Image source @ Visual China
Wen | Hedgehog Commune, author | Fluorescent, edited | Director
Beijing's East Third Ring Road, the most "trench" shopping mall SKP is constantly "digesting" huge amounts of money. Since 2011, it has been the first place in the domestic shopping mall sales list for ten consecutive years. In 2020, SKP surpassed Harrods In London in retail sales to become the world's number one. In 2021, its annual sales reached 24 billion.
At SKP, you can find almost all major luxury brands. Their classic colors flutter on the background panel, pricking the retina and consumer desires: Hermès orange in 1837, Louis Vuitton brown in 1854, Barberry Mi in 1856, Diogin in 1905, Chanel black in 1910, Gucci green in 1921...
Bain's 2021 China Luxury Market Report shows that China's total luxury consumption will reach 471 billion yuan in 2021. In the past decade, the stock of China's luxury goods market has reached 4,000 billion yuan, forming a huge base for the luxury second-hand trading market.
Compared with the luxury first-hand transactions between the glass windows, the luxury second-hand transactions are less "tall" and more secretive. In 2019, the transaction share of the luggage and leather goods category in the second-hand luxury goods market reached 60.2%, accounting for the highest proportion. Where do they come from? By whom? Where are you going? Hedgehog Commune tries to find the story behind this secret deal.
Are used luxury bags and medieval bags a concept?
On the Little Red Book, the notes of "second-hand luxury goods", "medieval" and "vintage" exceeded 90,000, 990,000 and 930,000 respectively. In a way, "medieval" and "vintage" are more widely known synonymous with "second-hand luxury goods". Among them, "Middle Ages" is a harmonic sound of the Japanese word "ちゅうこ", meaning "second-hand". Correspondingly, the English word "vintage" has the same meaning.
In fact, second-hand luxury goods are not equivalent to the Middle Ages. The operator of the offline medieval store told the hedgehog commune that the industry generally believes that the styles sold by the counter in the past 10 years are called "modern models", and the styles with a history of more than 10 years are called "medieval models". These two categories are collectively referred to as "second-hand luxury goods".
Zaza, director of the Zhonggu Caizi store, said that in the Beijing area, there are about a dozen medieval stores that mainly sell medieval models; there are more than 50 second luxury stores that mainly sell modern models. At the end of 2019, Yu Shuxin, Lisa and other celebrities carried goods on their bodies, making the word "medieval" hot, and these stores also mushroomed in the past two years.
The Baidu Index shows the search trend of the term "Middle Ages"
Climbing in the past two years Whether it is a modern or medieval model, the core is a luxury. Naturally, their prices, also known in the industry as "quotes", have become the most concerned topic for consumers. Zaza concluded that the market rules of modern and medieval models are different. The market and market fluctuations of modern models are higher than those of the middle and ancient models. Therefore, the medieval model is relatively more valuable.
Correspondingly, the market and fluctuation range of modern popular models are also higher than those of medieval popular models. "Taking LV as an example, a popular model of LV modern models, such as the messenger bag, because many people are 'planted grass' on social platforms, so its market heat is higher, and the second-hand price can be sold for 13,000 to 14,000 yuan. But LV's medieval popular model is priced at around 5,000 to 7,000 yuan. Obviously, the price advantage of the medieval model is more obvious," Zaza said.
LV bags in Dego's shop
There is no clear and uniform standard for these second-hand luxury goods. Zhang Chen, an expert in luxury appraisal and appraisal, mentioned that brands, styles, newness and oldness are "visible hands", and merchants will formulate a preliminary price accordingly. In addition, the second luxury price is also linked to the "invisible hand" of market liquidity. Therefore, the price law of the secondary market is very different from that of the primary market. In the second-hand market, due to the different market liquidity, the middle bag is more expensive than the large bag, and the classic model is more expensive than the seasonal model and the limited edition.
Offline sales are still the mainstream form of sales
The sales channels of the second luxury can be divided into two forms: online and offline. Online includes traditional e-commerce and live broadcasting, and offline refers to store sales. According to the "2021 China Second-hand Luxury Goods Industry Overview" of the Head Leopard Research Institute, the proportion of consumers spending second-hand luxury goods offline is 75%, and offline stores are still the main sales form of second-hand luxury goods.
For second-hand goods, building trust with consumers is a problem that merchants need to overcome. This sense of trust is easier to build up than pictures and text descriptions of online transactions in offline stores. Details that cannot be fully represented in the picture, such as stains and water stains, leather scratches, hardware wear, etc., can be displayed in more detail offline.
