Consumer brands such as Ikea need to invest more than e-commerce platforms, which are already well-established in the Chinese market, and there is greater uncertainty about the outcome. Author Fu Rao Editor Haruno How lucrative can a second-hand business be? With two data can show Japan’s second-hand trading platform Coal Stove achieved revenue of 187.407 billion yen in fiscal year 2024, an increase of 9 , and consolidated profit rose 3 1 year-on-year to 13.455 billion yen, far exceeding the market’s expectations And in the United States on the other side of the ocean, the eBay second-hand platform at the end of October announced the third quarter of fiscal year 2024 financial results, net revenue reached 2.576 billion yuan, an increase of 3 . billion dollars, a year-on-year increase of 3 . This means that even if you don’t engage in production and only do second-hand business, you can still create considerable revenue and profit. The Chinese market, where second-hand consumption is slowly becoming a trend, is no exception. Used e-commerce platform Idle Fish was officially upgraded to a Tier 1 business by Ali, and has already reached 600 million users in 2024 alone. Now, outside of e-commerce platforms, even consumer brands are eyeing the big cake of China’s second-hand market. 01 Branding second-hand business On April 19, 2024, Reuters revealed that Ikea would test the waters by launching a second-hand furniture business in China. in June, the Ikea buy-back and on-sale service was piloted in several stores in Shanghai. The service said consumers could sell their used IKEA products that met the requirements back to IKEA in exchange for an IKEA shopping card with the same value as the buyback price. Half a year later, IKEA announced that it would roll out the service to all IKEA stores in China. The second-hand recycling business has clearly become the focus of IKEA’s efforts in 2024. Karen Pflug, IKEA’s chief sustainability officer, said in a June 2024 media interview that IKEA now sees second-hand recycling as a top priority. Although IKEA sees great potential in China’s idle market, on the other end of the consumer spectrum, IKEA’s recycling business doesn’t look as good as it could be. IKEA furniture recycling service is quite pitiful. Not long ago, on December 3, A Bai left this sentence on the social platform to summarize his experience in IKEA old furniture recycling. He confessed that when the news of the IKEA recycling service campaign first came out, he was attracted at first. He quickly decided to recycle a table, which he purchased in December 2022 for $999, through IKEA. In Abai’s opinion, the table was well-protected and hadn’t been used for very long, so he should get a good price for it, or at least not a big discount. But IKEA’s online customer service told him that the recycling price was 200 yuan, and it didn’t provide door-to-door service, which meant that Ah Bai needed to send the furniture to the IKEA store in Xuhui himself. Recycling costs directly discounted 20%, the cost of recycling is less, and then looking for moving cars and masters, in fact, the reverse is a loss. Finally, A Bai turned to idle fish. Under the dynamic shared by Abai, a netizen named Ordinary Chali also said that IKEA’s recycling service is a bit pitiful. He shared his own experience of selling second-hand to IKEA A Malm four-drawer chest of drawers, in the IKEA online estimated recycling price of 300 yuan, things sent to the store, the clerk checked and said that there are defects, can only be given to 200 yuan. Because he did not want to pull the heavy things back again, he could only accept this price. In contrast, MUJI’s furniture recycling business in China is advancing slowly, but has a good reputation. In February 2024, the MUJI flagship store, which is said to be the largest in the country, opened in Beijing’s Chaoyang Joy City. In addition to its large size, the recycling bazaar, which focuses on selling second-hand furniture, has become a reason for many people to go to the store. Sparrow, a 90-year-old consumer, told Slightly Big Reference that when he went shopping in June, he spotted a brown cowhide single sofa, which he thought he could just take away, but was told by the clerk that it had long been reserved. When we visited the store recently, we also found that there are many customers in the second-hand circulation area, and a clerk said that we can still accept to buy second-hand furniture, even if it is a little flawed. For many people, as long as the appearance can be justified, does not affect the use of the situation, can be sold. It is understood that MUJI furniture provides door-to-door recycling business, and the furniture will be cleaned and treated after recycling. On Xiaohongshu, Yuan, the person in charge of the recycling bazaar, even shared a vlog of MUJI’s door-to-door furniture recycling. as of the end of 2024, MUJI has three stores in the cities of Beijing and Tianjin for furniture recycling business. In addition, in Beijing Shanghai Zhengzhou and other places, some MUJI stores have set up MUJI CYCLE recycling service in their stores, which is used to recycle MUJI products, such as plastic recycling for bottles of cosmetic water MUJI clothing and other textile recycling business. On social media platforms, some netizens who went to participate in recycling shared that they drew a raffle to win an environmental bag made by MUJI. In addition to Ikea and MUJI, even Decathlon has a vague hint of doing second-hand recycling business. In a Decathlon store in Shenyang, shelves of recycled goods with green banners have appeared in the area where bicycles are sold. According to Li Yang, a pseudonym and current department manager at Decathlon, most of the recycled goods come from online e-commerce returns, which may be bought home in the wrong size, damaged packaging and other reasons for recycling to offline stores, and after a second check in line with the rules of the sale of recycled goods into the recycled goods area for sale at a discount. According to Li Yang, the service has not been promoted in all Decathlon stores in the region, and the scale is still small, but perhaps do second-hand business, has been advocating the concept of sustainable Decathlon is not surprising. Whether it’s the first signs of this, or a strong commitment to the circular economy, these consumer brands are certainly looking at the possibilities of the second-hand economy in China. 