Underwater is the main body of this “iceberg”.
Editor’s note: This article is from WeChat public account “China-Venture” (ID: China-Venture), author Xue Ying.
The Rising Second-hand Luxury Market
How much do Chinese love to buy luxury goods?
McKinsey data shows that last year, the Chinese bought one-third of the world’s luxury goods. In 2018, the luxury consumption of Chinese people at home and abroad reached 770 billion yuan. This figure is expected to increase to 1.2 trillion yuan in 2025, accounting for 65% of the increase in global luxury consumption.
For Nalan Zhengxiu, these abstract data have a solid, heavy feel.
“A big diamond is in your hand, just like a stone.”
She used to be the head of the Ginza International Jewelry and Fashion Department. Each auction collects goods worth 200 million to 300 million from her, and she selects about 30 million boutiques for auction. . In this rich man’s game, she knew how players weighed the flaws of jadeite, the condition of diamonds, how a string of necklaces cost tens of millions of dollars, and saw the opportunity of this huge incremental market.
“Luxury is a fast-growing large market, and this is beyond doubt. Last year, nearly 800 billion new products were consumed, and in mature markets, it has a circulation rate of nearly 20%, which means 1,000 More than one billion goods will be transferred to the secondary market. China’s penetration rate is growing rapidly. “Nalan Zhengxiu told CIC.
When luxury goods from all over the world come to China, the market for second-hand luxury goods is also rising, and the maturity of this market depends on the further increase of penetration.
“In the second-hand luxury transaction, I think the biggest pain point for users is not that buyers do not buy it, but that the seller’s awareness of selling has not yet awakened, leading to a relatively large gap on the supply side.” Second-hand luxury goods E-commerce “only two” CEO Zhu Tai Niqi said in a previous interview with the media.
Many people who own luxury goods find it unnecessary to sell, unwilling to sell, or dare not sell. And they are slowly changing.
Andy’s “very secure” since he was a child in 1996. He has a credit card that can be swiped almost casually. The favor of his family allows him to easily get what he likes.
Andy is LV’s “loyal fan”. He has seventeen or eighty LVs in his wardrobe, from shoes, shoulders, diagonal crosses, portables, travel bags, wallets … he bought them all. Over and over again. He often grows grass on ins, and wants to get it as soon as he releases a new one. Last year, I bought a box model of LV.Andy did not hesitate to double the price.
Despite Andy’s efforts to “sweet the rain and the dew,” many luxury products are still “grayed out”: “My LV leather shoes did n’t go through very much because they were too hard. Lost it at home. And that backpack, I ca n’t carry it five times a year. ”But Andy has no intention of selling them. The bags can be given away, and can be given away by friends. Sell.
The downward pressure on the economy has also made Andy feel “a big gap.”
“Abandoned nobleman”, Andy teased after spending money has shrunk sharply, and now his mother often says that he shouldn’t spend money arbitrarily and shouldn’t buy unnecessary things. “Buying luxury goods is vanity, and you don’t need to talk about vanity.” Andy said that he is “many stupid and rich,” and lying in bed late at night, Andy occasionally regrets his consumption impulse. Now, he is thinking about his family and bought Uniqlo, Nike and MUJI.
“The day my credit cards are frozen, I will consider selling them,” Andy said. The downward pressure on the economy is closely related to the prosperity of the secondary market. In the economic boom years, Japan ’s luxury goods market has been rising all the way, the latest models of major brands will be sold first in the Japanese market, and then the Japanese economy is down, and a large number of luxury goods are circulated to the second-hand market under excessive consumption. Japanese second-hand luxury company SOU Inc was listed in Tokyo last year, with total revenue of more than 22.7 billion yen and profit of 1.14 billion yen.
Although there are many differences between the Chinese and Japanese markets, many people still believe that China will generally follow the old path of Japanese second-hand luxury prosperity in the 1990s. Chinese luxury consumption will shift from excess impulse consumption to cost-effective Consumption transition. In the future, more Andy will sell their luxury goods, and more people will choose to buy second-hand.
In addition to macro factors, mainstream consumer groups and consumption concepts are migrating. Young people are more concerned about the experience than owning. The psychological threshold for buying and selling second-hand is decreasing. Once the penetration rate of second-hand luxury goods in China gradually increases, the market potential will further explode.
Relay game
The market for second-hand luxury goods is like a relay game.
“People who buy new products care more about their feelings. They care if others have used it. They like things that are completely their own. They basically don’t like buying second-hand things, but they often sell them. “Nalan Zhengxiu said.
