Not all resale businesses work the same way—and understanding the differences is key to building a profitable secondhand operation.
In this clip from the ReCommerce Podcast, Tuomo Laine (CEO of TWICE Commerce) breaks down the core business models inside the resale space. From acquiring used goods cheap and flipping them, to reselling product returns, to full-scale refurbishment and recombination of parts—each model has different cost structures, supply needs, and margin strategies.
Real-world examples include:
Learn how these resale models make money, what makes them scalable (or not), and where value is actually created.
Karri: By talking about the different business models inside reselling and selling second hand items.
Tuomo: Sure, I think we can kind of do some of the split in terms of where do you look to make your margin because at the end of the day in business it’s all about making a margin. So there are models where you kind of still let’s say acquire cheaply and sell more expensively, maybe. So maybe you’re trying to make a second hand find and then just sell it with a margin due to, I don’t know, finding a more qualified buyer or something like that. I’m trying to figure out, maybe those models are a bit rarer at scale, but maybe that could be a… anti-extra shop for example might operate in that way.
Then we have models where you kind of acquire cheap because you might get it for free, but at the end of the day you’re kind of recovering losses. So product returns is a major supply for many second hand sales. So retailers might do things like turn their product returns to be sold in an outlet corner or similar in the retail environment. IKEA for example is doing this in quite many places. So inside IKEA you might find that kind of outlet—outlet, I think they have another name for it—but kind of the outlet corner.
So these are kind of the models where you effectively just get an item and then you sell it as it is as second hand. Now then there are other models where you kind of try to improve your margin or you make your margin by the fact that when you acquire the supply after the fact, you might do some things with it, you might refurbish it, you might turn it into spare parts and then like rebuild, remanufacture things. So these models are, for example, refurbished phone businesses also usually work in this way.
So you go to the market, you acquire some supply from an aggregator or maybe from a consumer, you might have a buyback, trade-in or similar value proposition to kind of acquire the supply and after the fact you then do some refurbishing—you change the screens and so on—and then the combination of the spare parts, the used item, you’ve made it kind of as good as a new iPhone for example and then you sell it with a profit.
So I think those are overall—then you might say that there are also businesses in maybe recycling or remanufacturing, but maybe they go a bit outside of reselling because there you kind of then… well, you don’t resell at least to the consumer in many cases, you might resell the materials to another business in form of kind of recycling. But yeah. So that would be the cut that I have in my mind at least for the different business models.