02 The possibility of second-hand business In foreign countries, consumer brands, especially clothing consumer brands, engaged in second-hand side business is not uncommon. In foreign countries, it is not uncommon for consumer brands, especially clothing brands, to engage in second-hand side business. Taking sports brands as an example, brands such as lululemon Allbirds have been doing second-hand recycled clothing business one after another. To fast fashion brands, for example, H M Zara Uniqlo have in the action to increase the size of second-hand clothing. For example, H M has set up a special website for sales, Uniqlo has set up flash stores in Tokyo, Fukuoka and other places to sell second-hand clothing, Zara has also long been carrying out the second-hand clothing sales business, and launched a second-hand platform Zara Pre Owned in 2024. Behind this, the company on the one hand can create revenue through the re-sale of second-hand clothing, on the other hand, due to the rise of raw materials such as clothing, recycling can also be conducive to better cost control. But for 2024 in the Chinese market only into the second-hand recycling business of the non-Indian good or Ikea, the volume of this business is still relatively small, the role of cost reduction and efficiency is not obvious, and even for the whole disk of revenue can not provide much help. Why do they still have to choose to enter the field? Considering the whole Chinese consumer environment market and brand development, there may be two reasons behind. On the one hand, in the Chinese market, buying used is indeed becoming a trend among young consumers. With a gradual change in attitudes, more and more young people are recognizing and practicing this new way of green consumption and life. Relevant reports show that the post-90s and post-00s have a significantly higher level of understanding of green consumption than other age groups, reaching 70 and 79 respectively. According to the 2024 China Youth Consumption Trend Report published by Xinjing Newspaper in October 2024, young consumers show a strong willingness to pursue fashionable, healthy and environmentally friendly lifestyles, and they are more willing to pay for sustainable brands and products. This trend is not only reflected in brand favoritism, but also in consumption decisions. The survey shows that more than half of the respondents said they would consume on second-hand platforms, of which 32 28 think second-hand platforms are more cost-effective, 24 11 think second-hand recycling is more environmentally friendly and low-carbon, and 17 13 respondents would depend on the attributes of the goods and the situation. Figure Source: 2024 China Youth Consumption Trend Report For this generation of young consumers, second-hand trading and green consumption have become a new lifestyle trend, including frequent second-hand trading, green traveling, recycling and so on, which has become a lifestyle practiced by many people. On the other hand, for consumer brands, second-hand business can be a means to attract new customers, recall old ones, and even promote consumption. Ikea, for example, has done well in the second-hand business in overseas markets. In IKEA’s view, the global second-hand furniture market is growing rapidly, with a projected annual growth rate of 6 4 in 2024. And among them, IKEA products can account for 10 percent of the second-hand furniture market. Ikea, which has tasted sweetness in overseas markets, undoubtedly wants to replicate this boom in the Chinese market as well. Combined with IKEA’s financial data, the motivation behind this is not hard to imagine. According to its fiscal year 2024 report, which ended in August 2024, IKEA’s parent company Ingka Group’s revenue fell 5.5 percent year-on-year to 41.864 billion euros, the first time in five fiscal years that revenue has declined. And 2024 fiscal year IKEA’s net profit fell 46 5 to 806 million euros, even less than the epidemic period of 2020 fiscal year earned. Revenue in the Chinese market was 1.46 billion euros, lower than the 1.58 billion euros in fiscal year 2023 This is still in the IKEA China 2024 fiscal year opened four new stores, a total of 39 stores under the circumstances of the performance. For this reason, Ikea is not without thought. Since 2023, Ikea has been trying to attract customers back by lowering prices. Throughout the 2024 fiscal year, IKEA invested more than 400 million yuan in price reductions in the Chinese market, which covered more than 500 products, accounting for 50 percent of all categories . Even so, customer traffic has not significantly improved, and even lower revenue. Compared to Ikea, MUJI’s fiscal year 2024 financial data is positive, especially the growth rate of the Chinese mainland market exceeded other overseas markets, becoming the second largest revenue market in addition to the Japanese domestic market. But it is not without hidden worries. MUJI officials in August 2023 have talked about the fact that sales growth in its Chinese stores is slowing down. In response, MUJI accelerated its store expansion in 2024 while using price cuts and the addition of new formats in the Chinese market to attract traffic and lead to repeat purchases from regular customers. For MUJI, the second-hand recycling business is the existence of a new form of business. As a matter of fact, this is a new store strategy that MUJI is accustomed to playing. In the past, Muji has launched many diversified businesses in the Chinese market to attract traffic to new stores, such as introducing new businesses like home decoration services, apartments, supermarkets, hotels, food markets, restaurants, cafes, and so on, and the second-hand recycling business is no exception. During the pre-opening period of the flagship store of MUJI in Beijing Joy City, the publicity highlights were not only the largest store in the country, but also the concept of environmental protection and recycling, including the establishment of a recycling bazaar and the large-scale use of recycled materials in all areas of the flagship store to provide services based on the concept of recycling and environmental protection. In addition, under the trend of more and more rational consumption by consumers, the second-hand recycling business is also considered a disguised means of price reduction. Since 2018, MUJI has added long-term discount areas in its stores in China, and there are also discount seasons in winter, summer and year-end, although the discount range is still limited to clothing daily necessities and other ranges. Furniture category based on the second-hand cycle of business unit price is higher, but also to a certain extent to enhance the store’s profitability of a single store. 