Source: Technode
Consumers in China are increasingly embracing second-hand goods, buying everything from used cars to “lightly used” lipstick. This new habit is reflected in the rising “re-commerce market,” which is predicted to reach RMB 1.25 trillion (around $178 billion) in 2020, rising by 70% from RMB 742 billion in 2018, according to data firm MobData.
The re-commerce market is dominated by two marketplaces associated with Alibaba and Tencent. Alibaba’s Idle Fish (Xianyu), a spin-off from Taobao, is by far the biggest, while Tencent-backed Zhuanzhaun is a clear second place.
Mobdata’s RMB 1.25 trillion would be almost 46% of the RMB 2.7 trillion sharing economy market estimated for 2020 by the Sharing Economy Work Committee of the China Internet Association. The sharing economy market also includes ride sharing (e.g., taxis), co-working spaces, and Airbnb-style apartment rentals.
Re-commerce is poised to gain more traction in 2020, as Chinese consumers increasingly pursue price-effective buying options and concern for sustainability. With the popularity of re-commerce platforms, such as Idle Fish and Zhuanzhuan, consumers have more opportunities and conveniences to buy and resell pre-owned goods.
More sales of used goods may cut into sales of new goods. Consumers are likely to grow more discerning about the relative merits of new and used. When similar products at a discount through re-commerce, they may not want to pay the premium for new.
However, we also see these platforms to provide opportunities for brand-name products—perhaps by encouraging customers to update their wardrobes more frequently while selling old clothes. For instance, luxury brand Stella McCartney offered a $100 store credit to customers who consigned old products from the brand to resale platforms.
Simon Says
This is a significant change in Chinese commerce norms. Ten years ago, second hand products were viewed as inferior and suspect. However growth in second-hand commerce is coming from wealthier, bigger cities and is being driven by environmental awareness and economic tightening. Eco-awareness and value for money should form a part of your China-facing brand story.
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