Chinese snap up used Rolexes, Birkins to satisfy luxury cravings amid slowdown

Realreal

28/09/2022 02:00

By Casey Hall
       SHANGHAI, Sept 28 (Reuters) - China's coronavirus-driven
economic slowdown is proving to be a  boon for Zhu Tainiqi, the
Shanghai-based founder of second-hand luxury goods marketplace
ZZER, who is now scouting for shop space to expand the business.
    The former venture capitalist is seeing a surge in people 
looking to sell their Hermes Birkin bags or Rolex watches to
raise cash, as well as a jump in interest from belt-tightening
shoppers.
    "More and more people are now aware they can sell luxury
goods for some money and the buyer side is noticing that they
can get a great deal," said Zhu, 33. "They think, 'Why not give
it a shot?'"
    He said the number of ZZER's consigners, or people putting
up their goods for sale, has soared 40% so far in 2022 over the
same period of last year. The platform now has 12 million
members and expects to sell 5 million luxury pieces this year. 
    The trend indicates a significant change in China's $74
billion luxury goods sector, where the second-hand luxury
sub-segment has been slow to take off versus other markets such
as Japan and the United States due to a preference for newness
and fears of unsuspectingly buying a fake.
    It could have ramifications for the China-focused strategies
of the world's big luxury goods makers, who are grappling with
softening demand in the key market.
    "I think because of China's interest ... that can really
move the needle for some brands to think about how they're going
to handle this (resale) market, and what role they are going to
play in the whole process," said Iris Chan, a partner and head
of client development at consultancy Digital Luxury Group.
    China's second-hand luxury market is tipped to grow to $30
billion in 2025 from $8 billion in 2020, consultancy iResearch
said late last year. New estimates from this year are yet to be
released.
    HANDBAGS, JEWELLERY
    Office worker Wang Jianing is exploring buying second-hand
luxury products, given the economic climate.
    "My consumption will definitely be downgraded (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 sentiments 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 looking for more shop space in Beijing, Guangzhou and
Shenzhen.
    Besides ZZER, other top platforms are local names, such as
Feiyu, Ponhu and Plum. Each of them drew tens of millions of
dollars in venture capital funds in 2020 and 2021 with an eye to
improving authentication practices, widening customer reach and,
in some cases, moving from online-only to online-offline models.
    China's luxury resale marketplace is expected by analysts to
remain dominated by local players for now. International
companies such as Vestiaire Collective and The RealReal are yet
to enter the mainland China market and confirmed to Reuters they
have no immediate plans to do so.
    Though handbags remain the top-selling category on luxury
platforms like ZZER, Zhu said sales of watches and jewellery are
also growing fast.
    While a nylon Prada Messenger or Fendi Baguette bag sells
for 30%-40% less on resale platforms than in luxury boutiques,
some products have seen the price gap widen further as more
consigners rush to sell goods online.
    Veteran vintage seller, Ou Huimin, who opened her Ding Dang
store in Guangzhou a decade ago and also sells country-wide via
livestreams, said speculators in the market have sent prices for
top-tier luxury goods soaring. 
    Ou said Rolex Submariner watch prices rose almost 250%
between 2020 and 2021, but have pulled back as much as 60% this
year. "Now consumption has become more rational," she added.
 (Reporting by Casey Hall and Xihao Jiang; Editing by Brenda Goh
and Muralikumar Anantharaman)
 ((Casey.Hall@thomsonreuters.com;))