Recommerce businesses don’t just have to sell used items—they have to get them back first. And that’s where reverse logistics becomes a real operational challenge.
In this clip from the ReCommerce Podcast, Tuomo Laine (CEO of TWICE Commerce) breaks down why the economics of returns, pickups, and logistics only make sense under certain conditions—and how high-value, small-format items like phones thrive where things like T-shirts or TVs struggle.
Key points:
Karri: Maybe also a couple words about the logistic side, so reverse logic, so actually getting that used item from the consumer to your business. I assume there is some challenges in that as well.
Tuomo: Yeah, definitely. I think there’s a complex topic, but on a high level I would say that there, it all starts from the fact that again, how valuable is the item. So it’s harder to get a five euro item back to you from a consumer to you as a single piece because it’s so thin the margin that you almost kind of lose all of that to the logistics cost. Now let’s say that if you make 40 bucks for the item like on profit, well then you can start maybe investing a bit more in ways of getting that item from the consumer. Technically at that scale, if you have a huge revenue, you might even be able to actually just collect the stuff from the people’s homes. So if you have a well-established setup where UPS is, for example, running, you could, some of the logistics providers already kind of provide these services that they take, as they bring something new, they can take old back or then they just can do that reversal logistics side of things. But yeah, so the challenges there really relates to like how much is it servitized in your area already by the logistics companies and what is the cost of that and whether that matches the average margins you have. Then if it doesn’t, you have to just increase the volume. So if you’re taking back, I don’t know, t-shirts or old clothes, you might need to kind of then increase the volume of a single pickup to make it more feasible or then start establishing some kind of logistics centers or kind of collection boxes where you can take stuff back. But yeah, it is a combination of what is the item, what is the size, what is the shipping cost of that, how well is it servitized. And then it goes back to the declaration side of things that if you try to run all of these, you know, somehow like that you have warehouse, it like how much can I trust in your declaration of what did you send me and the condition of that. The condition grading is also hard for many people.
Karri: Maybe a couple words about that a little bit later, maybe like on the reverse logic side you mentioned, like the size and the value and that’s probably the reason why there are like iPhone refurbished businesses more than like TV refurbished businesses because it’s a lot of value in a small box that is quite cheap to actually.
Tuomo: Yeah, there’s kind of, there’s that and a few more things, but yeah, it’s like how much value can you pack into that square meter or whatever square centimeter or cubicle. So yeah, so it’s kind of how much value do you have to hide into that item.