Reimagining the resale market

Associated with a myriad of terms — “second-hand”, “pre-owned”, “pre-loved”, “thrifting”, “reverse marketplace” and most recently, “recommerce” — the resale industry is steadily gaining acceptance and popularity in Asia for various reasons favoured by today’s shoppers. Muneerah Bee finds out why recommerce has a strong potential to be more than a buzz word in retail and why it is thriving in the online sphere.

Across the globe, there has been an increasing number of shoppers who do not mind buying second-hand goods and this has boosted recommerce. Some do it as a way to preserve the environment and reduce waste in the world while others use it as a way to stay within their budgets.

Marcus Tan, Carousell’s co-founder and president, shares: “Turning to the second-hand market to inject new life into preloved goods is one of the environmentally-friendly practices that people enjoy doing. Supporting sustainability by buying unused or underused products that are still in good condition is a big draw, especially when these items are priced much lower and can be unique treasures that are not available in stores.”

As a mobile-first classifieds marketplace, Carousell is focused on helping individuals declutter and sell their pre-loved items. He added: “It’s our mission to inspire everyone in the world to start selling. Today, we have one of the largest and most engaged online communities, with one in four people in Singapore using Carousell monthly. This is a testament to the fact that Carousell thrives in communities where sustainability is a priority for consumers.”

Last year, the e-commerce platform polled 1,000 citizens and Permanent Residents in Singapore to find out more about the motivation behind buying and selling second-hand. Results showed that most cited the ability to make extra cash and the need to declutter as the main motivators, and according to Carousell’s internal data (which includes high-value items, such as cars), users earned an average of S$4,000 (US$3,033) to date.

The Heroes Don’t Wear Capes survey shows that electronics and mobile devices emerged as the most popular underused items (78%) that Singaporeans are looking to revive in the second-hand market, followed by women’s fashion (40.2%) and textbooks (38.6%).

Shopping on seconds
This practical approach is also seen within the luxury segment. Daniel Lim, co-founder of Reebonz, an online platform for buying and selling luxury products, says shoppers are getting more pragmatic or value-conscious especially in their luxury expenditures. They are willing to buy pre-owned or even rent from a variety of luxury brands to create styles that define their lifestyle choices.

Reebonz’s 2017 Asia Luxury Index, a benchmarking report of the online luxury ecosystem, shows that last year saw new category sectors, apart from bags, making a strong point for growth. Although bags continued to dominate with an average of 77% of total transactions in 2016 and 2017, there were also steep sales growth in shoes and apparels.

Ultimately, the changing perceptions towards pre-owned luxury have altered the state of resale and how consumers shop today, contributing to a 40% sales growth in the pre-owned category at Reebonz, based on total sales value for pre-owned items in 2016 and 2017. In fact, the average order value of a pre-owned timepiece is five times more than a brand new one.

“There is also a growing number of millennials who are responsible for this shift towards pre-owned luxury. Having less purchasing power than their older counterparts, hunting through reseller markets for the best quality luxury goods at the most affordable prices has driven the growth of sales in the pre-owned market. There is also the idea of owning luxury pieces that are no longer available in stores, driven by a sense of nostalgia,” Lim explains, adding that many millennials consider digging through resellers to find the perfect vintage, well-made, unique or sought-after pre-owned label a thrilling activity in itself.

Reebonz’s quantitative survey conducted on millennials aged between 18 and 34 years old within Asia-Pacific revealed key factors that this new breed of resale shoppers consider before making a pre-owned luxury purchase. Resale value of the item still takes priority in their purchase decisions for most of them. Other factors include quality of material and colour. Additionally, millennials are more inclined to buy small leather goods and shoes in the pre-owned categories.

As consumers get savvier with market research, they acknowledge the benefits of investing in iconic luxury pieces that deliver an intrinsic value and exclusivity. These are also pieces which subsequently fetch high resale values in the secondary markets, as Lim expounds: “Luxury powerhouses that manage to create a high-perceived value of their brand are typically the most purchased pre-owned brands — Chanel, Louis Vuitton and Hermès take the lead, followed by Balenciaga, Prada and Gucci. The quality of material is carefully assessed and most importantly, resale shoppers ensure they are buying from retailers that guarantee authenticity.”

Gaining consumers’ confidence

But why are shoppers today comfortable with buying pre-loved goods, even pricey designer leather products, online? With the growing demand of pre-owned luxury, the focus on authenticity has expanded and established online resale retailers continue to see the imperative need to champion their authenticity guarantee.

Lim assures that at Reebonz, which has been around for almost nine years, all pre-owned items are authenticated and graded by its experienced and internationally-trained team of in-house ateliers before each piece is issued with a Reebonz Atelier Authenticity Card.

In addition, timepieces and jewellery come with a Grading Certificate that contains detailed information issued by its in-house luxury experts, so consumers can shop with peace of mind.

Headquartered in Singapore, Reebonz has also invested in technology to support the growing productivity of its business. “Our authentication tool marks newly arrived products in our warehouse with an invisible ink so that we know when an item that has already gone through our certification process comes back in for sale. This enhancement improves operational efficiency without compromising the accuracy of our product authentication — laying to rest the uncertainties around authenticated pre-owned luxury purchased from trusted online platforms like Reebonz,” Lim states.

