CBN Friday Special丨How secondhand luxury market catches fancy of Chinese customers

S: Hi. Welcome to CBN Friday Special. I’m Stephanie.

J: Hi, I’m Jenny.

S: Hey Jenny, have you ever bought secondhand items like pre-owned luxury handbags on the internet?

J: Well, I wasn’t a fan of used goods before, but I’ve noticed that China’s secondhand luxury is really catching on these days. I’d actually spend some time browsing Idle Fish every day and look for luxury bargains. And instead of spending at the mall, I also started selling secondhand stuff piling up in my closets and drawers.

Like myself and many of my friends, young and environmentally conscious consumers are now searching for affordable high-end products instead of buying new ones. China’s technology giants targeted the market as well. In 2012, Alibaba launched an online flea market that it rebranded as Idle Fish. JD.com Inc. purchased Paipai.com, an online marketplace, and relaunched it as a direct competitor to Alibaba. In 2017, Tencent invested $200 million in ZhuanZhuan, the used-goods platform of China’s 58.com.

S: The interest in sustainability by way of buying secondhand is kind of a nascent concept among China’s luxury consumers, who are mostly first-time purchasers and would often prefer the latest and greatest products that will enable them to shine in society, but once they become repeat customers, buying something from previous collections will likely be more acceptable.

As one of the important luxury market participants, luxury e-commerce is still in development, casting light on the online second-luxury market’s great potential. According to media estimates, secondhand goods account for only about 5% of China’s overall luxury market, compared to 28% in Japan and 31% in the U.S. It’s likely just a matter of time before Chinese consumers start emptying dressers and desks and catching up.

J: In fact, young Chinese fashion buyers have already become acceptive to secondhand luxury goods, especially in recent years. This makes young people become the main force of second luxury consumption. As is the case in the overall luxury market, younger millennial and Gen Z consumers increasingly occupy a central role in China’s secondhand luxury segment.

According to the China Luxury Consumption Behavior Report 2022 data at the University of International Business and Economics, young millennial account for the highest proportion of consumers in both online and offline consumption and are the mainstay of current luxury consumption. Younger Gen-Z accounted for 24.7% of online consumers. Data from the second-hand luxury resale platform Plum showed that more than 70 percent of its users were born after 1990.

Younger Gen-Z have a strong willingness to buy luxury goods, but also have enough consumption power, with the potential to surpass millennials in online consumption. Gen-Z cares more about "unique products" than "new products." For them, buying second-hand luxury goods is a way to show their personality.

Globally, Gen Z’s rising environmental consciousness leads it to ask more of brands than older consumers have. According to a December 2019 survey by First Insight, the majority of Gen Z consumers prefer to buy sustainable brands, and are willing to spend 10%more on sustainable products.

S: The secondhand market in China is heavily geared towards younger buyers for two main reasons. The primary factor is price: as young consumers in China are on the whole less affluent than older generations, their secondhand purchases are as much about economics as they are about lifestyle.

Second, younger consumers are less likely to view used items with a sense of stigma that is more prevalent among their elders. The enthusiasm for secondhand luxury in Japan and South Korea — two major fashion markets whose trends are closely followed by young Chinese consumers — has played a role in its acceptance in China. In place of the blanket term “secondhand”, more retailers have adopted the phrase of “pre-owned” or “vintage” to shake off the sigma of being shabby or low-end.

In addition to being less resistant to the idea of purchasing used luxury goods, young consumers in China have shown themselves highly impatient, preferring to “jump the line” and get the luxury items they want now – even if they’re secondhand – rather than getting on a brand waitlist or, in the case of brands like Hermès, have a chance of purchasing a brand’s top handbags in a boutique at all.

Chinese consumers have hoarded a huge amount of luxury goods in recent years, a large number of which are gifts, which means the products are brand new and not inferior to those purchased in stores. Consumers used to require luck, long lists of previous purchases, or long waits in queues to purchase limited-edition or “it” items, but they now face fewer restrictions when purchasing secondhand items.

J: In 2021, Chinese consumers spent an estimated $73.6 billion on luxury goods domestically, a massive increase over the $53.6 billion spent at domestic stores in 2020 and nearly double the $36.9 billion spent in the pre-pandemic year of 2019.

