Image source @ Visual China
Wen | Wu Qi, the author | Michelke, the supervising producer | Wu Qi
After the outbreak of the epidemic, in the context of the decline in sales in the global luxury market, the Chinese market is still in reverse booming.
Bain & Company expects the country to become the world's largest luxury market by 2025, heralding an unprecedented boom in the second-hand luxury market.
At present, the growth trend of the luxury primary market has slowed down slightly, while the secondary market is growing by leaps and bounds. Between 2017 and 2021, the growth of second-hand luxury products was as high as 65%, while the growth rate of the primary market was only 12%. In 2021 alone, the transaction volume of the secondary market exceeded 1.2 trillion yuan.
The heat of the market has attracted players to compete. From second-hand platform traders to luxury brands themselves, there are also individual shops throughout the streets and alleys of first- and second-tier cities.
This is the case when an industry is in the early stages of an outbreak, where low concentration and lack of standardization give players the opportunity to stir up muddy waters.
China's second-hand luxury trading platform, which started from e-commerce, is favored by capital. Between 2018 and 2021, 7 platforms completed more than 10 rounds of funding, some progressing to Series C and some already ringing bells at Nasdax.
Judging from the attitude of luxury goods to accelerate the matching of supply and demand in the primary and secondary markets, the entire luxury market will show a fuller and more three-dimensional growth after that, and in the process of trees being forested, some hidden underwater problems should not be avoided.
A cake for everyone
A positive conclusion is that the current Chinese second-hand luxury goods market is huge and the increase is obvious.
According to public data, China's luxury goods stock in the past decade is about 4 trillion yuan, and the market stock is huge. Bain Consulting statistics found that the penetration rate of second-hand luxury products in 2020 is only 7%, and there is still a gap with the penetration rate of 20%-30% in mature markets such as Europe, the United States and Japan.
The size of market transactions in this area has climbed rapidly after 2020. With the full promotion of millennials and Z generation young groups, the global secondary market volume of luxury goods will reach 1.2 trillion yuan in 2021, and forward-looking data also shows that the size of The second-hand luxury goods market in China has rushed to 17.3 billion yuan in 2020.
Against the backdrop of multiple reports that have illustrated That China will become the world's largest consumer market for luxury goods, no one will miss the possibility of sharing the cake. Players in the local market and mature opponents overseas are ready to go.
Early China's second-hand luxury trading platform originated between 2009 and 2010, and Secoo was its representative, but at that time, consumers in the market were not mature before they turned to increasing the proportion of new product sales to do luxury e-commerce. Most of the players in the later period are second-hand luxury e-commerce, which appeared in the period from 2015 to 2016, and the affirmation of capital can be seen from the multiple rounds of betting in these years.
Image source @ Wu YiYi Studio
Foreign players with relatively mature development and relatively standardized models have already entered China to expand their layout, intending to share a piece of the second-hand luxury market.
In March 2021, Japanese second-hand e-commerce Mercari entered the Chinese market through Taobao and Idle Fish; three months later, Brand OFF, a nearly 30-year-old medieval store in Japan, and Branddear, a Japanese online second-hand luxury store, began to settle in Tmall International; followed by Japan's large-scale medieval store Big Black House and second-hand luxury trading platform RECLO also began to enter Koala Haishou.
If the battle situation is not fierce enough, then as the most upstream player in the industrial chain, the luxury brand side, personally went down, which added fire to the second-hand luxury track.
In 2021, French luxury group Kering and Tiger Global Fund of the United States jointly invested 178 million euros in Vestieraire Collective, Europe's largest second-hand luxury goods platform. Vestieraire Collective, headquartered in Paris, France, and Kering have a natural proximity in physical space, and the two sides can complement each other's strengths.
In addition, Gucci, a luxury brand owned by Kering Group, has also partnered with The RealReal, the world's largest second-hand luxury e-commerce platform, for several months.
At the end of 2021, Lorenzo Bertelli, the quasi-successor of prada, a luxury brand that intends to take over the family business, also admitted in an interview with the media that Prada sees a huge opportunity in the field of second-hand luxury products, and may develop related businesses through internal development or external cooperation in the future.
Frankly speaking, luxury brands that firmly control the supply of goods have the highest right to speak. Their entry may have a dimensionality-reducing blow to other players in the industry, but this positive entry gesture at least sends a stark signal: resale and second-hand retail markets are an effective means of obtaining increments for luxury goods.
