Demand for secondhand luxury goods on the rise

Buying an authentic secondhand Louis Vuitton bag is no longer a risky back-alley adventure. And it is not just bargain hunters who are going online and bypassing the boutique experience in the first place.

Snapping up vintage Chanel purses online with a few clicks. Used Louis Vuitton on Instagram. Rare Nike Air Jordans on eBay. A preowned Tiffany necklace.

Some secondhand shoppers are not exactly looking for bargains. They are searching for luxury goods on the secondary market, because vintage is cool or cannot be found anywhere else. And they are part of a growing number of young consumers who are buying into the upper echelons of the circular economy.

Yet for years, many high-end brands were skeptical of the digital world and online sales, let alone the secondary market. Though Cartier offers preowned items in some of its boutiques, and fashion houses Valentino and Gucci recently started to sell vintage pieces, this is an added bonus for customers instead of a real business plan.

Today’s luxury world extends far outside elite boutiques and beyond the reach of retailers. This also means most of the consolidation and trust-building work behind the current secondhand market was left to outsiders.

Keeping out counterfeits

For 2021, the secondhand luxury market, which includes things like handbags, clothing, jewelry and watches, is estimated to be worth €33 billion ($37.2 billion), according to calculations by consultancy Bain & Company. This is a 65% increase from 2017. In the same period, the firsthand luxury market only grew by 12%.

Unfortunately for shoppers looking for luxury items, there are a number of problems because where there is a lot of money to be made there is bound to be illegal and unscrupulous activity.

In the past travelers brought home stories of replica goods sold on the beaches of Italy or the back alleys of New York. These are nothing compared with today’s sophisticated forgery market. Tales of counterfeit goods seized by customs agents continue to make big headlines.

Getting it real the first time

More important than price, knowing if something is genuine is the most important issue for luxury goods customers. To help ease their minds, legitimate secondhand businesses offer guarantees of authenticity. One secondhand business even named itself The RealReal just to drive home the point.

Founded in 2011, they sell consigned high-end clothes, jewelry, art and home decor authenticated by an in-house team. They mostly sell online, but starting in 2017, they opened their first brick-and-mortar retail shop and now have 15 of them across the US.

In mid-2019 the company went public and raised $300 million (€265 million) for its IPO, showing the interest in the sector from investors. Today the company calls itself: “The world’s largest online marketplace for authenticated, resale luxury goods,” with 24 million users.

This past Black Friday was the company’s busiest day ever.For the whole of November, it had strong sales and reported an increase in gross merchandise value of 51% and 46% compared with the same periods in 2020 and 2019 respectively. The average order amount came in at $514, an increase of 17% and 10% over the previous two years.

Everyone wants in on the market

At the same time, some of the biggest luxury brands have finally come to better understand the secondhand market. Recently, Gucci owner Kering invested in high-end resale platform Vestiaire Collective. And in 2018, online watch reseller Watchfinder was bought by Richemont, which owns Cartier.

Others are jumping on the secondhand luxury bandwagon, too. In the United States and the UK, eBay stands behind the authenticity of certain things. Sellers send eligible items to a third-party expert for inspection and approval before they are then sent to the buyer. For American users, it covers items sold by sellers in the US, Japan, the UK, Canada, Australia, Germany, South Korea and Italy.

Currently the program covers three categories: watches sold for $2,000 or more, designer handbags sold for $500 and sneakers in new condition sold for $100 or $150 for preowned ones. Not all brands are covered, but those on the list are a who’s who of the luxury market: Chanel, Gucci, Hermes, Saint Laurent, Dior, Prada, Goyard, Rolex and Omega.

Using the tagline “No fakes. No fraud. No doubt,” the costs for the company’s Authenticity Guarantee program are covered by eBay and show the importance of authentic products.

Global firsthand luxury is key

There are two big factors behind the growth of the secondhand luxury market: younger online shoppers with lots of cash and high demand for luxury goods in the first place.

Increasingly influenced by products on TikTok, Twitter or Instagram, the growing number of rich millennials and especially Gen Z youngsters are set to make up 70% of the firsthand retail luxury market by 2025, according to the most recent Luxury Study published in November by Bain & Company. Not surprisingly, many of these tech-savvy customers don’t see the need for actual shops and are not afraid to buy online.

Another prerequisite to a secondhand market is a big firsthand retail market. Here the personal luxury goods industry is on the mend after a big downturn in 2020 due to the coronavirus. Still, the current year has not been all smooth sailing, only returning to growth in the second and third quarters compared with 2019.

For the final quarter of the year, Bain expects a 1% increase in the firsthand personal luxury goods market over 2019 numbers. That would bring it to an all-time high of €283 billion — more than double its size two decades ago.

This massive growth has largely been propelled by spending in the US, which now accounts for 31% of the global market, and China, a country that has doubled it market share in the last two years alone and today accounts for  21% of the market.

Bain has high hopes for the industry and estimates that the firsthand personal luxury goods market could grow 6-8% each year and reach €360-380 billion by 2025. With figures like that, there will be plenty of glamorous goods to filter down to the secondhand market where willing buyers can snap them up with increasing confidence and a few clicks from the comfort of their living room.

Source: dw.com