Recommerce Fintechs’ Business Models Rethink The Concept Of Wealth

Sixty-two percent of global consumers—including 75 percent of millennials—believe that companies must consider sustainability practices, according to a recent study by McKinsey & Company. Younger generations are drawn to a shared, or circular, economy, which encourages longevity in products and therefore lowers their carbon footprint.

The circular economy—using and reusing natural capital as efficiently as possible and finding value throughout the product life cycle—is transforming entire industries. Clothing is one of these. The Ellen MacArthur Foundation found that clothing resale is expected to eclipse the new sale of fast fashion garments by 2029.

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Two fashion-oriented recommerce fintechs have recently raised more than $40 million in funding using the circular economy. But, as TechCrunch puts it, the two are also “reimagining the function of a bank as an arbiter and exchange of resale value.” Their business models are expanding the definition of wealth beyond real estate, cars, and luxury goods that tend to retain more value over time.

Take Twig ($35 million in funding), a London-based app which currently lets users sell and trade digital and physical items with cash. In the future, Twig will accept digital assets like Bitcoin and Ethereum cryptocurrencies and non-fungible tokens (NFT). Payments can be applied to purchases, and customers can return their purchases at any time for store credit. The company then resells the returned items for a profit. Twig’s app comes with an emoney account and a Visa debit card.

Responsible ($6.6 million in funding) is a Belfast-based startup with an embedded finance platform, BuyBack, which can be integrated into a fashion brand’s ecommerce site or store. Consumers look for the Responsible brand when purchasing clothing. When they return items, they can then use the credit toward any clothing item listed in the Responsible app.

In both cases, the technology lets consumers know the residual value of any item when purchased. This way, they can seamlessly resell their items for instant cash. At present, both platforms are only available in the British Isles.