Whether in the primary or secondary market, supply is almost the lifeblood of luxury goods. Especially in the second-hand luxury track, the conversion rate of first-hand luxury goods to second-hand luxury goods is extremely low: personalization is widespread. The status quo of decentralization, of which the post-90s and post-00s individual sellers can provide sources of goods account for more than half.
Even for B-end sellers, their supply needs to be recovered from individual sellers. Offline sellers who visit Shanghai, Beijing, Nanjing and other cities, most of them are individual medieval stores, clothing bag maintenance stores and pawn shops. Together, these stores constitute the B-end suppliers of the industry and receive goods from individual sellers in Beijing, Shanghai, Guangdong, Zhejiang, Jiangsu and abroad.
It is also based on this that about 60% of the market circulation transactions are almost completed by individual stores distributed in the corners of the city, although their turnover rate is not high, but the transaction scenarios based on acquaintances and private domains often build the cornerstone of trust, and the repurchase rate also rises.
The middle reaches of the industrial chain are difficult to understand
In the previous discussion on second-hand luxury products, whether it is divided into online and offline according to the transaction scene, or divided into recycling and consignment according to the purpose of the transaction, an unavoidable problem is authenticity certification, which is the core link in the second-hand luxury goods transaction, and it is also the focus area for complaints and contradictions.
When a consumer chooses to buy a second-hand item, he may face a market of counterfeit goods of up to $450 billion. The data of the "Research Report on the Development of China's Second-hand Luxury Goods Market" reveals a cruel truth: the comprehensive genuine rate of second-hand luxury goods is declining year by year, only 33.6% in 2019. Among them, bags, shoes and cosmetics are the hardest hit areas for fake goods – which makes the trust problem between the two sides always worry.
Although many second-hand luxury platforms and offline medieval stores claim genuine fidelity, this does not guarantee that it is 100% error-free.
Previously, The RealReal, the world's largest second-hand luxury e-commerce platform, was exposed to the major hidden dangers in the identification process. Foreign media reports pointed out that some of The RealReal's bag identification work was not handed over to professional appraisers as they claimed, but to some junior employees who had not undergone relevant training.
After the scandal broke out, the company's stock price hovered at the low line for a long time. If you count the domestic second-hand luxury trading platforms, you will find that some of the complaints are focused on the disputes over "fake goods" and "flaws", so the number of appraisal orders every year continues to rise.
Compared with the relatively complete appraiser training mechanism in the mature second luxury market such as Japan, China's talent reserves in the team of appraisers are obviously insufficient, and there are currently no more than 100 professional appraisers. Many of the "professional appraisers" that have emerged on short video platforms are not really from the class.
Take Hiroharu Numayama, a luxury appraiser who has worked for 24 years in Japan's Big Black House, for example, before officially becoming an appraiser, he worked as a sales consultant in a local offline store for more than a year, and also received strict training on brand, product and other knowledge. After that, he is qualified to become a trainee appraiser, and he also needs to maintain a record of no fake acquisition for more than three years before he can finally become the official appraiser of the Big Black House.
Excellent appraisers in the face of difficult tasks, sometimes beyond the "machine to identify the authenticity" ability, the chairman of the chairman of the big black house Holdings Co., Ltd. Ogawa Hirohira once mentioned that they have an appraiser can judge the authenticity by the feel, smell, long-term experience accumulation makes it possible to identify the authenticity of 5,000 different commodity categories, which is difficult for machines to achieve.
However, even if the problem of the authenticity of the supply is solved, the pricing and sales in the process of commodity circulation are still difficult.
Walking through the large and small medieval stores in Shanghai, you will find that the manual quotation methods such as store owner pricing and buyer quotation are basically adopted, and there is a large bargaining space between individuals based on the brand awareness, new and old color, scarcity or popularity of the product.
According to the data of the second-hand luxury platform Rebag, Hermès handbags have the highest retention rate in the second-hand market, the average price remains 80%, even compared with Chanel and LV, it is also in an absolutely advantageous position, the average retention rate of the latter is around 63%, of course, do not rule out some shows or out-of-print, the price in the secondary market is higher than the original price.
An ancient shopkeeper introduced, "For example, five years ago you bought LV Neverfull spent 8,000 yuan, and now the price I recycle is also about 5,000 yuan, because now the official selling price of Neverfull has reached about 12,000, you will not feel the loss, five years to fold 3,000 pieces, but the same you take a piece of Celine that costs about 20,000 yuan, maybe I sold it for 6,000 pieces, the price recovered must be lower, you feel more fierce than the half cut." And I don't feel well in my heart."