03 second-hand business is not good to do the brand to do second-hand recycling business determination is not only reflected in the offline store business. Some consumer brands have even begun to establish their own second-hand e-commerce platform, such as outdoor brands such as REI Patagonia Zoetrope. At the end of last year, Zara announced it was expanding its second-hand resale platform Pre Owned to 14 European countries. Even Ikea, in recent days, plans to promote its second-hand furniture marketplace platform globally to compete with professional second-hand e-commerce platforms such as ebay Craigslist and Gumtree. It is reported that it is free for consumers to sell their goods on IKEA’s second-hand platform. However, the IKEA side said it does not rule out the possibility of charging a modest fee in the future. But the prosperity of foreign second-hand business has not been perfectly replicated in the Chinese market right now. What can’t be denied is that the second-hand market is growing rapidly in China. According to the China Used Goods Association, China’s second-hand market will grow by nearly 6 percent in 2023, reaching the equivalent of 170 billion euros. Electronics, luxury goods and clothing account for a large share of the market. Online sales are growing particularly fast, with 580 million second-hand e-commerce users in 2023, up 25% year-on-year. Figure Source 2024 Used Goods Industry Development Report But in the Chinese market, it is not easy for consumer brands to do used e-commerce business in. First of all, China’s e-commerce platforms have been doing second-hand business much earlier, and they have already cultivated users’ minds. For consumer brands, this is the threshold. In addition, the SKU on the platform is more complete, with the function of shopping, which is more conducive to maintaining user stickiness. Even in Taobao, Jingdong, Pinduoduo and other online e-commerce platforms, the low retail price of the flat replacement of a large number of goods. Secondly, more e-commerce platforms are joining the second-hand recycling business, and the competition is getting fiercer. In addition to professional second-hand platforms such as Idle Fish and Love Recycling, which have a relatively large market share, short video platforms are accelerating their entry into second-hand e-commerce while transforming into e-commerce. For example, in May 2021, Quick Hand announced that it had invested in the new life of all things, and in March 2022, the second-hand goods channel was officially launched in the Jitterbug mall. Finally, consumer brands need to invest more than e-commerce platforms that are already well-established in the Chinese market, and there is greater uncertainty in terms of results. Taking IKEA’s online channel development in the Chinese market as an example, IKEA has invested 10 billion yuan in China between fiscal years 2020 and 2022, mainly for online digital development. This figure sets a new record for the amount of IKEA’s annual investment in the Chinese market. But even so, as of fiscal year 2024, the proportion of IKEA’s online business in China has only reached 25, and offline stores are still IKEA’s main sales channel. This means that IKEA will need to invest more if it wants to increase its share of the online channel. The same is true for other consumer brands. Of course, consumer brands themselves down to do second-hand recycling business also have advantages, such as the authenticity of the guarantee. In various second-hand platforms, the phenomenon of shopping being cheated, purchased items not matching the real thing, and paid transactions not being shipped is widespread. This has led to a poor shopping experience for many consumers. Consumer brands to do second-hand, for consumers, the biggest attraction is not to worry about buying fake goods, after-sales aspects are also more secure. In addition, the second-hand business of consumer brands is positively related to user brand loyalty. Only when the brand itself has enough appeal, people will consider to buy second-hand. The more enthusiastic the second-hand consumption, the higher the user’s stickiness to the brand. Of course, at least in the Chinese market right now, these bright prospects have yet to arrive. For both Muji and Ikea, the main goal of developing second-hand business in China at this stage should not be to make a profit. Continuing to attract traffic and tell new stories is perhaps more important. Header image courtesy of AI Graphics
Consumer brands such as Ikea need to invest more than e-commerce platforms, which are already well-established in the Chinese market, and there is greater uncertainty about the outcome.
Author Fu Rao Editor Yuan Ye
Author Fu Rao
Editor Harano
How lucrative can a second-hand business be? Two figures can show that Japan’s second-hand trading platform Coal Stove realized revenue of 187.407 billion yen in fiscal year 2024, an increase of 9 percent year-on-year, and consolidated profit rose 3.1 percent year-on-year to 13.455 billion yen, far exceeding the market’s expectations. In the United States, on the other side of the ocean, the second-hand platform of eBay published its third-quarter fiscal year 2024 financial results at the end of October, and its net revenue reached 2.576 billion dollars, up 3 percent year-on-year. billion dollars, a year-on-year increase of 3 . This means that even if you don’t engage in production and only do second-hand business, you can still create considerable revenue and profit. The Chinese market, where second-hand consumption is slowly becoming a trend, is no exception. The second-hand e-commerce platform Idle Fish was officially upgraded to a Tier 1 business by Ali, and in 2024 the number of users alone has already reached 600 million. Now, outside of e-commerce platforms, even consumer brands are eyeing the Chinese second-hand market as a big cake.
How lucrative can the second-hand business be?
With two data can show Japan’s second-hand trading platform Coal Stove in fiscal year 2024 achieved revenue of 187,407 million yen, an increase of 9 , consolidated profit rose 3 1 , to 13,455 million yen, far exceeding the market expectations And on the other side of the ocean, the United States, eBay second-hand platform at the end of October published the third quarter of the fiscal year 2024 financial results, net revenue reached 2,576 million dollars, an increase of 3 . billion dollars, a year-on-year increase of 3.
