The "It" bag of the future is most likely to be pre-owned and bought second-hand from an online auction site. - Sharon Cheah
Eyeing that Birkin or Kelly bag? Forget about walking into an Hermes shop since according to (true) urban legend, they’re never any available off the shelf. Instead, shop like a millennial fashionista, who has been buying that gently-used Kelly Retourne 28 or a pre-owned Birkin 30 at one of the several online luxury auction sites that have popped up in the last 10 years.
Welcome to the world of pre-owned or pre-loved, re-sale and second-hand luxury goods, which is fast-catching up with online and brick-and-mortar stores. The second-hand luxury business, according to the analysts of German private bank Berenberg, is worth US$25 billion in annual revenue and expected to grow 10 per cent annually.
At the end of 2016, online sales of luxury items across high-end categories such as beauty, perfume, footwear, jewellery, watches, and leather goods accounted for eight per cent in the US$313 billion global luxury. According to leading market researcher McKinsey, this will more than triple by 2025, reaching US$91 million, with millennials using on average 4.5 devices to make a purchase. That means that in about a decade, nearly one-fifth of luxury sales will take place online.
Some industry observers even expect to see the growing trend of second-hand fashion outstripping sales growth in the primary luxury goods sector, thanks to sites which have been improving the experience since 2004.
As sites like Gilt and Net-a-Porter made it hip and convenient to go online to buy top designer labels in the 2000s, it was only a matter of time for consumer acceptance to extend to second-hand luxury items as well.
The millennial shopper
The economic recession of the late 2000s certainly helped push the cultural shift, as re-sale and pre-owned no longer carry the negative connotations they used to. Certainly not now when mobile-toting millennials are the key shoppers of luxury consumer brands today. Not just aspirational and fashion-forward, they are also mindful consumers who believe in the adage: Buy, sell, repeat.
Millenials (born between 1981 and 1994) and generation Z (born between 1995 and 2010) now make up over 30 per cent of all luxury spending, and generate 85 per cent of the global luxury growth in 2017, according to McKinsey.
They start by browsing online and then listen in on social media conversations about the brand or the goods – and their online experience can sway about 40 per cent of purchases, according to McKinsey. Current consumer attitudes towards the global resale economy is also fuelled by the changing concept of ownership.
“Resale has positioned itself as the antidote to fast fashion,” says Vestaire Collective’s chief marketing officer, Ceanne Fernandes-Wong, in an interview with Marketing Week. She heralds “circularity” as a “big driver in the era of sustainability.”
Consumers are also thinking of purchases as “investments”, so the ability to recoup some the investment is also a plus, believes Rati Levesque, of fashion reseller, The Real Real. Then there’s the idea of experiencing instead of owning, points out Charles Gorra, CEO of luxury handbag reseller, Rebag, who adds, “It’s the same reason why now for millennial consumers, it’s Uber vs taxis, and Airbnb vs hotels.”
Peer-to-peer sites vs Curated platforms
In the online world of shopping, there are peer-to-peer platforms like Etsy, Carousel and Poshmark, that are good for unique, personalised or vintage finds, and often at attractive concession prices. What is typical: They have lower barriers of entry, resulting in many offers that require due diligence to sift through – not the most efficient of ways to shop. This has led to the success of platforms like TheRealReal, Vestaire Collection and StockX, where collections are curated and luxury goods are authenticated but you pay steep commissions for the service.
How does a curated platform work?
A new player in the pre-owned luxury market is Dol’s Pond, Singapore’s first global online auction site dedicated to luxury bags and accessories, that allow buyers and sellers to bid and sell from anywhere in the world. It now focuses on luxury bags that cost US$2,500 and above. Each item is put on auction for seven days, and there are auctions, daily.
Some online sites will only take consignments from trusted and validated brick-and-mortar businesses, so that goods are properly valued and authenticated before they are sold online with guarantees. As you can imagine, with reseller sites, authentication is a major concern.
Dol’s Pond however has inhouse experts who vet the sellers’ identity, authenticate and also verify market demand for the bags. It offers a money-back guarantee if the item turns out to be fake. The shopping experience is designed to be seamless on Dol’s Pond. Everything is done online, whether you buy or sell, right down to the logistics of how and when your item is delivered after you’ve won an auction. While buyers/sellers’ commissions can range from 10 per cent to 50 per cent on other auction or reseller sites, Dol’s Pond charges only five per cent to buyer/seller respectively.
An unstoppable trend
Savvy Asian consumers are fast picking up on the ease of shopping for second-hand luxury online as well, according to Portero.com, founded in 2004. In 2015, about 30 per cent of its business came from overseas, outside of its US market and they had been seeing an increase in its Asian customers. About 40 per cent of Portero’s customers are repeat customers. Its predominant business is in handbags, with jewellery and watches registering high growth.
Even fashion’s biggest conglomerates like LVMH and Richemont are beginning to explore partnerships with consignment sites and niche resellers, not to just have some control over the brand, but more importantly, to gain access to the data that these sites are compiling as consumer preferences, notes The Fashion Law, an independent source for law, business and culture.
Because “It” bags aside, the future is data.