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Wednesday, Aug 10, 2022

Resale Platform Arrive Offers Retailers New Source of Revenue

While most retail metrics are focused on two primary sales channels — brick-and-mortar and ecommerce — Santa Monica-based Arrive is helping brands break into a third: circular commerce.

The fledgling but more sustainable sales channel enables retailers to derive revenue from the resale of online returns that otherwise would likely end up in landfills, according to the company’s co-founder and chief executive, Rachelle

“The vision of our businesses is how can we be smarter about the things that we buy and the things that we use and how can we limit resource extraction,” Snyder said. “If you’re only going to use that product (a few times) or you don’t need it brand-new, then it’s really so much better to purchase at resale or to rent it.”
In addition to helping consumers reduce their environmental impact, this approach can benefit retailers.

“The other really exciting thing is that returns traditionally are a cost on your balance sheet, but with launching resale with us, you can turn that cost center into a profit center,” Snyder added.

She was referring to Arrive’s proprietary reverse logistics platform that the company initiated on Jan. 31 with Ohio-based Eddie Bauer and more brands to be announced in the near future. The software is integrated with the retailer’s website and provides consumers an opportunity to purchase less-than-perfect items at 20% to 60% below regular retail prices.

“On average, about 20% to 25% of all ecomm is returned,” Snyder said. “There are a number of those returns that can go right back onto the shelf, and that’s what the brands want because they want to sell at full price. But there’s a selection of those returns that can’t go back on the shelf — maybe somebody wore the shoes for a week or maybe the shirt smells like cologne or maybe there’s a small smudge on something. Those are called Grade B and C-level returns, and we are working with return companies to accept those returns on behalf of the brand and then resell them for the brand.”

Rental and resale channels

Snyder founded Arrive as Arrive Outdoors in June 2017 with her husband, Ross Richmond, who is also chief operating officer of the company. The travel and camping aficionados who didn’t have any gear saw a need in the marketplace and decided to start a company that would rent supplies online and ship them to consumers nationwide.

Last year, Arrive offered its online rental service to Eddie Bauer, Dick’s Sporting Goods Inc. and other retailers and dropped “Outdoors” from its name.
The company uses a warehouse in Gardena to store, clean and maintain retailers’ products in the rental pool and ships them to consumers as orders come in from brands’ websites.

“Those are all brand-new products that are sent to us, and then we fully manage the rental process,” she said, adding that Arrive also handles customer service calls related to rentals.

The idea of expanding into the resale of returned items has been on Snyder’s and Richmond’s minds for the last couple of years, during which they conducted research and interviews with brands about what they want from this type of service.
“Resale has been around forever, and there are companies now like ThreadUp and Poshmark and The RealReal, which are all doing amazing and … can accelerate resell for brands, but the challenge is that the brands don’t own that channel,” Snyder said. “The brands are losing out on the relationship with the consumer and losing out on this opportunity to market (themselves and) say, ‘Hey, we’re actually doing something sustainable, we’re reselling these products, we are doing a rental model for products that you’re not going to use all of the time.’ Being able to own that channel is so important for the brands.”

Circular model

Arrive expanded the reverse logistics platform it built for rentals to enable the resale of returned items, which is fully integrated with brands’ websites. It also allows Arrive to resell merchandise from a rental pool that is no longer generating demand or has exhausted its appeal.

“One of the most special things about our platform is that we do a fully circular model,” Snyder said. “You can have however many rentals that product can withstand — and we keep pretty high standards in terms of the user experience — but as soon as that product hits the level where it doesn’t feel like the quality we want for rental, it goes into resale, so it’s not going into the trash.”

When Grade B and C returns are sent to Arrive’s warehouse, the company’s staff performs necessary repairs or cleaning and then posts product details on brands’ websites for resale. The descriptions label the products as “like new,” “refurbished” or “open box” so consumers understand that they are not getting brand-new items. Arrive also ships the items to consumers, and as with rentals, handles customer care calls.

Arrive charges retailers a management fee for rentals and also collects a percentage of revenue generated from each transaction. It uses a similar model for resales.
“[A brand’s] success is directly tied to our success in this model,” Snyder said. “We want to do everything we can to help them grow the business.”

Anthony Dukes, professor of marketing and co-director of the Marshall Initiative on Digital Competition at the University of Southern California, said while there are definitely advantages for brands to engage in resale from an operational perspective — they’re getting some sale benefit out of something that would otherwise not be sold — there’s also a risk that if a resold product doesn’t function as well, or doesn’t have the same level of prestige, it might dilute the original brand value for the consumer.
The burden then falls on Arrive to “treat that return carefully and make sure they curate the ones that they resell, that they are in good shape, whether they’re cleaned and presented well, so that they don’t erode or corrupt the brand in any way, or diminish the perceptions of quality,” Dukes said.

Arrive plans to build on its model and expand. The company has more than 30 employees and has raised $8.75 million to fund its operations to date.
“We’re hoping to grow at least 4x this year with our brands,” Snyder said. “I can’t unfortunately name anybody quite yet but hopefully very soon. We have (nondisclosure agreements) with all of our partners right now, and so we’re waiting for their launches.”

Other retailers that have announced or have implemented resale programs similar to Arrive’s include Amazon.com Inc., Eileen Fisher, REI and Ikea.
“I think there was a trend already toward this, but the supply-chain problems due to Covid and other things have probably just accelerated it,” Dukes said.

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Mediha DiMartino
Mediha DiMartino
Mediha DiMartino covers retail, manufacturing and the ports. She can be emailed here.

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