This means that even if you don’t engage in production and only do second-hand business, you can still create considerable revenue and profit. The Chinese market, where second-hand consumption is slowly becoming a trend, is no exception. Used e-commerce platform Idle Fish has been officially upgraded to a Tier 1 business by Ali, and has already reached 600 million users in 2024 alone.
Now, outside of e-commerce platforms, even consumer brands are eyeing the Chinese second-hand market as a big cake.
01 Brands are making a push into the second-hand business
On April 19, 2024, Reuters revealed that IKEA would test the waters by launching a second-hand furniture business in China. in June, IKEA’s buyback and on-sale service was piloted in several stores in Shanghai. The service said consumers could sell their used IKEA products that met the requirements back to IKEA in exchange for an IKEA shopping card with the same value as the buyback price. Half a year later, IKEA announced that it would roll out the service to all IKEA stores in China. The second-hand recycling business has clearly become the focus of IKEA’s efforts in 2024. Karen Pflug, IKEA’s chief sustainability officer, said in a June 2024 media interview that IKEA now sees second-hand recycling as a top priority. Although IKEA sees great potential in China’s idle market, on the other end of the consumer spectrum, IKEA’s recycling business doesn’t look as good as it could be. IKEA furniture recycling service is quite pitiful.
On April 19, 2024, Reuters revealed that IKEA would test the waters by launching a second-hand furniture business in China. in June, the IKEA buyback and on-sale service was put on trial at several stores in Shanghai. The service said that consumers could sell their used IKEA products that met the requirements back to IKEA in exchange for an IKEA shopping card with the same value as the buyback price.
Six months later, IKEA announced that it will roll out the service to all IKEA stores in China.
The second-hand recycling business has clearly become the focus of IKEA’s efforts in 2024. Karen Pflug, IKEA’s Chief Sustainability Officer, said in a June 2024 media interview that IKEA now sees second-hand recycling as a top priority.
Although IKEA sees great potential in China’s idle market, its recycling business does not look as good to consumers on the other end of the spectrum.
IKEA furniture recycling service is quite pitiful.
Not long ago, on December 3, A Bai left this sentence on the social platform to summarize his experience in IKEA old furniture recycling. He confessed that when the news of the IKEA recycling service campaign first came out, he was attracted at first. He quickly decided to recycle a table, which he purchased in December 2022 for $999, through IKEA. In Abai’s opinion, the table was well-protected and hadn’t been used for very long, so he should get a good price, or at least not a big discount. But IKEA’s online customer service told him that the recycling price was 200 yuan, and it didn’t provide door-to-door service, which meant that Ah Bai needed to send the furniture to the IKEA store in Xuhui himself. Recycling costs directly discounted 20%, the cost of recycling is less, and then look for moving cars and masters, in fact, the reverse is a loss. Finally, A Bai turned to idle fish. Under the dynamic shared by Abai, a netizen named Ordinary Chali also said that IKEA’s recycling service is a bit pitiful. He shared his own experience of selling second-hand to IKEA A Malm four-drawer chest of drawers, in the IKEA online estimated recycling price of 300 yuan, things sent to the store, the clerk checked and said that there are defects, can only be given to 200 yuan. Because he did not want to pull the heavy things back again, he could only accept this price. In contrast, MUJI’s furniture recycling business in China is advancing slowly, but has a good reputation. In February 2024, the MUJI flagship store, which is said to be the largest in the country, opened in Beijing’s Chaoyang Joy City. In addition to its large size, the recycling bazaar, which focuses on selling second-hand furniture, has become a reason for many people to go there. Sparrow, a 90-year-old consumer, told Slightly Big Reference that when he went shopping in June, he spotted a brown cowhide single sofa, which he thought he could just take away, but was told by the clerk that it had long been reserved. When we visited the store recently, we also found that there are many customers in the second-hand circulation area, and a clerk said that we can still accept to buy second-hand furniture, even if it is a little flawed. For many people, as long as the appearance can be justified, does not affect the use of the situation, can be sold. It is understood that MUJI furniture provides door-to-door recycling business, and the furniture will be cleaned and treated after recycling. On Xiaohongshu, Yuan, the person in charge of the recycling bazaar, even shared a vlog of MUJI’s door-to-door furniture recycling. as of the end of 2024, MUJI has three stores in the cities of Beijing and Tianjin for furniture recycling business. In addition, in Beijing Shanghai Zhengzhou and other places, some MUJI stores have set up MUJI CYCLE recycling service in their stores, which is used to recycle MUJI products, such as plastic recycling for bottles of cosmetic water MUJI clothing and other textile recycling business. On social media platforms, some netizens who went to participate in recycling shared that they drew a lottery to get an environmental bag made by MUJI.
Not long ago, on December 3, Ah Bai left this sentence on social platforms to summarize his experience in IKEA old furniture recycling. He confessed that when the news of IKEA’s recycling service campaign first came out, he was attracted to it at first. He quickly decided to recycle a table, which he purchased in December 2022 for $999, through IKEA.
In Abai’s opinion, the table was well protected and hadn’t been used for very long, so it should get a good price, or at least not a big discount.
But IKEA’s online customer service told him that the recycling price was 200 yuan, and it didn’t provide door-to-door service, which meant that Ah Bai needed to send the furniture to the IKEA store in Xuhui himself. Recycling costs directly discounted 20%, the cost of recycling is less, and then looking for moving cars and masters, in fact, the reverse is a loss. Finally, Ah Bai turned to idle fish.