What's more, when the purchase of two luxuries gradually becomes a culture from consumption habits, the starting point for people to buy two luxuries is no longer just to buy a relatively cheap luxury, but to buy a fashion item that highlights personality and aesthetics and suits themselves.
"I have more than 300 bags in my shop, and when a customer asks me to recommend a bag for them, I ask them what they need for the bag, is it a commuter bag or a dating bag?" What is the dressing style? What are the shades of color for everyday clothes? But more often than not, it's the guests who fall in love with the bag at first sight, and after trying it on the upper body, they feel that the bag is destined to belong to themselves," Zaza said. Therefore, the importance of the store image is self-evident. When consumers step through the door, they can establish a figurative perception of the store's style through temperature, smell, furnishings and background music. Some shops bring a sense of home that "casually look, please help yourself", and some shops are full of cool atmosphere, which is "the most beautiful boy on the whole street".
Zaza's shop "Medieval Caizi" Image source @ Dianping
Sign Vintage's manager, Di Ge, is a native of Beijing and especially likes to use the adjective "ge". "To say that a person is 'Kudzu' means to say that he has a variety of temperaments and eccentricities; to say a thing 'Kudzu' is to describe this thing as too rare, too special, too little." Compared with a complete collection of LV PERFECT BOOK from Japan, Digo collected various "Kudzu" bags according to Tu Suoji and showed his results to the Hedgehog Commune, "This set of millennium LV limited edition bags." They look the same as the classics, but are mini in size and still black satin. A full set of 5, I have one on the road, and when I arrive, I will be together. If I want to sell this set of things, I will sell a set, not just sell."
Dego's LV PERFECT BOOK
The creation of physical stores is not only the concern of individual merchants, but also the online trading platform of the second luxury has successively laid out the offline store track. In August 2021, Only Two opened its first offline store in Shanghai. In November 2021, Fat Tiger opened an offline flagship store in Sanlitun, Beijing. The shopping experience users get in offline stores will feed their loyalty to e-commerce brands.
In addition to the layout of offline stores, the second luxury e-commerce platform has also carried out live broadcasts to supplement online sales channels. However, Zhang Chen, an expert in luxury appraisal and appraisal, has said that live broadcasting can only complement the traditional online sales method, especially in combination with the reserve price clearance activities, but it cannot become the mainstream online sales method. As a non-standardized commodity, there is only one piece per style of the second luxury, and live broadcasting is more suitable for standardized products.
If live streaming merchants want to increase revenue, they can either increase the unit price of products or increase the number of sales. The former will squeeze the interests of consumers and put forward higher requirements for the quality of merchants' supply; the latter will require merchants to optimize the supply chain, or prompt anchors to add more standardized goods, such as beauty and clothing, to become integrated anchors in the live broadcast room.
Second luxury bag: cross the ocean to see you
Where do the second luxury sold in live broadcast rooms, e-commerce platforms and offline stores come from?
The second luxury comes from the transformation of the first luxury. According to the data of the "2021 China Second-hand Luxury Industry Overview", the turnover rate of China's second-hand luxury is the lowest, less than 5%, and the scale of the mainland second-hand luxury goods market in 2020 is 17.3 billion yuan. Countries such as Japan and the United States have a secondary luxury turnover rate of more than 20%. China's second-hand luxury goods industry is still in the initial stage of development, and its consumption concept and behavior are not yet universal.
Therefore, in addition to domestic C-end recycling, domestic second luxury packages also come from overseas purchases. Most of the overseas sources come from Japan, a small part from Europe, and Europe's international logistics cycle is longer. At present, the cycle from Japanese ordering to receiving goods is about one and a half months, while European sources may take two and a half months to three months.
Not only the logistics cycle, but also the difference in the style of overseas sources. Digo said that there are relatively more rare styles in the European supply, and the styles of the Japanese source are more practical, and there are not many rare models, but the victory is in the large volume. Japan amassed a large number of luxury goods during the "bubble economy" era from 1986 to 1991. During this period, the rich standard of living led to a large consumption of luxury goods, and the per capita holding of LV bags was as high as 14 at one point. When the bubble burst and the economy went down, people began to sell and replace the luxury goods in their hands for financial "blood return".
