SHANGHAI Reuters -- China's 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 looking 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 surge in interest from belt-tightening shoppers.
More and more people are aware that 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 that the number of ZZER's customers, or people who put up their goods for sale, has soared 40% over the last year. The platform has 12 million members and expects to sell 5 million luxury pieces this year.
The trend indicates a change in China's $74 billion luxury goods sector, where the second hand luxury sub-segment has been slow to take off against 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 biggest luxury goods makers, which are struggling with softening demand in the key market.
I think because of China's interest that can really move the needle for some brands, I think they're going to think about how they're going to handle this resale market, and what role they're going to play in the whole process, said Iris Chan, a partner and head of client development at Digital Luxury Group.
The Chinese second-hand luxury market is expected to grow to $30 billion in 2025, from $8 billion in 2020, consultancy iResearch said late last year. There are new estimates for this year that are yet to be released.
Because of the economic climate, Wang Jianing is looking at buying second-hand luxury products.
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. She said that she was standing in front of a wall displaying Louis Vuitton and Gucci bags in ZZER's cavernous Shanghai warehouse.
The company, which started in 2016 as an online platform, started opening offline stores in Shanghai and Chengdu last year and is now looking for more shop space in Beijing, Guangzhou and Shenzhen.
Other top platforms are also known as Plum, Ponhu and Feiyu. In 2020 and 2021, each of them drew tens of millions of dollars in venture capital funds to improve authentication practices, widen customer reach, and in some cases move from online-only to online-offline models.
The luxury resale marketplace in China is expected to remain dominated by local players for now. Zhu said sales of watches and jewellery are also growing fast as handbags are the top selling category on luxury platforms like ZZER.
A nylon Prada messenger or Fendi Baguette bag sells for 30% - 40% less on resale platforms than luxury boutiques, but some products have seen the price gap widen as more consigners rush to sell goods online.
The Ding Dang store opened in Guangzhou a decade ago, and 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 went up almost 250% between 2020 and 2021, but have pulled back as much as 60% this year. She added that consumption has become more rational.