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About the Author:
David Gearhart, CFA
Vice President
David Gearhart is a vice president specializing in research and investment in software-as-a-service (SaaS) and the Internet of Things sector and has played a key role in establishing First Analysis’s Internet of Things franchise. He is a thought leader in his sectors, having authored several widely read white papers. He uses his industry knowledge and expansive network to uncover promising investment opportunities and help companies navigate their strategic paths and accelerate growth. Prior to joining First Analysis in 2011, he was an accountant with The Northern Trust Co. and an options broker with American Option Services. He earned a bachelor’s degree from Purdue University with a concentration in economics and finance and his MBA at DePaul University with a focus on finance and entrepreneurship. He is a CFA charterholder.
First Analysis E-commerce Optimization Team
Matthew Nicklin
Managing Director
David Gearhart
Vice President
Richard Conklin
Managing Director
First Analysis Quarterly Insights
E-commerce Optimization
Better the second time around: Brands move to embrace re-commerce
December 18, 2020
  • Re-commerce, short for resale commerce, is a smaller market than the market for new goods but still sizeable at nearly $100 billion in the United States annually and growing quickly. Despite a backdrop of general economic prosperity, more people now view it as acceptable to buy used instead of new.
  • Brands have been slower to adopt re-commerce than e-commerce marketplaces, other online retailers and traditional retailers. We think this will change within the next few years as brands recognize many compelling benefits of re-commerce.
  • As brands undertake re-commerce initiatives, we believe most will elect to outsource the underlying technology given the technical capabilities required to build a proprietary capability are often outside their core competencies and outsourcing is generally more cost effective.
  • We expect technology vendors in several areas to see strong demand from brands seeking to outsource all or part of their re-commerce efforts. We highlight several key technology areas likely to see the most interest and profile some innovative providers of these re-commerce technologies.

TABLE OF CONTENTS

Includes discussion of AMZN, EBAY, WMT, ZAL and eight private companies

Re-commerce market substantial and growing fast

Common re-commerce models

Retailers taking notice, some already entered re-commerce

Brands lag, but time for them to get involved

Multi-year tailwind for technology vendors enabling re-commerce

The second time around

First Analysis E-commerce Optimization Index hits new peak

E-commerce optimization M&A pace sustains its recovery

E-commerce optimization private placements slow in Q4

Re-commerce market substantial and growing fast

Re-commerce, short for resale commerce, means selling used products, returned items, and excess inventory through physical and digital channels; some use the term to include rentals. Virtually any item in good condition with some remaining utility can be resold, including apparel and accessories, housewares, video games and other electronics, and collectibles.

The re-commerce market is smaller than the market for new goods but still sizeable at nearly $100 billion in the United States annually. The apparel and accessories re-commerce category alone is expected to reach $32 billion in 2020 and to double by 2025. Much of the resale volume and revenue flow through physical locations, but like online new goods sales, online resale has been steadily gaining share due to its broader selection, greater convenience and quick fulfillment. For example, $7 billion of apparel and accessories resales are now online, with much of the near-term category growth expected to be on digital storefronts.

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