Recommerce – which includes reselling, renting, refilling, repairing or reusing goods – is already an extremely valuable business model, estimated by Barclays to be worth almost £7 billion ($8.9 billion) in the United Kingdom, alone, and expected by Visa to increase globally to £82 billion ($104.3 billion) by 2030. This growth, particularly with respect to resale, is widely regarded as being driven by younger consumer demographics like Gen Z, over two thirds of whom now prefer to buy second-hand over new goods, in part, due to sustainability concerns.
As a concept, recommerce is, of course, not new. However, driven by the adoption of recommerce business models by luxury retailers like Selfridges, the increase in number of specialist rental or resale platforms (such as Poshmark and Vestiaire Collective), and the shift in focus to luxury goods, these secondary market business models have found solid footing. And there are many benefits to recommcerce models, including, sustainability, which is a particular focus for Gen Z, with 82 percent of people in this consumer group expressing concerns about the state of the planet. Moreover, recommerce models appeal to new consumers and create increased demand for new goods, on the basis that they may be considered an “investment,” which can ultimately generate income for consumers via rental or resale.
As such, certain luxury brands, such as Gucci, Rolex, and Burberry, have embraced recommerce and partnered with existing resale platforms or created curated platforms of their own. Retailers like as Selfridges and brands like Mulberry, among others, also offer repair services, which help to increase the lifespan of products and encourage brand loyalty.
Other luxury brands are understandably concerned by the risks involved with recommerce, including in relation to the authenticity of goods, parallel imports (also known as “grey goods,” or goods that are put on the market by a brand in one territory and later sold in another territory by third parties without the brand owner’s consent) and potential brand damage. Chanel, in particular, has been involved in various high-profile disputes in recent years, filing trademark-centric lawsuits against reseller platforms The RealReal and What Goes Around Comes Around (“WGACA”).
Some of Chanel’s main complaints in these cases have been that the resale platforms have been selling counterfeit and/or grey goods and misusing its trademarks (and other brand assets) by falsely claiming to sell genuine Chanel goods. In response, The RealReal, for one, has accused Chanel of “anti-competitive conduct” for trying to stop the second-hand sale of its products.
As for the status of these cases: Chanel recently prevailed in a jury trial against WGACA. Meanwhile, its dispute with The RealReal is still underway and looks set to be hard fought by both sides.
What action should brands consider?
These cases are taking place in courts in the U.S., making it so that they are not directly applicable to entities the UK, but the approach taken by different brands to recommerce is notable for companies across the board, as is how the courts are starting to grapple with the issues at play. As these business models increase in popularity and value, there will likely be more disputes of this kind in the future.
In the meantime, retailers, platforms, and brands adopting recommerce models should be aware of a few key considerations, including …
> The importance of implementing processes to authenticate goods and monitor legitimate distribution channels;
> The benefit of using contracts to govern key issues such as liability (e.g., for damage to goods being repaired or the late return of rental goods) and restrictions around the use of brands’ intellectual property rights by the retailer/platform and the extent of such use, to provide greater certainty and clear remedies in the event of a breach by either party; and
> Committing to continuous monitoring, so that prompt action can be taken in the event that any issues arise (whether that is brands objecting to the treatment of their brand or goods, or retailers/platforms taking action to prevent inadvertent infringement).
All the while, it will be interesting to see how consumer laws and regulations will develop in response to the increased popularity and adoption of recommerce models.
Ciara Cullen is a Partner and IP and technology litigation specialist at RPC in London.
Emma Dunnill is a Senior Associate at RPC with a wide range of experience advising clients on the protection and enforcement of IP rights, issues relating to technology and general commercial disputes involving technology or tech companies.
Share
