The economic downturn caused by the coronavirus in China is proving to be a boon for Zhu Tainiqi, the Shanghai-based founder of second-hand luxury goods marketplace ZZER, who is now looking for store space to expand his business.
The former venture capitalist is seeing an increase in people looking to sell their Hermès Birkin bags or Rolex watches to raise cash, as well as renewed interest from belt-tightening buyers.
“More and more people are now aware that they can sell luxury goods for money, and buyers are noticing that they can get a good deal,” said Zhu, 33. “They think, ‘Why not give it a shot? “”
He said the number of ZZER shippers, or people putting their wares up for sale, is up 40% so far in 2022 compared to the same period last year. The platform now has 12 million members and expects to sell 5 million luxury pieces this year.
The trend indicates a significant shift in the $74 billion luxury goods sector in China, where the second-hand luxury sub-segment has been slow to take off compared to other markets such as Japan and the United States. United States due to a preference for novelty and fears of buying unsuspectingly. a fake.
This could have ramifications for the China-focused strategies of major global luxury goods makers, which are grappling with slowing demand in the key market.
“I think because of the interest from China…it can really get some brands thinking about how they’re going to handle this (resale) market and what role they’re going to play in the whole market. process,” said Iris Chan. , partner and head of client development at the consulting firm Digital Luxury Group.
China’s second-hand luxury market is expected to reach $30 billion in 2025 from $8 billion in 2020, consultancy iResearch said late last year. New estimates for this year have yet to be released.
Office worker Wang Jianing plans to buy second-hand luxury goods, given the economic climate.
“My consumption will definitely go down (this year), but I still like what I like, and I can’t control the desire to buy it,” she told Reuters, standing in front of a wall displaying Louis Vuitton and Gucci bags in ZZER’s cavernous downtown Shanghai warehouse.
ZZER is banking on feelings like Wang’s for growth. The company, which started as an online platform in 2016, began opening offline stores in Shanghai and Chengdu last year and is now seeking more store space in Beijing, Guangzhou and Shenzhen.
Besides ZZER, other top platforms are local names, such as Feiyu, Ponhu, and Plum. Each of them has attracted tens of millions of dollars in venture capital funding in 2020 and 2021 with the goal of improving authentication practices, expanding customer reach and, in some cases, moving from online models only to offline online models.
According to analysts, the Chinese luxury resale market is likely to remain dominated by local players for the time being. International companies such as Vestiaire Collective and The RealReal have yet to enter the mainland Chinese market and confirmed to Reuters that they have no immediate plans to do so.
Although handbags remain the top-selling category on luxury platforms like ZZER, Zhu said sales of watches and jewelry are also growing rapidly.
While a Prada Messenger or Fendi Baguette nylon bag sells for 30% to 40% less on resale platforms than in luxury boutiques, some products have seen the price gap widen further as more and more more shippers are rushing to sell goods online.
Veteran vintage saleswoman Ou Huimin, who opened her Ding Dang store in Guangzhou a decade ago and also sells nationwide via live streams, said market speculators had caused prices to skyrocket. leading luxury goods.
Ou said prices for Rolex Submariner watches rose nearly 250% between 2020 and 2021, but fell as much as 60% this year. “Now consumption has become more rational,” she added.