Consumers tend to hesitate on price due to lack of understanding of the market when consigning/selling, in fact, this is an important source of profit for offline individual medieval stores, and poor information can make money.
But on the flip side, even if there are platforms that offer algorithm-based anchored prices, sellers are not necessarily willing to accept it. A longtime red Bollinger tells me that he always feels that the platform's algorithm's suggested pricing is low, but sometimes it is more difficult to ask a familiar shopkeeper.
This is almost the current portrayal of the industry, second-hand luxury products as "non-standard products in the standard", who has the pricing power? After the price is set, is the next person who takes over willing to pay the bill?
Who pays for second-hand luxuries
In terms of the most attractive buying factors of luxury goods, consumer experience, scarcity and cost performance are indispensable. A big reason for the influx of young people into second-hand luxury products is because of the cost performance, but in today's second-hand luxury market, a new consumer landscape is rising.
When young people buy bags, they pay more attention to whether they are shows or orphans, or whether they match their personal temperament, which is more like the cultural expression of Generation Z and millennials.
Studying graphic design in Kyoto, Kona, who loves materials such as cotton and linen, especially chooses bags with straw and cowhide elements, and she shows me an orange-brown straw Fendi, "I feel like I'm on vacation in Okinawa on my back."
And when you walk into an antique shop, even if it has almost all the colors and sizes of saddle bags on the market, today's young consumers may not be satisfied. "For the same saddle bag, you have to have an embroidered fringe, canvas or silk fabric to speak out."
The offline second-hand luxury stores that shuttle through the streets and alleys of the city are more like entering an exhibition with "strong ornamentality and no admission", and the decoration design of the store, the warm smiles of the owner and the clerks, and the detailed and thorough popularization of luxury knowledge are the keys to a Vintage store becoming an Internet celebrity.
Therefore, the business of offline medieval stores is not good, "the proportion of people who come to buy bags and people who are willing to sell bags sometimes overlaps quite a lot, so we sometimes need to use this service method to maintain the customer base," explains An An, a Vintage shop owner.
In the sales link of solving inventory and increasing sales, more industry middlemen have chosen live broadcasting.
According to the data previously disclosed by Red Brin, the unit price of customers in live broadcasts is often 3 times the unit price of regular customers. This seems to be an immediate solution, in the live broadcast as the main position of the platform Feiyu, the founder also mentioned in the interview "single month sales of more than 100 million yuan", this figure, equivalent to selling 10,000 LV bags with a unit price of about 10,000 yuan.
The "2021 China Second-hand Luxury E-commerce Platform Consumption Insight Report" also shows that from 2019 to 2020, the length of time spent watching live broadcasts by second-hand luxury users showed a clear upward trend, with post-90s becoming the main consumer force and post-00s consumption rising significantly.
The key reason for the popularity of live broadcasting may lie in the reappearance of "consumer experience scenarios". When the anchor introduces the hidden buttons and rare leather of a bag in front of the camera, the consumer in front of the screen may be eager to move. But the live broadcast has cast another layer of dust on the long-criticized question of authenticity.
A large number of consumers who place orders for second-hand luxury bags in the live broadcast room on the Internet pointed out that they felt that they were "not in the right version" after receiving the goods, suspected of encountering a replacement, and the after-sales refund process of the platform was extremely cumbersome and it was relatively difficult to produce evidence, so they often had to admit it in the end. "When returning goods, it is difficult for the platform to rest assured, in case the consumer receives the genuine product and exchanges the goods, the position of both sides is the same."
In the future, the industry may have a way to solve this problem. Deloitte's latest report on luxury goods points out that NFTs can be used to track the origin of items, and this feature may become a powerful tool against second-hand counterfeit products. At present, the better practice known is the traceability code and anti-counterfeiting buckle used in Japan.
Perhaps there is another way of looking at the problem. The offline, decentralized, and individualized medieval stores have become the best contact points for cultivating the consumption habits of the younger generation of second-hand luxury products, although they have transferred their purchasing behavior to online platforms and live broadcast rooms, it is undeniable that they have become an important driver of accelerating the market.
About Vintage culture, about fashion heritage, about luxury care, everything is frozen in the interaction between people and things, in a certain moment.