Shanghai: China’s economy is slowing down because of the coronavirus. This is good news for Zhu Tainiqi, the founder of the second-hand luxury goods marketplace ZZER in Shanghai, who is now looking for shop space to grow the business.
The former venture capitalist is seeing a rise in people who need money and want to sell their Hermes Birkin bags or Rolex watches, as well as a rise in interest from shoppers who are trying to save money.
“More and more people are realising they can make money by selling luxury goods, and more and more buyers are realising they can get a great deal,” said Zhu, who is 33 years old. “They figure, ‘Why not try it?'”
He said that the number of people who put their goods up for sale on ZZER has increased by 40% so far in 2022 compared to the same time last year. There are now 12 million people using the platform, and they expect to sell 5 million luxury items this year.
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The trend shows a big change in China’s $74 billion luxury goods market, where the second-hand luxury sub-segment has been slow to take off compared to markets like Japan and the US, where people like things to be new and don’t want to buy fakes.
It could affect the strategies of the world’s biggest luxury goods companies, which are trying to focus on China even though demand is falling in the key market.
Iris Chan, partner and head of client development at consulting firm Digital Luxury Group, said, “I think China’s interest can really move the needle for some brands to think about how they’re going to handle this (resale) market and what role they’re going to play in the whole process.”
The market for used luxury goods in China is expected to grow from $8 billion in 2020 to $30 billion in 2025, a research firm called iResearch said late last year. This year’s new estimates have not yet been made public.
HANDBAGS, JEWELLERY
Given the economy, office worker Wang Jianing is thinking about buying used luxury items.
“My consumption will definitely go down (this year), but I still like what I like, and I can’t control the urge to buy it,” she told Reuters while standing in front of a wall of Louis Vuitton and Gucci bags in ZZER’s huge downtown Shanghai warehouse.
ZZER is counting on people’s feelings like Wang’s to help it grow. The company started out as an online platform in 2016. Last year, it opened stores in Shanghai and Chengdu and is now looking for more store space in Beijing, Guangzhou, and Shenzhen.
Other top platforms, like Feiyu, Ponhu, and Plum, are based in China. In 2020 and 2021, each of them got tens of millions of dollars from venture capital funds to improve authentication, reach more customers, and, in some cases, switch from online-only to online-and-offline models.
Analysts think that for the time being, local players will continue to control China’s luxury resale market. International companies like Vestiaire Collective and The RealReal (NASDAQ:REAL) have not yet entered the mainland China market, and they told Reuters that they have no immediate plans to do so.
Even though handbags are still the most popular thing to buy on luxury sites like ZZER, Zhu said that sales of watches and jewellery are also growing quickly.
Even though a nylon Prada (OTC: PRDSY) Messenger bag or Fendi Baguette bag sells for 30%–40% less on resale platforms than in luxury boutiques, the price difference has grown for some items as more consigners rush to sell goods online.
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Ou Huimin, a veteran vintage seller who opened her Ding Dang store in Guangzhou ten years ago and also sells all over the country through livestreams, said that speculators in the market have driven up the prices of high-end luxury goods.
Ou said that the prices of Rolex Submariner watches went up by almost 250% between 2020 and 2021, but have gone down by up to 60% this year. “Consumption is now more sensible,” she said.
