Secondhand luxury goods catch fancy of Chinese customers
By Zhang Shixuan, Jin Yang
China's secondhand luxury market is booming as more young and environmentally conscious consumers search for affordable high-end products. With much of the consumer goods industry increasingly focused on sustainable development, China's secondhand luxury market is growing quickly.
Luxury is in with affluent Chinese consumers at malls, online or even in secondhand shops. Chen Shiyun has been a luxury buyer for more than a decade, but two years ago, she started to see the appeal of trading in her secondhand items.
"I used to shop like crazy before. But around two years ago, I realized I should simplify my life, so I went to those stores and online platforms to have my things appraised. If I liked the prices offered, I sold them, especially the ones that were out of fashion. There are more of these stores nowadays, with some even doing promotions on livestreams or WeChat Moments," said Chen.
While Chen has mainly sold secondhand luxury goods, there are plenty of others around interested in buying them. One big attraction is the often lowered prices.
A secondhand luxury goods buyer, surnamed Ye, said he started to buy secondhand luxury about five years ago. In the past, he just bought from flagship luxury stores, sometimes even abroad.
"But now, they are more available in China, and so I can find my favorite styles in secondhand stores here. There are good-quality things almost new that can be 6,000 or 7,000 cheaper than their original price. And if the quality is not that good, the price can be less than half the original. I buy one or two secondhand bags a year," said Ye.
Bags at a secondhand luxury store in downtown Shanghai usually sell within a month of their previous owners' parting with them. Business has been so brisk since last year that the company has expanded from just one store before the COVID-19 outbreak to five now across China.
"Both collecting and selling secondhand luxury products are going well," said Zheng Yalan, co-founder of Glamour Luxury. "Since the outbreak, some people may have needed money quickly, so they've sold things to us. And also due to the pandemic, people were not able to go abroad, so many chose to shop in China. What really matters in the pricing is the item's popularity. And, of course, its quality and how long it's been used for."
Zheng also adds that vintage products – say those more than 15 years old – have seen a big rise in prices since last year, some even doubling or tripling in value.
A recent report from Bain & Company shows that Chinese consumers will account for nearly half of the global luxury market by 2025. However, sales of secondhand luxury products in China only accounted for 5 percent of the nation's overall luxury market in 2019, compared with 28 percent in Japan and some 30 percent in the United States. So, there's plenty of room for the market to grow, both online and offline.
Zhou Ting, a luxury industry expert and co-founder and CEO of luxury platform Yaok Group, said China's secondhand luxury market has developed based on the firsthand luxury market.
"At present, the annual turnover of China's secondhand luxury market is estimated to be about 30 billion yuan ($4.6 billion), accounting for 1 percent of total market cap," said Zhou. "Therefore, the market development is still in its initial stage."
More than 30 percent of luxury goods purchasers in China are from the younger generations, Generation Z or Generation Alpha, many of whom look at sustainability as a new fashion in itself. The key lies in attracting their attention to the market.
"China's consumers are not that well-educated to consume secondhand products, so the maintenance service after that is very important," said Kathy Jiang, principal of Roland Berger.
"And also, to keep a still very good theme of vintage offering and keep consumers aware that it's worthwhile to purchase the goods. Even for the secondhand luxury, you still need to keep the experience and also the life occasion for the purchasers."
She said, despite the items being secondhand, they are still luxury items, and the consumers still care about its "branding life essence and also the lifestyle behind that."
Luxury brands are well aware of the growing attraction of secondhand products in China. Gucci China Trading has just added daily secondhand product retail to its business model.
And online retail is also now in the market in a big way. Started as a livestreaming store selling luxury products on Taobao in 2016, Feiyu shifted its focus to the secondhand luxury market two years later.
The company completed $30 million of Series B financing last month. It now has six warehouses across the country and more than 40 appraisers responsible for certifying products from handbags to watches and jewelry.
In 2020, some secondhand luxury platforms saw double-digit growth in sales on a month-on-month basis. Zhou said data shows that there are 4 million luxury customers and 70 million marginal luxury customers.
"To cater to most of them, luxury brands have begun to develop low unit price products. Still, these cannot meet the luxury consumption demand of the rapid growth of customers with low purchasing power, so the secondhand luxury market in China has huge opportunities," said Zhou.