Running a resale business is fundamentally different from operating a traditional full-price retail model. The unpredictability of secondhand supply means that standard systems for pricing, merchandising, and reporting are inadequate for resale. Additionally, the user experience must be tailored: both buyers and sellers require resale-specific features, such as listing processes, item identification, condition descriptions, pricing suggestions, and support for shipping and payouts. Moreover, a resale business demands more sophisticated supply and demand modeling, as well as targeted marketing strategies.
Due to these inherent complexities, Circle is focused to develop retail technology that tackles these challenges, making it straightforward for brands to launch a profitable and scalable resale business - no matter which model (or combination of models) they decide to implement.
The Breakdown: Resale Models
The simplest way to think about various resale models is to split them into two buckets: those where Circle and/or a brand does not touch the inventory, and those where we do.
Let’s start with models in which Circle does not touch any inventory.
Peer-to-Peer
In peer-to-peer models, buying and selling secondhand items occurs within an online marketplace. Circles recommerce sites are fully customised, crafted to serve as a seamless extension of the brand while providing an exceptional user experience. Sellers typically have the choice to receive their earnings as cash payouts or store credit.
While peer-to-peer generally involves consumers selling directly to one another, meaning the brand doesn’t hold any inventory, Circle marketplaces enable brands to utilise supply from various channels. Brands can select to source inventory from one, multiple, or all of these options:
- Consumer Owned: Any consumer can list their secondhand items for sale. When an item sells, the seller ships it directly to the buyer using a prepaid shipping label.
- Verified Sellers: Certain sellers can be designated as “approved sellers” and list their secondhand inventory on the recommerce site. Many brand partners use this feature for vetted vintage resellers, who ship items directly to buyers upon sale.
- Brand-Listed: A brand can list its own inventory - such as samples, returns, or damaged items - on the site and ship directly to the buyer.
Now, let’s address models where we do touch inventory.
Managed and Trade-In Models
Managed Models: In this setup, a brand sends its owned inventory - such as samples, returns, or damaged goods - to a warehouse for cleaning, repairs, and fulfillment upon sale. These products are listed for resale on the brand’s recommerce site powered by Circle. This process can be executed in several ways:
- Archive Managed (Full Service): The brand utilizses Circle Resale Ops Technology and a third-party logistics (3PL) partner for all logistics, including product identification, conditioning, cleaning, repairs, photography, listing, and fulfillment.
- Archive Managed (Lite Service): The brand employs Circle Resale Ops Technology for product identification and fulfillment but relies on its own 3PL for all other logistics.
- Brand Managed: The brand opts not to use Circle warehouse management system (WMS) and instead utilises its own 3PL, while Circle automates the fulfillment process.
Trade-In Models: These models source inventory from consumers, following a flow similar to Managed models, where items are sent to a warehouse for cleaning and resale, or routed for reuse or recycling. This type of program is also known as a “take-back” initiative.
- In-Store Trade-In: Customers can bring their pre-loved items to stores in exchange for store credit.
- Mail-in Trade-In: Customers can ship their pre-loved items directly to a warehouse and receive store credit in return.
How to know which model is right for your brand
Determining which resale model is best for any brand is based on a number of factors, including program goals, internal resourcing, item price points, customer preferences, operational set up, etc. Circle technology was built to be incredibly flexible, allowing brands to launch with any model (or combination of models), and then add new models over time. Our team helps brand partners build a business case for resale with a recommended model that ensures profitability.
Interested in discussing which resale model might be best for your business? Get in touch with our team today.