In addition to the economic downturn, Japan's strict environmental regulations and the Antiquities Business Law have also contributed to the development of "second-hand" transactions. In Japan, many things are allowed to be sold but not thrown, and the person concerned will face fines if they are found to have thrown away reusable items. As a result, in the 1980s, Japan's second luxury industry developed.
Brick-and-mortar sellers like Zaza and Digo are mostly sourced from Japan. They do not have to go to Japan to buy goods in person, but cooperate with Japanese medieval trading companies to obtain low-cost supplies. Trading companies holding "antiquities licenses" can participate in auctions and make high-volume purchases at low prices.
On the Little Red Book, the video clips at the auction piece together a complete picture of a price game: at the auction site, the second-hand bags of each brand are packed in translucent plastic boxes. Boxes are placed next to each other on two rows of shelves, and the spectacular scene makes people feel that the people who are trading are fruits and vegetables rather than luxuries.
Japan auction scene Image source @ Little Red Book
@Georgina Zhao described it this way: Auctioneers sit in line for seniority, people from large trading companies sit in the front seats, and auctioneers sit in the back. Each person only looks at the bag for ten or twenty seconds, and then hands it to the next person. In the process of quickly passing the package, the auctioneer needs to determine whether the color is in line with his own bid, and if the price increase is not rational enough, he may get the product at an excessively high price.
Online auction websites are also a source for trading companies. In addition to the above mark-up mode, there is another bidding mode in the online auction: the bidder enters the bidding price, the highest bidder wins, and the winning bid is the second highest price + 1 (1 mouth = 1000 yen). This approach avoids significant deviations from market prices, and it is easier for bidders to win bids at low prices. A simple math problem: If you are the highest bidder in the whole market, the bid is 20,000 yen, and the second highest price in the whole market is 5,000 yen. Well, you win the lot and end up paying 5,000 yen + 1,000 yen, which is 6,000 yen.
Whether it is an online or offline auction, the participants can only be B-end trading companies that hold a Japanese "antiquities dealer license". Through the auction, they can purchase large quantities at a lower price, and then centrally identify, sort, and distribute to medieval stores. Because C-end individual buyers cannot participate in the above auctions, they have derived platform auctions, private auctions and other auction agencies. In the auction transaction, C-end buyers need to weigh the cost of the auction fee, RMB/JPY exchange rate, freight and other costs to determine whether the auction is a good choice.
The circular economy has opened up, and the competition between the two luxuries has intensified
In the 1960s, the American scholar Balding proposed the theory of spacecraft economy. He believes that the earth is like a spaceship in the vast space, and the disorderly growth of the population and economy will sooner or later exhaust the limited resources in the ship, and the waste discharged from the production and consumption process will pollute the spacecraft and poison the passengers inside the ship.
In order to avoid a tragic solution, the mode of economic growth must be changed from "consumption- to "ecological" and from "open" to "closed". This is the source of circular economy thinking. At the beginning of the 21st century, the concept of circular economy entered Chinese society, and erzhu is a microcosm of it. The "2021 China Second-hand Luxury Industry Overview" mentions that China's second-hand luxury industry is currently in its infancy. On the one hand, the consumption of one luxury has slowed down, and the second luxury has ushered in a window of volume. On the other hand, the source of secondary luxury goods is still fragmented, the supply chain has not yet taken shape, and the industry standards need to be standardized.
With the increase in the heat of the industry, the price of the middle antique bag and the second luxury package has risen, and the merchants feel that the sea of China's second luxury industry has begun to red. "In the past, LV camera bags 700 yuan a piece, LV travel bags do not need money. I went to Japan to buy 100,000 yuan of goods, and people also sent two LV large travel bags to facilitate my loading. Now in the blink of an eye, these things are selling for four or five thousand dollars," Said Dego.
The market of Japanese goods sources has been speculated by the demand of the Chinese market, seeing the price rise, new sellers have poured in, but if the channels and capabilities are not in place, it is easy to die. "The channel is not good enough, the purchase cost is high, and the merchant has no profit margin." So in the past two months, a lot of sellers I know have started to 'ebb and go' and not do it," Zaza said.
But fashion is a circle, aesthetic is a reincarnation, many brands launched a "replica", that is, to refer to the elements of the medieval bag 20 years ago, slightly change the detailed design, and then make it and sell it. Zaza believes that according to this logic, there is a prospect for doing second luxury, "You see that Japan has experienced thirty or forty years of development and has not eliminated this industry, and I think that China will not eliminate it too much."