How can SAP Recommerce help businesses to create new revenue streams while accelerating circularity?

[elena_vavitsa]

In the constantly changing consumer environment of today, businesses are constantly seeking innovative ways to not only increase revenue but also to align with sustainability goals. For several years now, one model in retail businesses has been gaining popularity: Recommerce programs.

Recommerce and resale programs not only promise financial gains but also resonates with eco-conscious consumers. By embracing recommerce campaigns, brands can embark on a journey of reinvention, extending the lifespan of products while unlocking new revenue streams.

Recommerce isn't just about reselling pre-owned items; it's a paradigm shift that redefines the relationship between brands and consumers. It's an opportunity for businesses to not only engage with their audience but also to build brand loyalty through sustainable practices.

Latest statistics show that consumers selling pre-owned items return to the brand and spend 2.5 times the amount of what they received in credit. In addition, 75% of customers return to those brands that offer resale programs. Especially in the fashion sector, resale programs are growing faster than in other sectors. As highlighted in the 2023 Resale report of thredUP, the U.S. resale market is expected to grow 9 times faster than the broader retail clothing sector by 2027 reaching $70 billion.

From retail, fashion, consumer products to electronics and automotive – resale programs gain popularity in various areas and industries. Brands like Coach, Lululemon, Patagonia, and Nespresso have effectively integrated resale programs into their established business models. For example, Coach launched Coach (Re)Loved, an initiative that offers customers to trade in their pre-loved leather Coach bags in order to be refurbished, recycled or reimagined and finally resold via the brands’ website. Another nice example is Nespresso which introduced the Nespresso “RELOVE” program providing customers the possibility to return their Nespresso machines. These machines are then refurbished, extending their lifespan and allowing them to be used for as long as possible, thereby giving them a second chance at life.

While resale programs offer many upselling opportunities for companies, it is also important to mention that they can help and support with important regulations. The European Commission, for instance, introduced in March 2020 the circular economy action plan, “designed to promote more sustainable product design, reduce waste and empower consumers, for example by creating right to repair”.  This plan was further adopted in February 2021 demanding additional measures to become an environmentally sustainable and fully circular economy by 2050.

The time for companies to act is now!

Circular business models represent a paradigm shift in how businesses operate, aiming to minimize waste and maximize resource efficiency throughout the product lifecycle. Unlike traditional linear models where resources are extracted, used, and then disposed of, circular models seek to close the loop by keeping resources in use for as long as possible through reuse, recycling, and regeneration.

One key aspect of circular business models is designing products with longevity and durability in mind, thereby extending their lifetime. This can involve using durable materials, modular designs, and repairable components to prolong product use and reduce the frequency of replacements.

How can SAP support brands with resale programs?

As one of the leading software companies worldwide, SAP is committed to help the world run better and improve people’s lives with sustainability at the core. One new solution which can support businesses to create circular revenue streams and reduce waste is SAP Recommerce.

SAP Recommerce can take back, manage, and resell preowned inventory. The solution helps customers accelerate the shift from a linear to a circular business model, extending customer lifetime value, and promoting more-sustainable consumption.

How does SAP Recommerce work?

SAP Recommerce is a flexible end-to-end solution tailored to the business priorities of retail, fashion, consumer product, and automotive businesses.

The solution is easy to use from end-customer, store associate, recondition and Recommerce manager perspectives:

• End-customer: SAP Recommerce can be integrated to the brands’ website providing customers the possibility to trade-in pre-loved items online, or give them back in-store. Customers can easily upload images of the items, and immediately see the estimated credit value of the pre-loved item.
• Store associate: Once the traded-in item has reached the store, the store associate can verify the item and its “real” condition, and finally confirm the trade-in flow in the system.
• Recondition manager: As a next step the recondition manager can define the next relevant steps for the item to be performed such as cleaning, repairing, reconditioning and restocking. Each step can be documented and tracked on a detailed level. Users can enter the time needed for every step.
• Recommerce manager: After all steps have been completed, the Recommerce manager can control and monitor the reporting of the Recommerce program and check the number of trade-in items and further relevant sustainability data.  Before the traded-in item returns back to stock, the Recommerce manager can set a new price. This price setting task can be provided by AI – while checking external 3rd party platforms and marketplaces.
• End-customer: Once the price is set, the pre-loved item is ready to find a new buyer. The end-customer opens the webshop and selects to buy a pre-loved item.

Watch the following video to get the idea behind the solution.

Added Value with SAP Recommerce

The above case shows how businesses can enable circularity and extend their product lifecycles while using SAP Recommerce to resell and manage all their processes.

Brands have further benefits when using SAP Recommerce:

• New revenue streams as an opportunity for up- and cross selling
• Demand generation while acquiring new customers
• Contribution to a more sustainable environment via commitment to reduce waste and promote circularity
• Monetize returns while capturing value from “write-off” products

Interested to learn more about SAP Recommerce? Visit our sap.com page, or connect with us in LinkedIn.