February 27, 2017

Everywhere’s a fleamarket for Netflea

An average Netflea customer purchases seven or eight products at one go.
An average Netflea customer purchases seven or eight products at one go.
Netflea

Circular economy is The Thing in today’s world, with people wanting to save both money and natural resources by sharing and recycling. Finnish Netflea gets unused items off shelves and storage rooms back into business.

Ossi Salo rolled his eyes. He’d just found out his wife had bought a second-hand dress for their daughter for three euros – and paid almost five euros for shipping.

“It just went against my logic,” he says. “How was it possible that the postage more than doubled the cost?”

Ever since their daughter was born, it seemed to Salo that his wife popped to the post office pretty much every day. This time, he grabbed the wrapping and saw that the sender had paid the exact amount, just under five euros, for the delivery costs.

His wife pointed out that eight euros wasn’t much for the dress.

“I agreed, but I still didn’t see how it made sense,” he explains. “The seller had gone through the effort of taking a photo, posting an advert, dealing with a mountain of responses, bought packaging materials and gone to the post office to mail it. That’s a lot of work for three euros, and those three euros include the price of the product.”

Salo didn’t understand why his wife wouldn’t buy more cheap stuff from the same seller to reduce the shipping cost per item. She said that particular person didn’t have anything else that tickled her fancy.

Salo, being a logistics professional, couldn’t let go of the thought. Fleamarket groups on Facebook were hugely popular and ever growing. Doesn’t anyone coordinate this sort of thing, so that it would be possible to order second-hand products from different people at one go? All it would take is careful thinking and effective processing, Salo figured.

Turned out no one did. Not until now.

Circular economy at its most effective

After convincing an investor and the Finnish Funding for Innovation Tekes, Salo and his old friend Pekka Manninen launched their first online fleamarket website in Finland in 2014. At the time, circular economy wasn’t as much of a buzzword as it is now.

Ossi Salo

Ossi Salo

Netflea

In order to attract visitors, the site needed something to offer. Salo and Manninen jumped in the car and drove around all fleamarkets in northern Finland to stock up on things they thought would be most likely to sell, such as clothes for women and children and sports equipment.

The idea caught on: now, an average customer purchases seven or eight products for a fixed shipping fee.

Both ends of the process are considered. A seller takes a photo of the product, sets a price and ships the thing to Netflea’s storage in Oulu. Once it’s received, Netflea puts it online, with one euro added to the price, and finds its slot in the storage – all of this taking about half a minute.

When the product is sold, the seller is paid the original price and Netflea keeps the added euro.

“This way, the service feels free to the seller, similarly to platforms like Facebook,” Salo says.

The product is on the site for 12 weeks. Every three weeks the price goes down 20 per cent. If, after the 12-week period, the product hasn’t found a new home, the original owner can either have it shipped back or donate it through Netflea. However, according to Salo, every four in five items are sold.

When it comes to the buyer, they have access to numerous cheap second-hand items at one glance, with extensive search options – and with only one stamp to pay for and consumer rights guaranteed.

“Our goal was, and still is, to make Netflea the best place to both buy and sell online,” he says.

A combination of markets brings best results

In February, the service was launched in 12 other European countries, with marketing efforts focusing on Germany, Poland and the Netherlands.

The site uses Google’s translation tools, so that a pair of jeans put on sale in Lapland is equally available to people abroad not knowing a word of Finnish. This multiplies the number of both potential buyers and sellers.

Salo points out that not all markets are alike. A combination of countries works in everyone’s favour.

“In Italy, there’s virtually no market for second-hand fashion, but people are keen on selling,” Salo says. “In the Nordic countries, second-hand is trendy, and a lot of people would be willing to see what Italians have in their wardrobes.”

The stock is currently stored in Oulu. Once Netflea has established its international presence, the company will consider other location options based on convenience and cost-effectiveness.

Netflea employs about a dozen people directly, and indirectly it provides work to subcontractors in fields like software development and marketing. The company’s internationalisation efforts have been boosted by Finpro’s eCom Growth programme. Without it, Salo doesn’t think Netflea would’ve stepped across Finnish borders.

The market is wide and open, though. Salo says that whilst a lot of second-hand enterprises focus on high-profit but non-mainstream items, such as luxury fashion, Netflea’s strength – and profitability – lies in volumes.

“Others are trying to reach the top of the iceberg. We’re happy to keep the bottom part to ourselves.”

Tuula Karsikas at the Netflea storage in Oulu. Once a product arrives, it takes about 30 seconds for it to be placed on the right shelf.

Tuula Karsikas at the Netflea storage in Oulu. Once a product arrives, it takes about 30 seconds for it to be placed on the appropriate shelf.

Netflea

Text: Anne Salomäki

 

Good News from Finland is published by Finnfacts, which is a part of Finpro. Both Finpro and Tekes form a part of Team Finland.

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