Under the dynamic shared by Abai, a netizen named Ordinary Chali also said that IKEA’s recycling service is a bit pitiful. He shared his experience of going to IKEA to sell second-hand A Malm four-drawer chest of drawers, in the IKEA online estimated recycling price of 300 yuan, things sent to the store, the clerk checked and said that there are defects, can only give up to 200 yuan.
Because he didn’t want to pull the heavy stuff back in, he had to accept that price.
In contrast, the furniture recycling business of MUJI in China, advancing slowly, but the reputation is good.
In February 2024, the MUJI flagship store, which is said to be the largest in the country, opened in Beijing’s Chaoyang Joy City. In addition to its large size, the recycling bazaar, which focuses on selling second-hand furniture, has become a reason for many people to go there.
Sparrow, a 90-year-old consumer, told Slightly Big Reference that when he went shopping in June, he spotted a brown cowhide single sofa, which he thought he could just take away, but was told by the clerk that it had long been reserved. And our recent visit to the store also found that there were not many customers in the second-hand circulation area, with one clerk saying
People can still accept to buy second-hand furniture, even if it is a little flawed. For many people, as long as the appearance can be justified and does not affect the use of the situation, it can be sold.
It is understood that MUJI furniture provides door-to-door recycling business, and the furniture will be cleaned and treated after recycling. On Xiaohongshu, Yuan, the head of Recycling Bazaar, even shared a vlog of MUJI’s door-to-door furniture recycling.By the end of 2024, MUJI has three stores in the cities of Beijing and Tianjin for furniture recycling business.
In addition, in Beijing, Shanghai, Zhengzhou and other places, some MUJI stores have set up MUJI CYCLE recycling service, which is used to recycle MUJI products, such as plastic recycling for bottles of cosmetic water MUJI clothing and other textile recycling business. On social media platforms, some netizens who went to participate in recycling shared that they drew a lottery to get an environmental bag made by MUJI.
In addition to Ikea and MUJI, even Decathlon has a vague hint of doing second-hand recycling business. At a Decathlon store in Shenyang, shelves of recycled goods with green banners have appeared in the area where bicycles are sold. According to Li Yang, a pseudonym for the current department manager at Decathlon, most of the recycled goods come from online e-commerce returns, which may be bought home in the wrong size, damaged packaging during transportation and other reasons for recycling to offline stores, and then put into the recycled goods area for sale at a discount after a second check that meets the rules of sale. According to Li Yang, the service has not been promoted in all Decathlon stores in the region, and the scale is still small, but perhaps do second-hand business, has been advocating the concept of sustainable Decathlon is not surprising. Whether it’s a hint of what’s to come, or a big push to develop a circular economy, these consumer brands are undoubtedly eyeing the possibilities of a second-hand economy in China.
In addition to IKEA and MUJI, even Decathlon has a hint of a second-hand recycling business.
At a Decathlon store in Shenyang, shelves of recycled goods with green banners have appeared in the area where bicycles are sold.
According to Li Yang, the current department manager at Decathlon, most of the recycled goods come from online e-commerce returns, and may be returned to offline stores because they are not the right size for them, and their packaging is damaged during transportation, etc. After a second check to meet the rules of sale, they are put into the recycled goods area for sale at a discount.
According to Li Yang, the service has not been promoted in Decathlon stores in all regions, and the scale is still relatively small, but perhaps do second-hand business, has been advocating the concept of sustainable Decathlon is not surprising.
Whether it’s a hint of what’s to come, or a big push to develop a circular economy, these consumer brands are undoubtedly eyeing the possibilities of a second-hand economy in China.
02 The possibilities of second-hand business
In foreign countries, consumer brands, especially apparel consumer brands, engaged in second-hand side business is not uncommon. Taking sports brands as an example, lululemon Allbirds and other brands have been doing second-hand recycled clothing business. To fast fashion brands, for example, H M Zara Uniqlo have in the action to increase the size of second-hand clothing. For example, H M has set up a special website for sales, Uniqlo has set up flash stores in Tokyo, Fukuoka and other places to sell second-hand clothing, Zara has also long been carrying out the second-hand clothing sales business, and launched a second-hand platform Zara Pre Owned in 2024.
In foreign countries, consumer brands, especially apparel brands, engaged in second-hand side business is not uncommon.
Taking sports brands as an example, lululemon Allbirds and other brands have come down to do second-hand recycled clothing business. To fast fashion brands, for example, H M Zara Uniqlo have in the action to increase the size of second-hand clothing. For example, H M has set up a special website for sales, Uniqlo has set up flash stores in Tokyo, Fukuoka and other places to sell second-hand clothing, Zara has also long been carrying out the second-hand clothing sales business, and launched a second-hand platform Zara Pre Owned in 2024.
