How long before airlines grasp the potential of resale marketplaces?

Nike Refurbished.

Chanel Vintage.

Patagonia Worn Wear.

The North Face renews.

Levi’s Second-Hand.

Gucci Circular Lines.

These different names refer to programs launched by well-known retail brands in recent years, all aimed at reselling products.

The resale industry is now worth $100 billion, growing five times faster than regular retail. Experts predict that by 2030, resale could make up 23% of all retail. It might even double in size by 2027, reaching $250 billion.

But all of this almost didn't happen because brands were initially unsure about adding second-hand sales to their regular sales.

After years of discussions and disagreements, the verdict is in.

Retail businesses need resale to make their brand stronger, improve their marketing, and make more money in the end.

Why were brands reluctant?

Retail companies have been hesitant to enter the second-hand market for their products, either by collaborating with external resale platforms or by establishing their own branded resale marketplace.

Several preconceived misconceptions have fueled their apprehension:

Potential cannibalization: The idea is straightforward. If I sell second-hand items, I'll also be offering discounted products alongside my new ones, potentially leading customers to opt for the lower-priced choice.

Potential brand damage: Marketers have been cautious about featuring pre-owned items, concerned that it could impact the esteemed qualities of their products, particularly in the luxury sector.

Potential limited ROI: Ultimately, brands didn't perceive a clear return on investment in setting up their secondary market. Aside from the complex logistics of managing the delivery of pre-owned items between customers, brands didn't envision substantial profit in the fees or commissions they could earn from transactions between their customers.

What changed?

The impressive ascent of independent resale marketplaces (the remarkable success of eBay in the 2000s serves as a prime example) has gradually compelled brands to consider resale as part of their strategy. Rapid growth of platforms like Vestiaire Collective or ThredUP, along with their substantial customer bases, serves as clear evidence that customers are enthusiastic about both reselling and purchasing second-hand items.

Brands had no choice but to respond.

During the 2010s, they began establishing their own resale marketplaces, which served as new direct channels or dedicated sections within their ecommerce stores.

This approach comes with several advantages, including:

Revitalized brand narrative: By directly addressing customer desires (such as the wish to resell products or buy second-hand), brands are actively reshaping their brand narratives and positioning themselves as responsive to their customers. Once again, prioritizing customers proves to be the winning formula.

Expanding customer base: Amid growing inflation, consumer response to pricing tends to favor lower costs. Through a resale marketplace, brands successfully attract and convert new audiences and customers to their products.

Customer-centric approach and increased brand loyalty: With a branded resale marketplace, brands gain complete ownership over their products' lifecycle, accompanying customers from their initial purchase to their resale. The increase in brand loyalty ranked among the top three benefits seen by retailers post-launch of their resale marketplace.

Environmental sustainability: As global temperatures rise, the retail sector has faced increasing pressure to shift away from the "take-make-waste" model and embrace a more circular economy. Resale embodies precisely this novel business approach and helps brands cope with the 61% of Gen Z and Millennials considering themselves as eco-conscious or sustainability-focused.

Incremental revenue: Experience has shown that there are far more new transactions by new customers than cannibalization by customers taking advantage of the opportunity of a cheap second-hand. And even better, the opposite happens. Come to look at good deals second-hand, many customers finally buy a new product.

Time for airlines to embrace re-sale potential

The travel industry, particularly airlines, finds itself in the same position that retail occupied a decade ago.

Even though there's a unanimous understanding that customers desire resale options, there exists a multitude of preconceived notions that fuel hesitance and a wait-and-see approach.

Interestingly, airlines could reap even greater benefits from embracing their secondary market, surpassing what the retail sector has experienced.

Here are the top 4 reasons:

Addressing customers' major concern: Airlines could resolve one of their customers' most significant pain points by offering a solution. It's still astounding that brands accept the reality of customers losing all their funds on non-refundable fares when they need to change their plans. This results in a negative experience occurring far too frequently for customers.

Feasible launch with minimal investment: Given that reservations now operate entirely within the digital realm, airlines could swiftly establish a marketplace on their own platforms without grappling with the logistical challenges faced by the retail sector.

Considerably more profitable than retail: And here's the simple rationale: Unlike the retail scenario, where pre-owned items typically decrease in value, second-hand airline reservations don't necessarily have to be priced lower. When flight demand is high, such reservations could yield substantial business value.

Brand loyalty holds paramount importance: The airline industry, above all, has implemented the most sophisticated loyalty programs to attract and acknowledge their frequent flyers. Establishing an exclusive members-only marketplace could serve as the ultimate benefit for them, offering enhanced flexibility and reduced prices to their most dedicated travelers.