What resonates with consumers the most in the second-hand market, according to Tan of Carousell, are factors that involve the uniqueness of items, connection with like-minded enthusiasts, ethical buying and the lure of great bargains. There is a lot more value to be unlocked in selling pre-loved items as well. “When someone is decluttering their unused or underused items, there’s also the opportunity to get items at a bargain. We’ve seen users turn to the Carousell community to find unique and rare items, from vintage collectibles to nostalgic memorabilia. We even host several community groups where users can buy, sell and connect with one another over their shared passion. For instance, Carousell is also a playground for many ‘upcyclists’, who hunt for day-to-day objects to transform them into products with renewed purposes.”

To ensure that buyers are purchasing from credible users, Carousell makes trust and safety a priority for its shoppers. “While it is our goal to make buying and selling easy for everyone, we also want to ensure we’re building a safe, conducive and friendly community. We currently have built-in features for user feedback as well as trust and safety guidelines. Feedback and user reviews have been critical in helping our community of users make better informed decisions on Carousell. Technology also enables us to detect unusual user activity and patterns at scale and we are constantly innovating to improve this capability. We also cooperate and work closely with local authorities in cracking down on online fraud, scams and prohibited items,” Tan reveals.

Thrifting drift
Needless to say, the rise of e-commerce, booming Internet economy and growing affluence in South-east Asia have opened up opportunities for individual sellers to easily start reselling their underused items on online platforms, such as social media, as they do not need to invest in renting a store space.

Reebonz’s Lim shares: “With e-commerce and the presence of mobile applications like Reebonz Closets, consumers just have to snap photos of their item(s), upload them onto Closets, and start negotiating and selling to the ready community of buyers. The ease with which this happens has contributed to the adoption and growth of the pre-owned market in Asia. The growth of online marketplaces has also brought international boutiques selling pre-owned luxury collections closer to shoppers in Asia.”

Carousell’s Tan acknowledges that as e-commerce grows in the region, consumers buy more things and they often end up with things that are underutilised. “Carousell sees this as an incredible opportunity for us to take a mobile-first approach to solving problems, by making buying and selling simple so people can easily find new homes for things they have in excess. Unlike regular e-commerce sites that are about buying brand-new items, we’re focused on helping individuals declutter and sell their unused and pre-loved items, in order to make space in their lives for more meaningful experiences instead.”

While establishments, such as Reebonz and Carousell, are making a mark on the recommerce landscape, they may have to compete with individual sellers in the pre-owned market as a whole. However, Lim views Reebonz’s business model as offering value-added services to such sellers. For example, its White Glove premium sell service takes care of the whole selling process from photography to marketing, and with its Closets DIY mobile selling platform, sellers are assured of reaching out to over four million shoppers. “We also carry out authenticity for all the pre-owned items that come through Reebonz. This offers great reassurance to our buyers in purchasing through the Reebonz platform rather than via individual sellers who lack this professional expertise.”

Pre-owned prediction

Lim is confident the demand for pre-owned luxury in Asia will continue to be driven by millennials who are more accepting of online shopping for pre-owned pieces, especially vintage finds and limited edition pieces. “Online players are also getting more sophisticated in informing and educating buyers about the specifications and authenticity of their pre-owned items through engaging content such as videos to make the purchase decision an easier one with fewer uncertainties.”

Tan has similar sentiments about the future of the resale market as Carousell has started to see increased demands for a greater variety of categories, including property and cars. He declares: “Studies around the world have projected that the next gold rush for online commerce would be in Asia. We see the continued growth of the second-hand market as a natural extension to this.”

Tan also expects to see greater variety and volume across other second-hand marketplaces over time. “Users are now more familiar with the benefits of buying and selling pre-loved. Now, the challenge is for industry players to continually stay ahead of the curve by innovating and improving the experience of the second-hand market, so that we remain relevant for the community we serve. At Carousell, we’ve begun work in Classifieds 4.0, where we leverage artificial intelligence (AI) and machine learning to improve the overall classifieds experience.”

Last year, Carousell rolled out several AI-driven features, such as Smart Listings, and it is also working on introducing value-added services to ease payment and fulfilment that will make it even safer and more convenient to snap, list and sell in the second-hand market.

But what does this mean for retailers?

The existence of a thriving resale market is a sign that world of commerce is evolving and traditional retailers have to adapt to changing consumer attitudes around ethical buying and selling, as well as to cater to the boom of the digital economy. Moreover, technological advancements are also altering the way consumers shop.

“However, we do see value in embracing collaboration between the two camps so we can all better serve the modern consumer. While the growing demands of buying and selling second-
hand do present some challenges to traditional retail entities, there are opportunities to be explored as well,” Tan opines.

He cites an example of Carousell Pro, which was built in response to suggestions and demands from its professional users who want to succeed on Carousell too — by providing them with a convenient way to drive more leads for their businesses. “We will continue to develop products and features that will benefit our users while ensuring we build a sustainable business to further our mission to inspire everyone in the world to start selling,” he concludes.

Commenting on the luxury market, Lim observes luxury consumption today has evolved into an ecosystem and retailers have to adapt to these changing habits and preferences. “Opening up options like Buy Back guarantees or making the process of sell-back easier within existing product platforms encourages shoppers to sell off their less-used luxury to possibly buying new ones. This ecosystem of buying and selling does not only inject pre-owned inventory into the market but inevitably impacts the demand for brand-new luxury too. Retailers have to continuously strategise their business models and innovate to take advantage of the opportunities that present themselves through the rise in pre-owned luxury demand,” he concluded.