What’s the difference between recommerce and resale? What does RaaS stand for? How can I choose a resale model for my brand when I don’t understand what any of them mean? Hold up, what’s a resale model in the first place?
If the terminology used in the resale industry makes your head spin, don’t panic. There’s a whole lot of words that you may not have come across. That’s why we’ve put together the ultimate resale glossary for you to bookmark and come back to every time you need a refresher on common words in the recommerce industry.
Resale / RaaS / Recommerce
Let’s start with the basics. You’ve probably heard of some of these “re” words — but what do they actually mean?
- Resale: Refers to the sale of items that are not brand new. Such items may also be described as pre-owned, used, secondhand, gently worn, vintage, refurbished, reconditioned, reclaimed, or pre-loved. These terms highlight that the items have had a previous owner or have been repurposed or restored
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- Resale-as-a-Service (RaaS): Resale-as-a-Service, or RaaS, is a business model where brands partner with recommerce providers, like Archive, to build and launch tailored resale programs for their customers. RaaS providers manage all the logistics involved in running a resale business.
- Recommerce: Recommerce, or reverse commerce, is the selling of previously owned products through online marketplaces to buyers who will reuse, recycle, or resell those products.
Resale Models
There are several ways to run a resale platform. These different methods are called resale models — for more detail on how each model works, check out our complete Beginners Guide.
- Peer-to-peer model: A resale model where consumers sell directly to consumers, so the inventory is never held by the brand.
- Managed model: In contrast to the peer-to-peer resale model, where consumers sell directly to each other, a managed model involves a brand shipping its owned inventory—such as samples, returns, or damaged items—to a warehouse for cleaning, repairs, and fulfillment upon sale. Products are then listed for resale on the brand’s recommerce site.
- Trade-In model: A resale model where supply is sourced from consumers, and then follows the flow of a Managed model, where items are sent to a warehouse to be cleaned and resold, or routed for reuse or recycling. This type of program is sometimes also referred to as “take-back.”
- Recycling and Donation: For both managed and trade-in models, any items received that cannot be resold are routed for recycling and donation.
- Omni-resale: Refers to a brand operating multiple resale models concurrently.
All About Supply and Demand
Where does resale inventory come from? The following terms refer to the different ways brands can source supply.
- Brand Supply: Applicable across all resale models, brand supply refers to inventory sourced directly from a brand, such as returns and samples. Brands often sell this “supply” through their recommerce platforms to ensure their items are given the next best use.
- Consumer Owned inventory: In a peer-to-peer model, consumer owned inventory refers to items listed for sale on the resale site by individual consumers. When an item sells, the seller ships it directly to the buyer using a prepaid shipping label. The brand never touches this inventory.
- Verified Sellers: Within a peer-to-peer resale model, sellers can be deemed “approved sellers” and list their secondhand inventory on the recommerce site. Most brand partners who leverage this feature do so for vetted vintage resellers. Verified resellers ship directly to the buyer when an item sells.
- In-store Trade-In: One method a brand uses to collect inventory for a Trade-In resale model. It involves customers bringing their used items into the store to trade them in for brand credit.
- Mail-in Trade-in: Another method a brand uses to collect inventory for a Trade-In resale model. In this instance, customers ship their used items directly to the brand’s warehouse in exchange for brand credit.
The Logistics
Get to know the logistics terms you need to run a resale business.
- Reverse logistics: The process of moving products back through a supply chain, from the customer to the brand. In the context of resale, this process refers to how brands receive used products from the end customer.
- WMS: WMS, or Warehouse Management System, is the software responsible for managing the logistics and operations of a warehouse or “DC”, serving as the backbone of a Managed and Trade-In resale business.
- 3PL: In resale, a 3PL, or third-party logistics company, is a service provider that manages inventory logistics for a brand's resale program. Archive’s software can integrate with any logistics provider, thereby streamlining resale operations and allowing brands to launch the resale model that best fits their needs.
- Distribution Center: A distribution center, often shortened to “DC”, is a specialized warehouse that receives, stores, and distributes products to consumers, retailers, or wholesalers. In the resale context, items are received, assessed, cleaned and repaired as needed, and graded before orders are fulfilled and shipped to consumers.
- Condition Grading: Brands will indicate a used item’s condition to give consumers a clear understanding of its state before they purchase. Condition grading is the standardized scale brands use to evaluate and rate an item’s condition.
The Tech
The following terms cover all the need-to-know elements of the technology behind resale-as-a-service software.
- Digital storefront: Where consumers go to shop for their products online. A brand's recommerce digital storefront is often powered by RaaS software.
- Universal integration: A RaaS feature that ensures that a brand’s existing systems and providers, including gift card providers, ERPs, and loyalty programs, can seamlessly connect to the new resale software.
- Retail replenishment: A RaaS feature that analyzes a store’s inventory and sales history, and then routes an optimal assortment of products to that store.
- Intelligent Routing: A RaaS feature that takes into account the resale price and the cost of necessary repairs, ensuring every item sold maintains a profitable margin. If something can’t be sold profitably, the item will be re-routed for recycling or donation.
Time to Think Profit
Resale can be a lucrative business model — understand these key terms to keep on track with your profits.
- Smart or Dynamic pricing: An algorithm that takes into account MSRP, item condition, existing inventory mix, and other variables to determine the best-selling price for sellers and brands. The pricing is dynamic, adjusting to market conditions to optimize sell-through while maintaining profitability.
- Sell-Thru Rate (STR): This metric measures how much inventory is sold in comparison to how much inventory a brand receives. It serves as a key metric for assessing the success of a brand’s resale program.
- Up-spend: In resale, up-spend refers to when customers who received store credit for their pre-loved item goes on to spend more than the value of that credit on their next purchase at that same brand. This behavior boosts revenue for the brand, as customers are incentivized to buy more items, leading to higher profits through increased engagement and loyalty.
Interested in learning more about the world of resale? Reach out to our team at info@archiveresale.com
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