Behind this, the company on the one hand can create revenue through the re-sale of second-hand clothing, on the other hand, due to the rise of raw materials such as clothing, recycling can also be conducive to better cost control. But for 2024 in the Chinese market only into the second-hand recycling business of the non-Indian good or Ikea, the volume of this business is still relatively small, the role of cost reduction and efficiency is not obvious, and even for the whole disk of revenue can not provide much help. Why do they still have to choose to enter the field? Considering the whole Chinese consumer environment market and brand development, there may be two reasons behind. On the one hand, in the Chinese market, buying used is indeed becoming a trend among young consumers. With a gradual change in attitudes, more and more young people are recognizing and practicing this new way of green consumption and life. Relevant reports show that the post-90s and post-00s have a significantly higher level of understanding of green consumption than other age groups, reaching 70 and 79 respectively. According to the 2024 China Youth Consumption Trend Report published by Xinjing Newspaper in October 2024, young consumers show a strong willingness to pursue fashionable, healthy and environmentally friendly lifestyles, and they are more willing to pay for sustainable brands and products. This trend is not only reflected in brand favoritism, but also in consumption decisions. According to the survey, more than half of the respondents said they would consume on second-hand platforms, of which 32 28 think second-hand platforms are more cost-effective, 24 11 think second-hand recycling is more environmentally friendly and low-carbon, and 17 13 respondents would depend on the attributes of the goods and the situation.
Behind this, the enterprise on the one hand can create revenue through the re-sale of second-hand clothing, on the other hand, due to the rise of raw materials such as clothes, recycling can also be conducive to better cost control.
However, for Muji or Ikea, which only entered the second-hand recycling business in the Chinese market in 2024, the volume of this business is still relatively small now, and the effect of reducing costs and increasing efficiency is not obvious, and even for the overall broader revenue does not provide much help.
Why do they still choose to enter the field?
Comprehensive the entire Chinese consumer environment market and brand development, there may be two reasons behind.
On the one hand, buying used is indeed becoming a trend among young consumers in the Chinese market.
With a gradual change in attitudes, more and more young people are recognizing and practicing this new way of green consumption and life. Relevant reports show that the post-90s and post-00s have a significantly higher level of understanding of green consumption than other age groups, reaching 70 and 79 respectively.
According to the 2024 China Youth Consumption Trend Report published by Xinjing Newspaper in October 2024, young consumers show a strong willingness to pursue fashionable, healthy and environmentally friendly lifestyles, and they are more willing to pay for sustainable brands and products.
This trend is not only reflected in brand favoritism, but also in consumption decisions. According to the survey, more than half of the respondents said they would consume on second-hand platforms, of which 32 28 think second-hand platforms are more cost-effective, 24 11 think second-hand recycling is more environmentally friendly and low-carbon, and 17 13 respondents would depend on the attributes of the goods and the situation.
Figure Source: 2024 China Youth Consumption Trend Report
For this generation of young consumers, second-hand trading and green consumption have become a new lifestyle trend, including frequent second-hand trading, green traveling, recycling and so on, which has become a lifestyle practiced by many people. On the other hand, for consumer brands, second-hand business can be a means to attract new customers, recall old ones, and even promote consumption. Ikea, for example, has done well in the second-hand business in overseas markets. In IKEA’s view, the global second-hand furniture market is growing rapidly, with a projected annual growth rate of 6 4 in 2024. And among them, IKEA products can account for 10 percent of the second-hand furniture market. Ikea, which has tasted sweetness in overseas markets, undoubtedly wants to replicate this boom in the Chinese market as well. Combined with IKEA’s financial data, the motivation behind this is not hard to imagine. According to its fiscal year 2024 report, which ended in August 2024, IKEA’s parent company Ingka Group’s revenue fell 5.5 percent year-on-year to 41.864 billion euros, the first time in five fiscal years that revenue declined. And 2024 fiscal year IKEA’s net profit fell 46 5 to 806 million euros, even less than the epidemic period of 2020 fiscal year earned. Revenue in the Chinese market was 1.46 billion euros, lower than the 1.58 billion euros in fiscal year 2023 This is still in the IKEA China 2024 fiscal year opened four new stores, a total of 39 stores under the circumstances of the performance. For this reason, Ikea is not without thought. Since 2023, Ikea has been trying to attract customers back by lowering prices. Throughout the 2024 fiscal year, IKEA invested more than 400 million yuan in the Chinese market for price reductions, which covered more than 500 products, accounting for 50 percent of all categories . Even so, customer traffic did not improve significantly, and even revenue was lower.
For this generation of young consumers, second-hand trading and green consumption has become a new trend in life, including frequent second-hand trading, green travel, recycling and so on, has become a way of life practiced by many people.
On the other hand, for consumer brands, second-hand business can indeed become a means to attract new customers, recall old customers, and even promote consumption.
Ikea, for example, has done well in the second-hand business in overseas markets. In IKEA’s view, the global second-hand furniture market is growing rapidly, with a projected annual growth rate of 6 4 in 2024. And among them, IKEA products can account for 10 percent of the second-hand furniture market. Ikea, which has tasted sweetness in overseas markets, undoubtedly wants to replicate this boom in the Chinese market as well.
Combined with Ikea’s financial data, the motivation behind this is not hard to imagine.
Fiscal year 2024, which ended in August 2024, showed that IKEA’s parent company Ingka Group’s revenues fell 5 5 to 41,864 million euros year-on-year, the first time in five fiscal years that revenues fell. The net profit of IKEA in fiscal year 2024 was down 46 5 to 806 million euros year-on-year, even less than what it earned in fiscal year 2020 during the time of the epidemic.
Revenue in the Chinese market was 1.46 billion euros, lower than the 1.58 billion euros in the 2023 fiscal year This is still in the IKEA China 2024 fiscal year opened four new stores, a total of 39 stores under the circumstances of the performance.
