Updated: Sep 18
As the resale industry gains serious momentum, brands are exploring ways to engage and ultimately benefit from resale. When considering their options, it’s useful to understand the two types of online marketplaces brands can benefit from.
Managed Service White Label
We will explore the features of each as well as the pros & cons.
Managed Service White Label Marketplace
What is it?
This service is where a third-party manages all aspects of the resale operations. This includes building a fully fledged, e-commerce website specifically for your brand. Once a customer purchased from you, and later decides to resell their piece, the third-party will handle the whole process - inbound logistics, inventory management, storage, processing, photography, order fulfilment, outbound logistics, customer care, payouts, and returns.
Consumers usually access the marketplace through your website.
As you may have guessed, these marketplaces are usually very expensive as they are fully bespoke solutions. There are usually large upfront integration costs coupled with high monthly fees.
Due to the bespoke nature of the solution, it usually takes a few months to build and deliver.
Due to the high operational costs of the service, the third-party will take a large cut of the resale proceeds, sometimes up to 90%. This means: - You receive a much lower commission. - Your customers receive a much smaller portion of the sale proceeds.
If a customer shops ten different brands, it can be a very frustrating experience dealing with ten different marketplaces.
The marketplace is a white label, meaning you have a lot of control over the branding & styling.
Some customers prefer the hands-off experience of reselling.
Peer-to-Peer Multi-Brand marketplace
What is it?
This service enables brands to integrate into their existing peer-to-peer marketplace. These marketplaces operate like similar marketplaces you are most likely familiar with. Transactions are made between two parties (a private seller and a private buyer) and they are responsible for fulfilment. Technological advancements have seen these online marketplaces become very sophisticated, allowing very frictionless trading. This includes automatically pulling data from the brand so consumers don't have to manually add their items, package and delivery slip automation, transactions escrow to protect funds from fraud, order tracking etc.
Brands lose some control over how the marketplace looks. Although branded spaces/shops within marketplaces counters this to some extent.
Some customers prefer the hands-off experience of not having to fulfil sales themselves, despite the higher costs involved. As discussed, however, technology advancements means the experience gap between the two types marketplaces is closing.
Again, as you may have gathered, these services are a lot more accessible and cost-effective for the brand, due to the lower overhead of operating the marketplace. Integration and monthly costs are usually substantially lower.
Unlike a white label marketplace where only a single brand’s items are sold, these multi-brand marketplaces provide a fantastic way to get discovered by new audiences, especially Gen-Z & Millennials.
Due to the lower costs of managing the service, the third-party can take a much smaller cut of the resale value. This means:
- You receive a sizeable commission. - Your customers receive a much larger portion of the sale proceeds.
The customer’s centralised inventory and marketplace means they can use a single app to manage and sell their items.
Peer to peer marketplaces offer customers the social element of selling, which include chatting, liking and following other participants as well as deriving inspiration.
There is little question that empowering consumers to frictionlessly resell their items has significant positive environmental impacts.
As always, the answer to the question of which type of resale marketplace is right for my brand is ‘it can depend’. If you’re a very high-value luxury brand with a lot of disposable cash then the costs of establishing a Managed Service White Label Marketplace may not be such a blocker. In our opinion however, for the vast majority of brands, the Peer-to-Peer Multi-Brand marketplace is likely to be most desirable due to the lower cost, accessibility, brand discoverability and customer experience.