A little over 40 years ago the “four big things” in China – a radio, a wristwatch, a bicycle and a sewing machine – were regarded as the symbols of material success. Things have clearly changed since. China’s transition to affluence has brought the ability to buy an abundance of new consumables that earlier generations would have only dreamed of. Many consumers now buy lots of shiny and new goods, hoping to earn status among their peers.
But a new generation who have grown up with consumption all around them, are consuming quite differently. Their consumption behaviour is more mature, sophisticated and thoughtful. These youth have driven China’s sharing economy and, although bike sharing giants, and more recently fashion rental app YCloset, have fallen, they have left a legacy of consumers who are okay using products that may not be so shiny and new, even products that are second-hand. And that has built the foundation for China’s fledging second-hand market.
Although the Covid lockdowns were short-lived in most of China, consumers continue to spend more time in their apartments than they were pre-pandemic. This has driven behaviours such as decluttering, Marie Kondo-style, which has flooded China’s second-hand industry with supplies.
Demand for second-hand goods has also accelerated due to Covid. Many consumers have reflected more about what is important as a result of the pandemic, with sustainability and individuality among the key benefactors. Sustainability is obviously core to the second-hand market, driving more conscious consumption. Whereas the quest to stand out from the other 1.4 billion Chinese has also seen younger consumers scouring second-hand platforms to find something unique. This has been helped by KOLs and influencers selling their second-hand goods, further driving acceptability. Whereas shiny and new used to help street cred in China, being sustainable and individualistic is a new currency among some demographics and tribes in the market.
The value of merchandise sold on China’s largest second-hand platform, Idle Fish, doubled from 2019 to 2020 to ¥200 billion ($31 billion). It has accelerated even faster this year, on track to hit ¥500 billion ($77 billion). Similarly, sales on preowned luxury watch platform Watcheco rose six-fold in 2020. Other second-hand platforms have seen similar growth.
Interestingly, it isn’t just the sustainability-minded and individualistic youth driving demand on second-hand platforms. China’s elderly, who have been quite traditional in their purchase behaviour, have come online in droves as a result of Covid, and have more time to ferret around looking for deals on everything from smartphones to karaoke machines, providing some interesting material to chat about in their groups.
Brands would be wise to take note of China’s rising second-hand industry and its drivers. Categories such as luxury which have seen a notable increase in demand for preowned goods, should be extending consumer journey strategies to include resale of second-hand/upgrading purchasers. Even brands in categories less touched by second-hand sales should pay attention to the trends driving this behaviour such as sustainability and individuality, the continued importance of KOLs and influencers, and the rise of digitally-savvy elderly. Contact China Skinny to learn how to best incorporate these trends.
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