Supply chains: key to the success of second-hand e-commerce
Published on 04/10/2023
Published on 04/10/2023
The second-hand online market is booming: consumers are in love with it and digital exchange platforms are mushrooming. How is this new sharing economy structured? A study by a team of researchers, including NEOMA’s Aurélien Rouquet, has recently highlighted the crucial role played by supply chains.
“Sold! Now simply download the waybill, pack up your parcel and send it off” – this is a message that regularly lights up the screens of online fans of second-hand goods. It’s a market that has been in full swing worldwide for the last ten or so years, and was estimated to be worth over 7 billion euros in France in 2022, with at least half of all online buyers turning to second-hand platforms. Enticed by the attractive prices on offer or motivated by eco-awareness, consumers are willing to trade all kinds of items, from clothes to books. Online consumer-to-consumer (C2C) sites – where strangers can buy and sell articles – are proliferating so quickly that some platforms are proving to be hugely successful, such as Vinted, Etsy, eBay and Vestiaire Collective.
The organising principles behind these finely-tuned machines are well-planned, juggling effortlessly between customer requirements and their experience. In a recent study, Conceptualizing sharing supply chains – lessons from an exemplary case, a team of researchers investigated the supply chains behind these platforms, analysing their structure from selling a product to receiving it. The aim was to identify the characteristics of what the authors call “a new sharing economy”.
Let’s remind ourselves how a conventional supply chain works, as utilised by business-to-consumer (B2C) e-commerce sites such as Amazon and Cdiscount. Articles are centralised in a warehouse before being shipped to consumers. In the sharing economy, on the other hand, the chain is more akin to a spider’s web that connects individuals to one another. The company acts as an intermediary between consumers, who are given a more prominent role within the network. As well as being buyers (and potential sellers), consumers become logistics coordinators, responsible for choosing which distributor will ship their goods. It follows that the key challenge for these sites is to ensure that their systems are secure and trustworthy so they can convince users to trade through them.
There are limitations to buying and selling certain articles in practice, especially high-value or high-tech goods. Buyers want to be sure about the quality of what they are buying – and whether it’s genuine – before getting their credit card out. It’s a difficult, but not impossible, challenge. The researchers spotlight the strategy implemented by Vestiaire Collective, which specialises in second-hand luxury goods. The company elected to act as a physical intermediary as a way of guaranteeing that the articles for sale are genuine. In other words, every item that has found a buyer is first sent to one of Vestiaire’s warehouses to be certified. The case of Vestiaire is, however, an outlier in the online second-hand market, although it is applicable to the resale of specialised goods.
In broader terms, the flexibility and usability of C2C sites enhances the trustworthiness of the process of buying and selling. The structure of these platforms is also tailored to user requirements. For instance, sellers and buyers can decide to exchange goods in person. The study shows that the strategic organisation of a supply chain plays a crucial role in gaining the trust of internet users in the same way as the feedback and rating system for sellers that is already in place.
However, the future of this model is by no means guaranteed. Some platforms have been so successful that they are opening the door to sending goods overseas, raising questions about the carbon impact of a system that was originally designed to be virtuous. In addition, major companies such as Decathlon and IKEA are taking over the second-hand market, connecting consumers so they can resell the products they no longer need. The online second-hand sector is changing fast, and its socio-economic impact is yet to be fully explored.
Christine Roussat, Valentina Carbone, Aurélien Rouquet. Conceptualizing sharing supply chains – lessons from an exemplary case. International Journal of Operations & Production Management – December 2022 – https://doi.org/10.1108/IJOPM-10-2021-0670