China's second-hand luxury goods market booms

China's love for luxury is spilling over into the once shunned secondhand goods sector, with online stores surfing a wave of pent-up demand from shoppers, led by millennials, who have been forced into belt-tightening by the coronavirus pandemic.

The rapid proliferation over recent years of second-hand luxury sales online platforms have helped fuel an expansion of the market, similar to those of U.S. online luxury reseller The RealReal Inc or Europe's Vestiaire Collective.

"Our income recorded a surge this year during the pandemic as offline stores are mostly closed," said Xu Wei, founder of Plum, a secondhand luxury products company in Beijing which is especially popular with millennial women from China's lower tier cities. Chinese consumers have traditionally shunned secondhand goods, though that has undergone a shift over the past decade or so led by younger, more environmentally conscious consumers looking for affordable high-end goods.

"Compared to completely new products, second-hand products are more economical for them," Xu said.

Sales growth at Plum have averaged over 25% month-on-month in the first half. The actual size of the Chinese second-hand luxury goods market is small, luring platforms such as Plum, Ponhu and Feiyu which are betting on strong growth over coming years.

A joint report by China's University of International Business and Economics and Isheyipai, a platform for second-hand luxury deals, estimated that sales of second-hand luxury products in China accounts for just 5% of the overall luxury market, compared with 28% in Japan and 31% in the United States.