How businesses are answering the demand for 'cheaper' and winning
We’ve previously written about how Generation Z is demanding a higher value for money, as they put more emphasis on savings. They are also a generation that is becoming more conscious of its impact on society and the environment, pushing for sustainable changes.
Almost every business in today’s world sees excess stock, while consumers are tied with more products they do not need. Back in the days, these would end up in landfills.
However, with new e-commerce platforms such as Dubizzle, Melltoo, and Cartlow, customers as well as businesses can liquidate their inventories. This has three prominent economic and environmental impacts:
Reduced items that add to landfills
Economic benefit from liquidation of dead stock
Consumers getting more value for their money
Businesses such as The Luxury Closet has also captured a niche in the market by dealing in high-end branded products. New startups in the fashion resell space are also gaining traction, such as Dabchy from Tunisia that raised $300K from 500 Startups in September, and Luxury Promise from the UAE; both of which are part of Womentum accelerator.
While Luxury Promise does focus on the luxury fashion niche, Dabchy is a broader marketplace for pre-loved fashion that also allows people to sell self-made fashion clothing and accessories.
Melltoo also startup out with a focus on pre-owned fashion, however, its categories have now widened to include new as well as used technology, cars, home and garden items, and more. They also closed their latest funding round in September, led by Gobi Partners; however the amount remained undisclosed.
Furthermore, the advent of e-commerce has the potential to reduce operating costs for retailers, helping them cater to the growing market demand for value-driven prices. However, the last-mile delivery business remains expensive and poses other challenges for the economy, such as lower wages and exploitation of delivery workers as well as redundancies with robots taking on the workload in warehouses.
Lower prices are a good strategy only if done sustainable, as in the above cases. However, lowering prices to gain market share is not sustainable in the long run. On the other hand, people buying from the second-hand market, will impact the original sellers and manufacturers as demand reduces. Will the positive economic impact of these marketplaces for pre-loved goods outweigh its effect on the larger manufacturing sector’s economy?