The other end of the baton is the buyer. “Value” is the core word of the buyers. Most of them want to buy a good bag, but they do n’t want to spend so much money. “If I buy a Chanel’s Used bag but i logoThe identity is the same as the new product-I am from the Chanel circle, the difference is that I only spend 1/4 of the money. “
The two ends of a domestic baton are basically two people in a circle. This observation is similar to the situation in the US market.
A survey by the Boston Group and second-hand platform Vestaire Collective shows that 70% of those who sell their luxury goods do not buy second-hand luxury themselves, and they tend to buy brand new. And 71% of consumers who buy second-hand luxury goods are unable to afford the cost of new products.
The ends of the baton need to be matched. The rules of grayscale have made the free market for second-hand luxury goods wild, and a new series of counterattacks have been born.
From Xiangbo to Beijing to work, Li Xiang had two options in front of him. One was to work in a shop and the other was to work in a restaurant. Li Xiang chose the former.
He went to a store selling second-hand luxury goods. The boss saw the young man was young and good, and was motivated to take him. He tried hard to learn. In just a few years, he felt the doorway of customers and sources of goods, and he became the boss himself. Now he has opened four stores, and the store with the lowest transaction amount has 5 to 6 million revenues a year. He often wondered what would happen to his fate if he had chosen to wash the dishes.
There are thousands of second-hand luxury middlemen like Li Xiang. In this market, it is normal to sell two or three thousand packages. A person familiar with the matter told CNBC that from the receipt to the sale, the profitability of the inside was very flexible, not less than 30% to 35%, and the first to take the goods was the most.
Nalan Zhengxiu also saw an opportunity. In early 2016, she founded the luxury goods service platform “Master Bao”, which cut in from luxury goods conservation and then extended to second-hand luxury goods and new product transactions. In 2018, the turnover was nearly 150 million yuan, and it is expected to exceed 500 million yuan this year.
In October of this year, “Master Bao” announced that it had received nearly 100 million yuan in A + round financing led by Huaying Capital and Capital Venture Capital. At present, Master Bao has reached a cooperation with Shanghai Waigaoqiao Free Trade Zone to jointly establish a “parallel import trading platform for luxury goods”, and promote the construction of a big data center for China’s luxury import and export transactions and a national statutory luxury goods identification laboratory to expand business. To the B-end and industry chain.
More startup companies have joined the queue, and investment institutions in the winter have also shot.
In November of this year, Erhuang’s luxury goods trading platform, “Tiamoo Circle”, was led by Dexun Capital, and Qianhang Capital followed up with a ten million yuan angel round of financing.. After the seller uploads the goods together and completes the valuation, the seller can consign on the platform. The platform is mainly an individual seller and buyer model. The platform earns profits through trading spreads.
In August this year, the second-hand luxury goods trading platform “Plum” completed a USD 20 million B + round of financing. The leading investors include a well-known USD parent fund and Recruit. Red Bullin cuts through the C2B2C model. The founder Xu Wei once revealed that in terms of the number of users and GMV, it has achieved a five-fold increase in the past six months.
In July this year, the second-hand trading platform “Only Two” completed a USD 10 million Series B financing. The leading investor is Hearst Capital, Yuanzheng Capital, China Venture Capital, and Red Dot Ventures China Fund. . At present, the platform has more than 2 million users, over 200,000 items on sale, and the average unit price is more than 1,000 yuan.
In November last year, Bao Zheng, a light luxury after-sales company, received support from investment institutions such as Zhenge Fund. In January of the same year, the idle luxury trading service platform “Fat Tiger Technology” officially announced the completion of RMB 100 million A In the round of financing, “heart” completed the US $ 50 million Series C financing led by GGV Jiyuan Capital and Yueyue Capital, followed by Northern Light Venture Capital.
Note: Tozhongwang organizes according to public data
Entrepreneurs and investment institutions believe that the luxury market is in the window of the rise of new platforms. Although there are idle trading platforms in the front, idle fish, and then there are Siku, Tmall Luxury Pavilion and JD.com’s Farfetch, but second-hand luxury goods are typical non-standard products. They are from source, authenticity, and judgment. There is a complicated chain for determining valuation, after-sale maintenance, etc., and the transformation of large platforms is still lacking, which gives the startups a chance to grow.
C2B2C is a common entry mode for second-hand luxury goods platforms. Some platforms buy out directly, and some platforms provide buyers and sellers with services such as identification and cleaning, pricing and consignment, and obtain service fees by matching the two ends of the sale. income. But online business seems to be booming, in fact it only accounts for a small head.
The second-hand luxury market is like an iceberg. Liu Tianjie, director of investment at Huaying Capital, analyzes that many people see only 10% of online traffic, and 90% of second-hand luxury transactions are completed offline. Underwater is the main body of this “iceberg”.
