Second-hand luxury, a niche in the domestic market
The second-hand luxury market in China has grown rapidly in recent years as more and more retailers join the industry. The growth in yields fueled the momentum of second-hand luxury goods identification agencies.
Young Chinese consumers born in the 1980s and 1990s have become the main demographic for luxury spending in China. The trend was also predominant in the second-hand luxury market. The rapid growth of e-commerce has fueled the development of the sector, according to a report by market research firm iResearch.
Yet, compared to Europe, the United States and Japan, the transaction scale of the Chinese second-hand luxury goods market is still relatively small.
Currently, China’s second-hand luxury market accounts for 5% of the total luxury goods sector, down 20-30% from numbers seen in some developed countries, according to a research report from the University of international trade and economy and Youshe Yipai, a platform for second-hand luxury offers.
China Origin Inspection Co Ltd (COIC), a leading luxury identification agency in China, now provides services to thousands of companies, such as video sharing apps Douyin and Kuaishou, the auction unit of the Alibaba group, and operates the growing number of second-hand products. retailers that have emerged in the country in recent years.
The company receives luxury items for identification, including those from Louis Vuitton, Chanel and Prada.
“Consumer perception has changed a lot compared to the past, and more and more people have started to accept second-hand luxury goods, given their high profitability. The sector has significant growth potential,” he said. said Zhang Lei, director of the company.
“For some iconic styles, some manufacturers are more likely to make counterfeit products to imitate them, and sometimes the products we have inspected are fake. In addition, for light luxury brands, the production costs are lower, and the fraud manufacturing costs are also lower. The products of these brands are more likely to be counterfeit, ”said Zhang.
Globally, luxury brands are showing increasing interest in the pre-owned luxury market. This year, the French luxury group Kering invested in the European thrift store platform Vestiaire Collective and the luxury bag rental startup Cocoon, as their growth prospects are optimistic.
At the same time, more and more luxury brands such as Valentino and Jean Paul Gaultier have launched their own second-hand product trading platforms. Valentino said the second-hand platform could help attract more consumers to buy his products, including some vintage styles.
For luxury brands, one of the main advantages of actively joining the second-hand luxury sector is knowing more about the authenticity of second-hand products circulating in the market, as many counterfeit products remain the second-hand market’s biggest problem, industry experts said.
The second-hand luxury sector in China has also seen a reshuffle over the years. Secoo Holding Ltd, a luxury e-commerce company, became very popular a few years ago and went public in New York in 2017, becoming China’s first publicly traded luxury trading platform.
Yet in November, 160 million yuan ($ 25 million) accumulated from its equity capital was frozen because its services could not function steadily and the company encountered several operational problems.
At present, the appraisal of a luxury good is mainly based on manual identification. CJOC said it would use specialized instruments for detailed observation and compare identifying information with its database. For bags, he mainly inspects parts like logos, metals, textile technology and paint edge.
“We have not been affected by COVID-19. Most of our growth has been fueled by growth in the business of second-hand luxury goods trading platforms,” said Zhang. “There is still a shortage of luxury assessors, and we are training more professional talent. Then the identification process will increasingly need the help of scientific instruments ”.