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Resale businesses are booming, but scaling them successfully requires more than just listing used products online. Whether you're an entrepreneur starting fresh or an established retailer looking to integrate recommerce, there are key strategies that can make all the difference.
In the latest episode of the ReCommerce podcast, Karri Hiekkanen sat down with Tuomo Laine, CEO of TWICE Commerce, to discuss the biggest challenges in resale, how technology (especially AI) is transforming the space, and what businesses can do today to build a scalable resale operation. This post explores some of the key insights from that conversation, focusing on the real problems resale businesses face and the solutions that can help them grow.
Most people assume that the hardest part of running a resale business is finding buyers, but as Tuomo Laine pointed out in the podcast, the real challenge is acquiring supply at scale. The difficulty isn’t just about sourcing products—it’s about ensuring quality, consistency, and cost efficiency.
If a resale business relies on consumer-sourced inventory, product condition is often unpredictable. People misidentify their own products all the time, listing an iPhone 12 as an iPhone 14 or failing to disclose damage. For retailers leveraging product returns, not all returned products are resale-worthy without refurbishment. Even in industries with established supply aggregators, like electronics, businesses face the challenge of securing inventory at a price that allows them to maintain margins.
One of the key insights from the podcast is that retailers already have a natural supply chain through product returns. Large retailers experience return rates between 5% and 20%, which can be turned into resale opportunities instead of waste. Brands like IKEA and Best Buy have successfully implemented in-store resale programs, converting returned or slightly damaged goods into profitable secondhand sales.
For resale businesses looking to scale, Tuomo suggests several strategies. Retailers should leverage their existing product return flows before trying to source externally. Trade-in programs, where customers exchange used items for store credit, also create a circular supply chain that benefits both the business and the consumer. AI-powered product recognition tools are another way to streamline supply intake, reducing the reliance on inaccurate customer descriptions and speeding up inventory processing.
AI is often discussed in terms of future possibilities, but as the podcast highlights, it is already making resale operations more efficient. Businesses today are using AI-powered tools to automate product identification, grading, and pricing—tasks that were once highly manual and error-prone.
One of the most impactful uses of AI in recommerce is product recognition and valuation. Instead of relying on consumers to manually describe items, AI can analyze photos and automatically determine the product model, condition, and estimated resale value based on current market trends. This dramatically improves the accuracy of listings and reduces the friction involved in sourcing inventory.
AI is also playing a major role in automated inventory management. Tracking secondhand items is more complex than traditional retail, where every unit of a product is identical. In resale, each item is unique, varying in condition, age, and potential refurbishment costs. AI-powered systems can categorize and price products dynamically, ensuring that businesses maximize their margins.
Another critical area is reverse logistics optimization. The cost of transporting secondhand goods, especially low-margin items, can make or break a resale business. AI helps businesses predict demand patterns and optimize which items should be resold, refurbished, or recycled, ultimately improving profitability.
During the podcast, Tuomo discussed how AI is particularly useful for retailers implementing trade-in or buyback programs. Instead of requiring employees to manually inspect each item, AI can assist in the initial screening process, flagging products that need further review and automating basic evaluations. This reduces the burden on staff while improving the speed and accuracy of resale operations.
One of the key differentiators between a successful resale business and one that struggles with inventory management is how they track their products. Unlike traditional retail, where items are uniform and tracked under a single SKU, resale businesses deal with unique products that require a different approach.
In the podcast, Tuomo emphasized that tracking at the individual item level is crucial for optimizing pricing, managing refurbishment efforts, and maintaining customer trust. If a business simply lumps all "Used iPhone 13" devices into one SKU, it loses the ability to differentiate between a lightly used phone with a pristine screen and one that needs a battery replacement.
Tracking inventory at the individual level allows businesses to optimize their pricing models, dynamically bundle items (such as selling spare parts separately), and offer customers more transparent product descriptions. It also enables businesses to analyze patterns in returns and refurbishments, helping them make data-driven decisions about which products to source or discontinue.
Instead of forcing products into generic categories, Tuomo suggests that businesses invest in flexible inventory management software (such as TWICE's single-sku inventory) that allows them to track items with detailed attributes. This not only improves operational efficiency but also enables resale businesses to maximize the value of every product in their inventory.
If you're a new entrepreneur entering recommerce, the podcast discussion provided a clear roadmap for getting started. The first step is always to validate demand. Setting up a small storefront on a platform like Shopify, Wix, or even Instagram is an easy way to test the market before investing heavily.
The next challenge is securing consistent supply. Many new resale businesses start by sourcing items from their own home or local community, but as they grow, they need to establish reliable supply channels. This could include liquidation sales, partnerships with retailers, or developing a structured buyback program.
Once a business has traction, the focus shifts to optimizing pricing and inventory tracking. AI-powered software tools can automate much of the process, reducing overhead costs and improving margins. Investing in the right technology early on can prevent bottlenecks and make scaling easier.
For established retailers looking to integrate recommerce, the easiest entry point is through reselling product returns. Instead of viewing returns as lost revenue, retailers can create dedicated resale sections in their online stores or physical locations. Companies like IKEA have already proven that this model works.
Retailers can also launch trade-in programs, where customers receive discounts or store credit for returning used goods. This not only builds customer loyalty but also ensures a steady flow of resale inventory. Implementing AI-powered inspection and valuation tools can streamline this process, making it both scalable and profitable.
The resale market is growing fast, but only businesses that optimize supply chains, inventory tracking, and pricing will succeed at scale. As Tuomo highlighted in the podcast, recommerce is no longer just about listing used products—it’s about building an efficient, technology-driven operation that can compete with traditional retail.
For businesses looking to enter the resale space or improve their existing operations, the key takeaways from the podcast are clear:
To dive deeper into these insights, check out the full conversation in the latest episode of the ReCommerce Podcast, where Karri and Tuomo break down these strategies in detail.
🎙️ Listen now: Spotify, Apple Podcasts, YouTube.