Underwater iceberg
In a medieval store in Jing’an District, Shanghai, hundreds of Chanel bags are displayed on a retro red-bottomed wall. From the most classic styles to the popular pearl bags, the eyes of incoming customers are brightened. There is also a black-and-white portrait of Chanel in the middle, implying here: “The trend is perishable, the style is eternal.”
Apart from Chanel, LV, Celine, Gucci, Hermès, Versace, Dior and other big-name bags, rings, earrings, clothes, etc. are displayed in the display cabinet, among them are out of print. More than just buying, this store can also provide consignment, appraisal, and maintenance services. The retro style quickly became a check-in place for petty bourgeois girls.
When there are still people trying to “kill offline with the Internet model”, after doing a complete survey, Liu Tianjie believes that such merchants have the most sources and customers, and offline is the second-hand luxury Main battlefield.
“What a novel way you want to subvert the traditional industry, now it may prove to be less feasible. Because it forms various interest structures, each level already has solid rules. What kind of Intermediaries are easily destroyed? Only the transaction information is provided, and there is no help in fulfilling the contract. Therefore, the intermediate link of the standard is the easiest to get rid of. But in the luxury goods industry, each item is unique. Middlemen are truly creating value. “
For example, offline experience cannot be replaced online.
“Second-hand luxury goods are a business with a temperature.” Liu Tianjie further analyzed, “It is a non-standard thing that requires a lot of lubrication. Sometimes the shop assistants are like sisters, dispelling you. Anxiety, how beautiful is this Amway bag for you. Sometimes people talk to you for two months, and you are really embarrassed to buy a bag, this is not the platform to do? “
Jie Yu valued a Burberry canvas bag. After tangling in e-commerce, purchasing, and offline channels, she chose offline. The kind of carefully selected in the store made her spend more money. At any rate. After chopping her hands, she was spit out by her friends: “How to buy a cloth, your bag is not as high-end as your shopping bag”, but she still thinks the money is worth it. She analyzed: “What about leather? How expensive is leather for so much money? So, it ’s not a bag but a series of experiences that matter when buying luxury goods.”
Offline merchants not only help luxury goods enter the second-hand market, but also bear capital and inventory risks.
Liu Tianjie analyzed: “Luxury goods will be pressed, and merchants will have to advance funds first. If one year and a halfIf you can’t sell it, you will lose money on the single product. These people can make money, we believe, because they provide more value and bear greater risks. “
For offline stores, the core is the ability to operate traffic. “You have so much natural traffic. If you enter a store with 1,000 people a year, how many conversions you can get depends on how hard you work, how well you talk in the private domain, and how flexible the way to guide fission is not flexible enough. .Some people have made 1,000 users into 5,000, and some have only 200. In the final analysis, this is a service-oriented business. “
For online platforms, the low-frequency attributes of luxury products are embarrassing enough.
“You take money directly from the luxury category to smash traffic into it, and this thing is completely unaccountable. For example, for a traffic flow, you bought 1,000 yuan, which may be the last Only made 200 dollars on him. “
In the final analysis, “It is easy to hit low frequencies at high frequencies, but difficult to hit high frequencies at low frequencies,” Liu Tianjie concluded.
“Because for users, the frequency of buying a bag for half a year is already high, but after half a year, he may have forgotten where he bought it, so it is difficult to generate user mind here. Buy luxury It is a low-frequency consumer. The only high-frequency in the entire industry may be the need for conservation. If JD.com says to make luxury goods, I think this makes sense, but now the luxury goods platform says it is difficult to make JD.He Is the difference between high and low frequencies. “
The same problem occurs on the track of used cars.
“Second-hand car melon seeds, no intermediaries make a difference”. In order to implant this ad in the minds of users, Yang Haochong has spent billions of dollars in the past three years. But billions fell, and instead of killing the middleman, the middleman became the user with the highest stickiness and the longest stay on the platform.
This ad has quietly disappeared. In the first half of this year, the second-hand car of Guazi started the “national purchase” business. By opening up the national car source and planning to export the basic capabilities in finance, rear-vehicle, logistics, pricing, and testing to the entire industry, it will empower small and medium-sized car dealers. The middlemen’s argument was completely abandoned. An insider at Guazi told TouZhong.com that Guazi now advocates “embracing car dealers.”
From “No middlemen making a difference” to “embracing car dealers”, Guazi made a big bend and returned to the original point.
The reason is that the problems in the second-hand car market are similar to those in the second-hand luxury industry. At the same time that car dealers take stock and match up transactions, they also undertake