Resale Market in India — turning adversity into opportunity!
While the world’s luxury goods market is expected to fare poorly in 2020, thanks to the economic havoc wrought by coronavirus, the luxury resale could see this as an opportunistic one.
Second-hand luxury goods market was expected to grow from an estimated $25 billion in revenues in 2018 to around $36 billion in 2021, increasing by an average of 12% per annum, according to the 2019 BCG-Altagamma True-Luxury Global Consumer Insight study. More interestingly, it is also seen to be growing four times faster than the primary market and is projected to double in value over the next five years.
The re-sale business is particularly strong and predominant in the US and European markets with the presence of well-established e-commerce websites like The Real Real & Vestaire Collective. However, irrespective of starts-ups like Confidential Couture, Luxepolis, My Luxury Bargain, Envoged, India still remains at a nascent stage for pre-owned luxury goods.
According to BCG x Altagamma report — 80% of secondhand market participants use online channels to get informed and to trade. With the increasing rate of internet penetration, India’s digital population as of Jan 2020 stood to be at 687.6 million making it the fastest growing online retail market in 2019. The number of digital buyers across the country was estimated to be approximately 329.1 billion, by Statista, Business Data Platform.
Making luxury affordable, the resale market creates an attractive proposition for the price-sensitive Indian audience. The value-conscious buyer, not very experimental given to high prices — are now offered a variety of brands at accessible prices. This also offers a powerful opportunity for luxury brands to boost their image and grow their customer base.
The younger consumers are targeted to be the largest participants in the second-hand luxury market. India, home to a young population, along with increasing brand-awareness remains yet untapped holding tremendous growth potential.
According to the recent report by Bain & Company, global luxury sales could drop up to 35% by the end of 2020. However, if innovative measures are adopted, the re-sale market could take a plunge in the Indian luxury space.
1. Digital is where everyone is: Fashion and luxury market has taken a back seat, but consumers are now spending considerable time on their digital screens. The companies need to direct this time towards educating the consumers on the benefits of investing in second-hand purchases. As per the McKinsey Report, India is home to the second-largest digital base in the world. From the current around 600 million internet users, it is projected to reach 800 million internet users by 2023. With the democratization of the internet, a rising number of brand-conscious consumers and a growing number of new-age bloomers, the online pre-owned luxury market in India could witness the much-awaited growth.
2. Could benefit both the seller and seeker: Individuals practising the art of de-cluttering would want to part with their pre-owned goods in order to get some easy cash. On the other hand, the seekers might bargain actively for affordable purchases in the near future if not leading to immediate splurge.
3. Content is the key: Indians are resistant towards owning second-hand goods. A lot of which is to do with consumers limited knowledge of the re-sale business model and hesitation towards the credibility and authenticity of the products. There needs to be a conscious shift in the consumer perspective. Through informative, transparent and constructive content, businesses could gain the attention of millennials. They must deliver content which resonates with the audience and broaden their reserved psychology.
4. Building a community: The pandemic has now positioned human connection above all. Resellers can use this opportunity to build a community of consumers driven by a common social belief. Sustainability and circular fashion economy is the topic of the hour. Collaborating with authentic influencers while delivering a genuine message regarding the importance of responsible consumption, could help generate a campaign that might have a lasting impact in the future of resale business.
5. Offering seamless end-to-end experience: Resale websites should focus on enhancing the experiential services at various digital touchpoints a consumer goes through during his purchase journey. Deploying technology to offer extra premium services such as curation, authentication and personalised experiences driven by deep data insights should prioritize their list.
However, the pandemic also imposes new challenges on the struggling business.
1. Safety issues: As masks and social distancing become ingrained habits, consumers might be hesitant of allowing used clothing or accessories to be shipped to their homes.
2. Sophisticated logistics infrastructure: Inventory management, taking appropriate safety and standardized sanitation measures during packaging and delivery are going to impose restrictions on the smooth functioning of operations.
Given the challenges, the post-COVID-19 scenario could be seen as a favourable one for the pre-owned luxury goods market. Resellers should centre their efforts on designing innovative consumer experiences and building a community-driven market. By improving the ease of selling used products, pushing educated consumerism, offering engaging online shopping platforms and ensuring quality — re-commerce in India could turn this adversity into an opportunistic one.