The huge secondhand luxury inventory has laid a material foundation for the niche industry. According to consultancy firm iResearch, China's luxury market stock has reached 4 trillion yuan in the past 10 years. China's high-end used goods retail market expanded from 16.24 billion yuan in 2016 to 51 billion yuan in 2020, benefited from live streaming e-commerce. It’s on track to hit 208 billion yuan by 2025.

Recent price hikes by brands like Louis Vuitton, Celine, and Chanel and a still-yawning price gap between mainland China and other key luxury markets could also dissuade some otherwise keen consumers to reconsider their intended purchases. For example, LV saw its sixth price rise by about 10% this February. The reason for the price hike of luxury brands lies in the establishment the scarcity of brands.

Compared with the frequent price increases and limits of number in firsthand luxury goods, buying second-hand luxury goods seems more cost-effective. On Plum's platform, a LV Speedy 25 Monogram rated at 85% new was offering at $676, compared with $1,560 on the brand's homepage. According to a report on the development of idle luxury goods in the first half of 2022 released by domestic luxury service platform Youshe Yi Pai, the trading volume of idle luxury goods rose 14.3% in the first half of the year compared with the same period last year.

S: China's secondhand luxury market has been growing rapidly in recent years with more and more retailers jumping on the wagon, but with the retail market recently impacted by COVID-19 lockdowns after nearly two years of relative normalcy, the outlook for luxury brands for the remainder of 2022 is murky to say the least.

Although we indeed see increase in the number of young Chinese consumers turning to secondhand luxury platforms in 2022 and hoping to score a deal or sidestep brand price increases, there remains several market challenges. For one thing, the market lacks a clear leader, even as tech giants invest more in in-house platforms such as Alibaba’s Idle Fish, meaning a Wild West atmosphere still pervades, and the problem with authentication and credentials needs a better solution than blind trust.

J: Yes, and for another thing, unlike global platforms which are able to procure luxury goods from sellers around the world, Chinese platforms operating under a model generally source from sellers based in the country, while those using a “vintage store” model purchase the items for storage in their own warehouse facilities.

The recent debacle of Secoo shows the challenges faced by secondhand luxury e-commerce in China. Secoo Holding Ltd, a luxury e-commerce company, became the first New York-listed Chinese luxury e-commerce platform in 2017. However, the brand has hit a rock bottom recently with several shops in Beijing and Shanghai forced to close doors, as its struggles with loss of customers, consumer complaints, and failure in paying its suppliers and employees.

S: While price, trustworthy authentication, and inventory are of course key for secondhand luxury platforms, the deciding factor for consumers this year could be who provides the best service. Deep down, luxury consumers pay more attention to experience and service, and spiritual enjoyment over material desires, which makes luxury consumption naturally rely on the offline experience. But this desire is difficult to satisfy via e-commerce.

J: But things are looking up. Check out the China Luxury Exhibition Center which just opened in Shanghai on August 11 at the Double-Five Shopping Festival in Baoshan District. The luxury exhibition centre covers an area of more than 3000 square meters and can accommodate 85 secondhand luxury enterprises. As a merchant selection and trading centre, talent incubation centre, and two-luxury pricing centre, the luxury exhibition centre will digitally evaluate the goods using big data, cloud computing, and other methods, giving merchants a reference for pricing. At the scene, official accrediting agencies will inspect the goods and solve counterfeit problems.

S: That’s great news! In the midst of economic uncertainty, that’s a bargain worthy of a flea market. That’s it for today, and I’m off to check out the vintage handbags and accessories on Idle Fish that I’ve been eyeing for a while. See you next time!