For this reason, Ikea is not without thought.
Since 2023, Ikea has been trying to attract customers back by lowering prices. Throughout the 2024 fiscal year, IKEA invested more than 400 million yuan in price reductions in the Chinese market, which covered more than 500 products, accounting for 50 percent of all categories . Even so, customer traffic did not improve significantly, and even revenue was lower.
Compared to Ikea, MUJI’s fiscal year 2024 financial data is positive, especially the growth rate of the Chinese mainland market exceeded other overseas markets, becoming the second largest revenue market in addition to the Japanese domestic market. But it is not without hidden worries. MUJI officials in August 2023 have talked about the fact that sales growth in its Chinese stores is slowing down. In response, MUJI accelerated its store expansion in 2024 while using price cuts and the addition of new formats in the Chinese market to attract traffic and lead to repeat purchases from regular customers. For MUJI, the second-hand recycling business is the existence of a new form of business. As a matter of fact, this is a new store strategy that MUJI is accustomed to playing. In the past, Muji has launched many diversified businesses in the Chinese market to attract traffic to new stores, such as introducing new businesses like home decoration services, apartments, supermarkets, hotels, food markets, restaurants, cafes and so on, and the second-hand recycling business is no exception. During the pre-opening period of the flagship store of MUJI in Beijing Joy City, the publicity highlights were not only the largest store in the country, but also the concept of environmental protection and recycling, including the establishment of a recycling bazaar and the large-scale use of recycled materials in all areas of the flagship store to provide services based on the concept of recycling and environmental protection. In addition, under the trend of more and more rational consumption by consumers, the second-hand recycling business is also considered a disguised means of price reduction. Since 2018, MUJI has added long-term discount areas in its stores in China, and there are also discount seasons in winter, summer and year-end, although the discount range is still limited to clothing daily necessities and other ranges. The second-hand recycling business, which is mainly based on furniture categories, has a higher customer unit price and can also improve the store’s single-store profitability to a certain extent.
Compared to Ikea, MUJI MUJI in the 2024 fiscal year financial report data is good, especially the growth rate of the Chinese mainland market than other overseas markets, in addition to Japan’s domestic market, the second largest revenue market.
But it is not without hidden worries. MUJI officials had talked in August 2023 about how sales growth in its Chinese stores was slowing down.
In response, MUJI accelerated its store expansion in 2024 while using price cuts and the addition of new businesses in the Chinese market to attract traffic and lead to repeat purchases from regular customers.
For MUJI, the second-hand recycling business is the existence of a new form of business. As a matter of fact, this is a new store strategy that MUJI is accustomed to playing. In the past, Muji has launched many diversified businesses in the Chinese market to attract traffic to new stores, such as introducing new businesses like home decoration services, apartments, supermarkets, hotels, food markets, restaurants, cafes and so on, and the second-hand recycling business is no exception.
During the pre-opening period of the flagship store of MUJI in Beijing Joy City, the publicity highlights were not only the largest store in China, but also the concept of environmental protection and recycling, including the establishment of a recycling bazaar and the large-scale use of recycled materials in all areas of the flagship store to provide services based on the concept of recycling and environmental protection.
In addition, under the trend of more and more rational consumption by consumers, the second-hand recycling business is also considered a disguised means of price reduction.
Since 2018, MUJI has added long-term discount areas in its stores in China, and there are also discount seasons in winter, summer and year-end, although the discount range is still limited to clothing daily necessities and other ranges. The second-hand recycling business, which is mainly based on furniture categories, has a higher customer unit price and can also improve the store’s single-store profitability to a certain extent.
03 Second-hand business is not good
The determination of brands to do second-hand recycling business is not only reflected in the offline store business. Some consumer brands have even started to establish their own second-hand e-commerce platform, such as outdoor brands such as REI Patagonia Patagonia. At the end of last year, Zara announced it was expanding its second-hand resale platform Pre Owned to 14 European countries. Even Ikea, in recent days, plans to promote its second-hand furniture marketplace platform globally to compete with professional second-hand e-commerce platforms such as ebay Craigslist and Gumtree. It is reported that it is free for consumers to sell their goods on IKEA’s second-hand platform. However, the IKEA side said it does not rule out the possibility of charging a modest fee in the future. But the prosperity of foreign second-hand business has not been perfectly replicated in the Chinese market right now. What can’t be denied is that the second-hand market is growing rapidly in China. According to the China Used Goods Association, China’s second-hand market will grow by nearly 6 percent in 2023, reaching the equivalent of 170 billion euros. Electronics, luxury goods and clothing account for a large share of the market. Online sales are growing particularly fast, with 580 million second-hand e-commerce users in 2023, up 25% year-on-year.
Brands’ commitment to the second-hand recycling business extends beyond the offline store business.
Some consumer brands have even started to establish their own second-hand e-commerce platforms long ago, such as outdoor brands like REI Patagonia Shuzu bird. At the end of last year, Zara announced it was expanding its second-hand resale platform Pre Owned to 14 European countries.
Even Ikea, in recent days, plans to promote its second-hand furniture marketplace platform globally to compete with professional second-hand e-commerce platforms such as ebay Craigslist and Gumtree. It is reported that it is free for consumers to sell their goods on IKEA’s second-hand platform. However, Ikea said it does not rule out the possibility of charging a modest fee in the future.
