Secondhand economy a win-win scenario
Rising buying trend boosts green growth, padding purses of those with unwanted, outdated wares
In a twist of fate, outdated clothes, obsolete smartphones, previously cherished appliances and used books, once mostly destined for recycling bins or landfills, are finding a new lease on life thanks to China’s thriving secondhand economy in recent years.
Multiple factors are driving this transformative shift, with a combination of government initiatives, a burgeoning market of surplus goods, and changing attitudes among the country’s tech-savvy and environmentally conscious youth playing influential roles, analysts said.
Liu Mengqi, a 28-year-old in Changsha, Hunan province, sold a smartwatch she had won at her company’s annual event for 900 yuan ($125), after a back-and-forth price tug-of-war on secondhand e-commerce platform Xianyu in early February.
The process began with Liu meticulously photographing the smartwatch and editing the images to showcase its best features. She also crafted a captivating description of the product, highlighting its functionality and unique attributes.
“Though the deal ended up being 200 yuan lower than prices listed on major e-commerce platforms, selling it allowed me to recoup a portion of its value while giving someone else the opportunity to enjoy its features at a discounted price,” she said.
Scenes of individuals selling their underused or outdated goods have become increasingly common in China, as evidenced by data from the country’s largest secondhand goods trading platform — Xianyu — which boasts 500 million user accounts, with over 1 billion items available for sale by May last year.
China’s domestic used product market, which had already surpassed the trillion-yuan mark in 2020, is expected to exceed 3 trillion yuan in trading volume of preowned goods by 2025, according to a report by the Beijing-based Institute of Energy, Environment and Economy at Tsinghua University.
The rapid development of China’s economy and the sustained period of rising consumer spending power have created the perfect breeding ground for the secondhand economy, said Zhu Keli, founding director of the China Institute of New Economy.
Data from the National Bureau of Statistics revealed that China’s total retail sales surged by 7.2 percent year-on-year to 47.15 trillion yuan in 2023. This notable increase indicates a nearly doubling of the figure compared to a decade ago, when it stood at 23.78 trillion yuan in 2013.
As consumerism surges in China, a surplus of products has emerged, leading to significant inventories of outdated and unwanted items. These goods, ranging from clothing and electronics to household items and more, form the foundation of the secondhand economy, Zhu added.
Online platforms have become the bridge between sellers looking to offload their unused belongings and buyers seeking cost-effective alternatives or unique finds and bargains.
The convenience and accessibility of online platforms have further fueled the popularity of the secondhand economy among young people. With just a few clicks, users can browse through a vast array of products, compare prices and make secure transactions.
China’s used goods e-commerce market in 2023 is likely to have surged 14.25 percent year-on-year to 548.65 billion yuan in transaction volume, said e-commerce digital economy media platform 100ec.cn.
In the meanwhile, this surge in trading activity is being helped by a rapidly expanding user base, which is predicted to have risen to 620 million, representing an impressive year-on-year growth rate of 33.9 percent, according to the data.
Unlike traditional brick-and-mortar flea markets and secondhand goods shops, online pre-owned product platforms leverage algorithms to achieve higher matching efficiency. This means that consumers can enjoy a more tailored and personalized shopping experience, said Li Mingtao, head of the research institute at the China International Electronic Commerce Center.
The algorithms take into account consumer preferences, browsing history and feedback to suggest relevant items, creating a seamless and efficient buying and selling process. With this level of precision, young people can explore a wide range of choices that suit their individual needs, tastes and budgets, Li added.
In particular, the younger generation has emerged as a driving force behind the growth of the sector, contributing to its expanding user base and transaction volume.
The user base of used goods e-commerce platforms is predominantly comprised of Generation Z, a typical consumer group consisting of those born between 1995 and 2009, as shown by data from Aurora Mobile, a big data platform in Shenzhen, Guangdong province.
Over 90 percent of users who engage in high-frequency trading activities on these platforms are aged 30 and below, according to the data.
Chen Hao, a tech enthusiast in Beijing, made his first purchase on an online secondhand platform — a moment that would mark the beginning of a decade-long journey. Since then, he has accumulated a collection of pre-owned treasures, including computer mice, routers, graphics cards and camera lenses.
“The line between brand new and pre-owned items is blurred, with the latter often offering superior value for money,” said the 29-year-old, adding that opting for gently used items or those still under warranty allows him to enjoy the same quality while paying only half price or so.
The allure of the secondhand economy for the younger generation extends beyond affordability. While cost savings are undoubtedly a key draw, they are also drawn to the uniqueness and individuality that secondhand goods offer, said Mo Daiqing, an analyst with China E-Commerce Research Center.
Vintage fashions, collectibles and niche products are just a few examples of the treasures that can be found in the online used goods market. Rather than adhering to mainstream trends, young consumers have the freedom to curate their own distinctive styles, expressing their personalities through one-of-akind items, Mo added.
While the secondhand economy offers economic benefits through cost savings and job creation, it holds significant implications in its ability to drastically lower carbon emissions and foster sustainable growth.
The National Development and Reform Commission, the country’s top economic regulator, released the 14th Five-Year Plan (2021-25) for Circular Economy Development in 2021, with secondhand trading activities being part and parcel of the process.
As part of this vision, the plan encourages the development of the Internet Plus secondhand economy model, emphasizing standardized and regulated services for used goods transactions through strengthened management and supervision of online platforms.
As the pre-owned goods economy continues to gain momentum in China, it faces several challenges that hinder its growth and full potential, with the quality and authenticity of the products, standardized practices and regulations, and perceptions and stigmas high on the list, analysts said.
A report released in 2022 by the China E-Commerce Research Center revealed the most common complaints raised by users of China’s secondhand e-commerce platforms. Topping the list is the issue of refunds, accounting for 22 percent of all user complaints. Following closely behind are concerns related to product quality at 14.6 percent, with online fraud ranking third at 11 percent.
Platforms should establish robust refund policies and procedures to streamline the process for dissatisfied buyers. Implementing clear guidelines and efficient customer support systems can help resolve refund issues promptly and restore user confidence, said Fu Yifu, a senior researcher at the Star Atlas Institute of Finance.
Pre-owned goods platforms should implement verification processes and quality checks, and ensure that products meet the advertised standards, reducing instances of customer dissatisfaction, Fu said, adding that efforts should be made to help dispel misconceptions and stigmas associated with used goods to encourage wider adoption.
In addition, it is essential to establish robust legal frameworks that govern the operations of these platforms, ensuring compliance and maintaining fair trade practices. This will help protect the interests of both buyers and sellers, fostering a transparent and trustworthy environment, Fu said.