中国二手奢侈品市场，一块刚切开的“大蛋糕”。

8月11日，上海首个二手奢侈品展览中心——中奢博奢展中心在宝山区“五五购物节” 宣布盛大开业。奢展中心占地3000多平方米，可以容纳85家闲置奢侈品企业入驻。作为商家选货交易中心、达人孵化中心和二奢定价中心，奢展中心会通过大数据、云计算等方式对货品进行数字化的评估，给予商家定价的参考，希望推动这个行业供应链的良性发展。现场还引进了中检中溯等官方机构来对货品进行检验，解决货品真假问题。

在国内二奢行业的起步阶段，奢牌电商方兴未艾，线上二奢市场有着巨大的发展潜能。自从2020年直播带货火起来以后，二手奢侈品平台等大大小小的奢侈品商家、网红和带货达人，纷纷涌向直播间。短视频巨头抖音就加大了对二手奢侈品的扶持力度，平台的扶持在很大程度上也助推了二手奢侈品的普及。再加上各大网红在社交和短视频平台上不停地种草，都在潜移默化地影响着消费者。

但“奢品电商第一股”寺库的暴雷，也昭示着奢牌电商面临的一些现实挑战。近几年，寺库线下门店人去楼空，频繁陷入裁员、用户投诉、拖欠工资、拖欠供应商货款等纠纷。业内人士分析称，对于奢侈品电商来说，首先要在保证产品品质上多下功夫；其次，奢侈品是相对小众的领域，平台如果不能获得高额利润，也就无法做引流工作，之后的路会越走越窄。

不过，近年来国内二奢兴起之势仍不容小觑，特别是随着年轻人对二手奢侈品的态度从过去的保守逐渐转到接受，二手奢侈品逐渐被越来越多的中国消费者，特别是年轻时尚的消费者所接受，年轻人成为了二奢消费主力。

据对外经济贸易大学中国奢侈品消费行为报告2022数据，无论是在线上还是线下消费中，千禧一代在消费者中占比最高，是当前奢侈品消费的中流砥柱。而更年轻的Z世代在线上消费者中占比达到了24.7%，他们对奢侈品不仅有较强的购买意愿，也有足够的消费能力，在线上消费中具有反超千禧一代的潜力。比起“新品”，Z世代更在意能体现出个人风格的“孤品”，对他们来说，购买二手奢侈品是一种展示自我“个性化”的方式。

二是自疫情暴发以来，奢牌多次涨价也在带动二级市场。以LOUIS VITTON为例，今年2月16日，LOUIS VITTON迎来2020年以来第六次涨价，涨价幅度在10%左右。相关人士表示，奢牌涨价的根本原因，还是在树立品牌的稀缺性。相比一手奢侈品的频频涨价和限量，二手奢侈品的高性价比优势也被进一步放大。国内奢侈品服务平台优奢易拍日前发布的2022年上半年闲置奢侈品发展报告显示，上半年闲置奢侈品交易量同比上涨14.3%，鉴定单量同比上涨21.67%。奢牌多轮涨价，促使消费者把更多目光转向二手奢侈品交易。

在奢侈品市场的带动和消费者转变观念之外，中国庞大的闲置奢侈品存量也为国内二奢市场打下了物质基础。由于二手商品属于存量市场的交易，其电商平台的货源就主要来自于广泛的消费端用户和商户。艾瑞咨询数据显示，2016年，中国闲置高端消费品零售行业市场规模为162.4亿元，2020年中国闲置高端消费品零售行业受益于直播电商形式加持，市场规模达到510.1亿元。中国近10年的奢侈品市场存量已达4万亿元，这就构成了二奢交易市场的庞大基底。艾瑞预计，到2025年，由于过往存量高端消费品的深度流通和每年日益增长的高端消费品境内消费所带来的增量，中国闲置高端消费品零售行业市场规模将达到2080亿元。

中国二手奢侈品行业的发展历程与奢侈品市场表现、消费理念密不可分，目前中国二手奢侈品行业处于起步阶段，随着消费者消费理念转变、一手奢侈品消费增长趋于稳定，预计未来3-5年或将迎来高峰期，二手奢侈品市场正面临良好的发展机遇。

Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI, ZENG Libin

Sound Editor: ZENG Libin

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

Produced by 21st Century Business Herald Dept. of Overseas News.

Presented by SFC

编委: 于晓娜

策划、编辑：李艳霞

播音：李莹亮

撰稿：李莹亮、曾丽镔

音频制作：曾丽镔

设计：郑文静、廖苑妮

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