1) Price discovery for both buyer & seller – A smart algorithm helps the potential buyer / seller to determine what price to sell / pay based on multiple variables – market demand, age, wear & tear of the product.
2) Some re-com companies also offer guarantee when products meet their specifications.
But the major concern for Re-com companies is sourcing of 2nd hand products form individual sellers & logistics. Now they have identified a gold mine for sourcing 2nd hand products – returns of E- commerce companies. These companies have returns from customers who buy the product & are not satisfied with it & return it – termed as reverse logistics. This ranges from 15 – 30 %. To place this in perspective, an FMCG company has reverse logistic in the range of 0.5 – 1.5 %. It is a time bomb waiting to explode for e commerce companies. And re-com companies are coming to their aid – they pick up the returns from one central location, refurbish it & sell it at steep discount!
Re-com has a strong Triple Color Bottom Line indelibly intertwined in its business model -
Black – for economic profit;
Green for environment (it recycles waste in an efficient way!) &
White for supporting community – bringing categories & brands with in the reach of many more people.
How do you feel about Re Commerce? Does it have a future?
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In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here
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