High-end second-hand goods appeal to China’s younger generation

June 10, 2022

SHANGHAI – Thousands of used items traded nationwide every day

Li Li, 29, a white-collar worker in Shanghai, spent 5,000 yuan ($788) to buy her friend a second-hand cellphone. The device had only been used for a year and the price she paid was about half that of a new phone.

Although Li could have easily afforded a brand new product, she said she just couldn’t turn down such a good deal because she really needed a phone.

Li sells second-hand products online, and in the two years since she registered on the second-hand e-commerce platform ZZER, she has sold nearly 14,000 yuan of these products, including clothes, shoes , bags and other accessories. She recently sold a hoodie, which she bought for 1,580 yuan three years ago, for 319 yuan.

“All the goods I sell are carefully selected. To me, they’re useless products, but that doesn’t mean they’re worthless to others,” said Li, who sold her used clothes to thrift stores when she was studying in New York.

A thriving market for second-hand items has existed in most Chinese cities for decades.

According to a report last year from Tsinghua University’s Institute of Energy, Environment and Economics and consulting firm Frost & Sullivan, the scale of the Chinese property market used has grown from around 300 billion yuan in 2015 to over 1 trillion yuan in 2020.

This market, which covers almost all categories of consumer goods, is expected to reach 3 trillion yuan in 2025, according to the report.

With more and more people trading in second-hand goods, high-end products have become an important part of this rapidly developing market, thanks to the changing attitudes of the younger generation.

A report released last year by market research firm Ebrun says the main consumers in China’s second-hand luxury market are between the ages of 24 and 36, and many young people no longer think second-hand is a pejorative term. Instead, visiting second-hand luxury stores has become a new trend for them.

Used luxury watches are sold online. GAO ERQIANG/CHINA DAILY

Clear potential

The potential of the high-end second-hand goods market became evident when Milan Station, a second-hand luxury store established in Hong Kong in 2001 and went public in 2011. Milan Station’s first store on the Chinese mainland was launched in Beijing in 2008.

An analysis on the development of China’s second-hand luxury market and a research report on investment prospects for 2022-29, both published by Insight and Info, indicated that the domestic luxury second-hand market has grown from 5.8 billion yuan in 2016 to 17.3 billion yuan in 2020, with an average annual compound growth rate of 31.1%.

Liang Qihua, the founder of ASEROOM, an offline second-hand luxury store in Shanghai, said there were more than 40,000 high-end “unused goods” swap merchants in the domestic market, including 20,000 were launched last year.

“About 10,000 of them are brick-and-mortar stores, while the rest include studios and businesses conducted on WeChat,” Liang said.

Launched in January, ASEROOM offers second-hand luxury bags, other accessories and watches, most of which come from retail customers.

Liang said some 300,000 second-hand goods are traded domestically every day, with top brands such as Hermes, Chanel and Louis Vuitton accounting for 20 percent of the market.

“The price of second-hand luxury items is mainly based on the lowest counter price in the world, and about 80% of the products are about half the counter price. The better the quality, the higher the price “, he added.

ZZER, which was launched in 2015, recorded a gross merchandise value of 1.5 billion yuan last year, up from 10 million yuan in 2017. The platform now covers more than 12 million users and over 5,000 brands.

Zhu Tainiqi, its founder, said the valuation of luxury, which is seen as the biggest challenge in the second-hand luxury goods market, has increased as the market grows.

“Five years ago, there were no more than 100 professional appraisers in China, but last year, for example, China Inspection Group’s appraiser training course attracted nearly 2,000 people from different industries. every month,” Zhu said.

There are hundreds of people in ZZER’s review team, which has reviewed nearly one million products over the past six years, Zhu added. Each product undergoes 11 evaluations, including logo inspection, material observation, and odor recognition.

The high-end second-hand market has flourished for many reasons, the COVID-19 pandemic being one of them.

