In a consumerist world where customers are always looking out for the best deals, and retailers are busy concocting them, there has always been a certain sweet spot in the retail chain, an area or niche not often explored. While the businesses exploring this niche today are by no means the trailblazers of the field, as this business model has existed for the longest time, it finds itself during an interesting period of time, one marked by the shopping fever of Black Fridays and Cyber Mondays.
What niche is this exactly? We’re talking about the secondary market retail industry, one where returned, excess or damaged goods are resold to consumers for a discount.
Many of these products are still fully functional, but do not meet the criteria for a ‘new’ product. The packaging might be damaged, or a piece of furniture could be nicked or scratched. If a customer is willing to overlook small details like these, they’re in for major savings – that’s the selling factor of this business model.
How does the business model work?
Secondary retailers are able to obtain non-mint items that are generally unsellable by first-hand retailers and turn them in for a profit. It takes a lot of time and effort, and sometimes costs more than simply disposing of an article or relisting it, for these second-hand retailers to obtain these undesirable products and list them. As such, not anyone can break into this field with ease. It requires plenty of market know-how and region-specific knowledge. A customer in the UAE, for example, might not be willing to overlook a scratched mahogany table, whereas a customer in the UK might, in favor of sustainability sentiment.
The market for secondary goods is very delicate and tricky to get a grip on, but some are finding success in this field.
Companies adopting this business model
UAE-based Cartlow is one company traversing this fine line of trade. It has partnered up with some of the leading retailers and distributors in the region, and is providing them with a cost-effective option for unloading their undesired goods.
“Retailers discard millions of returned and overstock products every year because they lack the processing capabilities to re-sell them — a missed opportunity for you and a burden to our environment,” Cartlow explains. “Most of these items are fully functional, but unsustainable practices make it difficult for many retailers to liquidate them.”
Therefore, Cartlow’s business model goes as follows:
“We’re hoping to change that by partnering with top retailers to enable us to offer returned, overstock and certified pre-owned products at unbeatable discounts to Cartlow shoppers.”
With e-commerce being much more subdued in the GCC than it is in countries like the US or China, where consumers are able to get their hands on secondary goods from dozens of retailers and websites, Cartlow has found itself some advantage in its niche. It is much more difficult to find deals on secondary goods in the Middle East than it is in the UK or Australia, for example, and as such, Cartlow is well positioned to scoop up as many customers as it desires.
It helps that Cartlow is a mobile app in the country with the highest rate of smartphone penetration in the world. E-commerce sales in the Middle East are known to be heavily mobile-oriented, and Cartlow’s mobile store is smart to capitalize on that.
However, Cartlow has not been the only brand to adopt this business model. Other pre-owned marketplaces exist in the region, such as The Luxury Closet, Garderobe, and Retold. Customers in Dubai and elsewhere in the UAE are certainly not starved for choice.
An example of how second-hand goods are rated
With the joy of discovering a deal for a desired item comes the concern regarding its condition. For those wondering how pre-owned goods are rated on a site like Cartlow, here is a Grade classification from the aforementioned seller:
“We buy wholesale stock. The product packaging of the stock may have some wear and tear. The Item inside the packaging is still new. You pay for the quality of the product inside the packaging and not the packaging itself.”
“We buy wholesale returned stock. The product has been opened however not used. The Item inside the packaging is still new. You pay for the quality of the product inside the packaging and not the packaging itself.”
“We buy wholesale liquidation stock. Items have been used, some minimally others moderately and extensively. Items are segregated, tested, certified and graded by our experts. You pay for the quality of the product depending on the grading.”