But the boom in second-hand business abroad has not been perfectly replicated in the Chinese market.
What can’t be denied is that the second-hand market is growing rapidly in China. According to the China Used Goods Association, China’s second-hand market will grow by nearly 6 percent in 2023, reaching the equivalent of 170 billion euros. Electronics, luxury goods and clothing account for a large share of the market. Online sales are growing particularly fast, with 580 million second-hand e-commerce users in 2023, up 25% year-on-year.
Source 2024 Used Goods Industry Development Report
But in the Chinese market, it is not easy for consumer brands to do second-hand e-commerce business. First of all, China’s e-commerce platforms have been doing second-hand business much earlier, and they have already cultivated users’ minds. For consumer brands, this is the threshold. In addition, the SKU on the platform is more complete, with the function of shopping, which is more conducive to maintaining user stickiness. Even in Taobao, Jingdong, Pinduoduo and other online e-commerce platforms, the low retail price of the flat replacement of a large number of goods. Secondly, more e-commerce platforms are joining the second-hand recycling business, and the competition is getting fiercer. In addition to professional second-hand platforms such as Idle Fish and Love Recycling, which have a relatively large market share, short video platforms are accelerating their entry into second-hand e-commerce while transforming into e-commerce. For example, in May 2021, Quick Hand announced that it had invested in the new life of all things, and in March 2022, the second-hand goods channel was officially launched in the Jitterbug mall. Finally, consumer brands need to invest more than e-commerce platforms that are already well-established in the Chinese market, and there is greater uncertainty in terms of results. Taking IKEA’s online channel development in the Chinese market as an example, IKEA has invested 10 billion yuan in China between fiscal years 2020 and 2022, mainly for online digital development. This figure sets a new record for the amount of IKEA’s annual investment in the Chinese market. But even so, as of fiscal year 2024, the proportion of IKEA’s online business in China has only reached 25, and offline stores are still IKEA’s main sales channel. This means that IKEA will need to invest more if it wants to increase its share of the online channel. The same is true for other consumer brands. Of course, consumer brands themselves down to do second-hand recycling business also have advantages, such as the authenticity of the guarantee. In various second-hand platforms, the phenomenon of shopping being cheated, purchased items not matching the real thing, and paid transactions not being shipped is widespread. This has led to a poor shopping experience for many consumers. Consumer brands to do second-hand, for consumers, the biggest attraction is not to worry about buying fake goods, after-sales aspects are also more secure. In addition, the second-hand business of consumer brands is positively related to user brand loyalty. Only when the brand itself has enough appeal, people will consider to buy second-hand. The more enthusiastic the second-hand consumption, the higher the user’s stickiness to the brand. Of course, at least in the Chinese market right now, these bright prospects have yet to arrive. For both Muji and Ikea, the main goal of developing second-hand business in China at this stage should not be to make a profit. Continuing to attract traffic and tell new stories is perhaps more important.
But it’s not easy for consumer brands to do second-hand e-commerce business in the Chinese market.
First of all, Chinese e-commerce platforms have been in the second-hand business for a long time, and they have already cultivated the minds of their users. For consumer brands, this is the threshold. In addition, the SKU on the platform is more complete, with the function of shopping, which is more conducive to maintaining user stickiness. Even in Taobao, Jingdong, Pinduoduo and other online e-commerce platforms, the low retail price of the flat replacement of a large number of goods.
Secondly, more e-commerce platforms are joining the second-hand recycling business, and the competition is getting fiercer. In addition to professional second-hand platforms such as Idle Fish and Love Recycling, which have a relatively large market share, short video platforms are accelerating their entry into second-hand e-commerce while transforming into e-commerce. For example, in May 2021, Racer announced that it had invested in the new generation of everything In March 2022, the second-hand goods channel was officially launched in the Jitterbug mall.
Finally, consumer brands need to invest more than e-commerce platforms that have already matured in the Chinese market, and there is greater uncertainty in terms of results.
Taking IKEA’s online channel development in the Chinese market as an example, IKEA has invested 10 billion yuan in China between fiscal years 2020 and 2022, mainly for online digital development. This figure sets a new record for the amount of IKEA’s annual investment in the Chinese market. But even so, as of fiscal year 2024, the proportion of IKEA’s online business in China had only reached 25 percent, with offline stores still IKEA’s main sales channel.
This means that IKEA will need to invest more if it wants to increase its share of the online channel. The same is true for other consumer brands.
Of course, consumer brands themselves have the advantage of being in the second-hand recycling business, such as the guarantee of authenticity.
In various second-hand platforms, the phenomenon of shopping being cheated, purchased items not matching the real thing, and paid transactions not being shipped is widespread. This has led to a poor shopping experience for many consumers. Consumer brands to do second-hand, for consumers, the biggest attraction is not to worry about buying fake goods, after-sales are also more secure.
In addition, the second-hand business of consumer brands is positively related to user brand loyalty. Only when the brand itself has enough appeal, people will consider to buy second-hand. The more enthusiastic the second-hand consumption, the higher the user’s stickiness to the brand.
Of course, at least in the current Chinese market, these bright prospects have yet to come.
For both Muji and Ikea, the main goal of developing second-hand business in China at this stage should not be to make a profit. Continuing to attract traffic and tell new stories is perhaps more important.
Header image courtesy of AI Graphics
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