Liang said, “Customer demand for overseas purchases has shifted to domestic consumption. After the pandemic emerged in Europe, many luxury goods factories cut production, leading to supply shortages.

“Furthermore, foreign currencies lost value, triggering higher official prices for luxury brands, which in turn boosted the entire second-hand luxury market.”

Da Wa, a student from Hangzhou, Zhejiang province, displays second-hand items at home after launching an online store selling such goods. JIN KE/FOR CHINA DAILY

Prices increase

Last month, Securities Times reported that many luxury brands, including Louis Vuitton, Chanel, Hermès, Celine, Dior and Gucci, announced price increases earlier this year. For example, Chanel increased the price of some of its products in January by 8-12%. Prices for some of its popular handbags are up 60% from 2019.

Shen Zhengqi, the founder of luxury watch service provider She Xiao Zhu, said, “Popular watches may need to be sold together with other less desirable models. The pandemic has restricted travel around the world, accelerating domestic circulation. As a result, prices for second-hand watches have increased significantly, especially for classic and popular products.

For example, a used Rolex Submariner Hulk cost 50,000 yuan in 2016, but the price this year is 180,000 yuan.

“The second-hand market ensures consumers get what they want, while the number of new products is limited and prices are cost-effective,” Zhu said.

“In addition, the Chinese have been buying luxury goods since the 1990s. Due to the strong modernization of these products, there are now enough second-hand stocks on the market. »

The Securities Times report also said that second-hand luxury goods stocks in China have “not been developed.” The current market penetration rate is only 1-2%, compared to 20-30% in developed countries.

“The fact is that the circulation of second-hand luxury goods in the market is just the tip of the iceberg… proving that this market represents a good opportunity,” Zhu said.

In addition to the booming high-end second-hand goods market, daily necessities, especially clothing, are gradually being accepted by more people, forming another important sector.

Lu Yaping, 29, founded Savvy Exchanger in Shanghai three years ago as a second-hand goods exchange platform.

According to Lu, her time in New Zealand taught her about second-hand culture and she often visited second-hand goods markets, which she continued to do after returning to China. About half of its daily consumer goods are second-hand.

“What attracts me the most to the second-hand market is that you can always find unique pieces there. For example, I buy many styles that were popular ten years ago,” Lu said.

She added that Savvy Market, part of Savvy Exchanger, has evolved into a second-hand market that is held once a month.

The market sells clothes, shoes, bags, other accessories, artwork, and daily supplies. Each sale day sees a turnover of 100,000 yuan to 200,000 yuan. Over 15 sales have taken place to date.

“At the beginning, there were only about five sellers in the market, but the number has increased to almost 50, which shows that people are now more accepting of second-hand trading,” Lu said.

She added that most of the market participants are between 19 and 30 years old and some have overseas experience.

“They are ready to accept and experiment with this mode of trading. They don’t care if these clothes have been worn by others,” Lu said.

Pre-owned luxury watches attract potential buyers. GAO ERQIANG/CHINA DAILY

Growing awareness

According to a report released last year by the China Mobile Research Institute, second-hand consumption reflects young people’s awareness of environmental protection and the need to reduce resource waste and mismatch. Such consumption also provides them with a new channel to seek out friends with common interests.

Lu said, “Humans are the creators of everything in life and should be responsible for everything they create.” She added that the Chinese are still relatively new to buying second-hand items and most of the participants in this market were initially foreigners.

“However, in recent years, more and more Chinese people have joined us, accounting for 50 percent of all attendees,” Lu said.

She added that with the concept of “second-hand” attracting more people, some sellers and buyers have introduced their relatives and friends to this market.

Lu plans to expand her online business to allow more people to experience the second-hand market.

Meanwhile, recycling store Deja Vu, which opened in Beijing in 2017 and later opened an outlet in Shanghai, started out selling second-hand books before expanding its clothing and merchandise business. electronics. By the end of last year, the company had sold over 20 million books.

As the store’s slogan says, “A very good thing is worth buying twice.”