1、uncommon senseTMFrom rags to riches The rise of the second-hand marketplace02|OC&C From rags to riches What we cover in How big is the second-hand market?Why is it so popular?What are the key factors driving second-hand growth?How is it transforming business models?Whats in store for the future of s

2、econd-hand?What are the implications for companies and investors?this reportsecond-hand goods is equivalent to the GDP of.The estimatedof second-hand goods are transacted through online marketplaces,the equivalent of.$180BN$90BNHow we created this report OC&C have conducted extensive desk research t

3、o estimate the size of secondhand markets through third party market and media reports Sizing was sourced at a vertical(e.g apparel&clothing,electronics,furniture etc)and market level(US,UK Europe etc)in most cases Where there were gaps in data,extrapolation was used to size the global market by est

4、imating a spend per capita on secondhand or using secondhand as a share of first hand and extrapolating to the remaining markets or verticals The report is focused on emerging secondhand categories and as a result,the more mature automotive category is excluded.China is also excluded from our figure

5、s given a different set of market dynamics and lack of reporting Sources include Statista,Ibisworld,Thredup,Euromonitor,Future Market Insights and media outlets such as Wall Street JournalOC&C From rags to riches|03By creating a large network ofbuyers and sellers in an easy-to-useuser interface,it i

6、s marketplaces that have leveraged this highly scalable,low investment model(vs traditional retail)to change the face of retail and how businesses interact with customers.It was only a matter of time until the second-hand market followed this trend.Historically reserved for charity shops and car boo

7、t sales,the internet gave buyers and sellers a new way to connect and trade second-hand goods across an increasingly diverse range of categories.Initially,this discovery was happening through classified sites,such as Craiglist or Gumtree,which Over the last fifteen years,the second-hand economy has

8、been radically transformed;firstly by the internet,and then by online marketplaces.Summaryfailed to fully solve a number of pain points faced by both buyers and sellers,including facilitation of transactions,trust and verification to name a few.The shift to online marketplaces changed everything.By

9、increasingly managing transactions end-to-end supported by additional valuable services,theyve created a network of buyers and sellers who can seamlessly trade second-hand goods through a secure and transparent process,across countries and continents.The second-hand market(excluding automotive)is wo

10、rth$180bn,and 50%of this($90bn)is transacted through online marketplaces.This represents a growth of 70%from 2017-2022,and is driven by powerful,global trends that suggest the sector is here to stay.Outside of automotive,second-hand today accounts for over 10%of the value of all goods transacted thr

11、ough online marketplaces,including new goods.Economic and environmental incentives,combined with the normalisation of second-hand goods,have transformed the market across multiple categories.Despite this,there is still significant headroom for growth,as the sector is only a fraction of the size of t

12、he first-hand market.As trends driving second-hand increasingly impact consumer behaviour,we project the second-hand market to grow to$330bn by 2027,a 13%pa growth.TOTAL CONSUMER GOODS SPEND BY CONDITION AND SEGMENT,WORLD EXCL.CHINA,$BN(2021)Excludes Automotive,Antiques(including Arts and Collectibl

13、es)Source:Euromonitor,Statista,Globaldata,ECommerceDB,Digital Commerce 360,Desk Research,OC&C analysis.Excludes VATSecond hand First hand 5%95%2%98%6%94%94%1%99%4%96%16%6%84%(79)(1,454)Apparel/AccessoriesFurniture/Homeware(exc household appliances)Consumer ElectronicsDIY/Gardening /PetsHome Applianc

14、esBooksTotal3,831(19)(797)1,533(47)(790)816(6)(782)837(15)(377)393(16)(182)(87)(4,287)10304|OC&C From rags to riches Consumers are both owning more goods and owning them for a shorter period of time across all categories,most notably fashion.Global clothing production has doubled since 2000,due to g

15、reater supply and the onset of fast fashion.The success of second-hand can primarily be explained by four key areas driving growth:1.Increasing velocity of first-hand goodsWhy is second-hand so popular?APPAREL SALES VOLUMES&ITEMS PER PERSON,2010-30F2 Indexed(2010=100)1.Includes childrenswear,exclude

16、s footwear;2022-26 forecast is a Euromonitor projection;2026-30 based on outer-year growth in Euromonitor forecast.Source:Statista,Globaldata,The Economist,Euromonitor OC&C analysis.2002109150Forecast(Euromonitor data)31242.7%1.4%1.2%2.4%CAGR2010-21CAGR2021-30F1.5%0.

17、9%20202025F2030F000Global PopulationApparel Sales VolumeItems per Person UKAvg*DENLThe primary reason buyers shop second-hand is to reduce their spending,with 66%of European consumers citing this as a motivating factor.With products significantly cheaper than first-hand,the mar

18、ket is the preferred option for a growing number of customers.The second-hand marketplace also creates opportunity for users to monetise their unwanted goods by re-selling them.With less disposable income due to inflation,the incentive to make small margins on unused goods is higher than ever.2.Savi

19、ng moneyMotivation for Buying Second HandShare of respondents(%)73%66%66%61%Save moneySecond hand is cheaper than first handOC&C From rags to riches|05Avg*NLUKUKNLDEDE20%41%19%Wider selection of products42%35%37%Create less waste73%of clothing is disposed as landfill,95%of which could be recycled or

20、 resold as second handDue to the reduced price of second-hand goods,consumers are able to trade up,purchasing luxury and premium brands they wouldnt otherwise have access to.4.Trading up The ever-growing importance of sustainability and the green agenda is the next most common reason to shop second-

21、hand,with 40%referencing this as important.Individuals are increasingly aware that their consumption habits have a major impact on the planet and are moving away from fast fashion because of this.3.Sustainability38%26%Avg*Average of DE,UK,NL06|OC&C From rags to riches The gamechanger:online resale m

22、arketplacesTheyve also solved a number of consumer“pain points”that have historically been significant barriers to transaction:Maximising sale value and speed of sale by providing scale networks of buyers and sellers,often operating on a global basis Driving ease of transaction for sellers,particula

23、rly through the growth of easy-to-use mobile apps that make it easy to prepare an item for listing,handle payments and provide shipping solutions Creating a retail environment for buyers,that builds engagement through a compelling user interface,breadth of choice and transaction enablement through f

24、inancing and payment handling Building trust through authentication,warranties,escrow services and customer supportOnline marketplaces have fundamentally transformed second-hand by allowing consumers to find buyers and sellers,enabling them to transact directly online through trusted platforms.Secon

25、d Hand Goods EcosystemDriving offline categories online Improved resale Ease of transaction ProfessionalismDriving spend in new categories Reducing category specific barriersDisposal Channels Recycling Disposal ExportOnline-focused second-hand resale Online marketplace Online classifiedsBuyerOffline

26、-focused second-hand resale Online retail Auctioneers EventsRental Channels Individuals or businessesOnline marketplaces are driving second hand by:OC&C From rags to riches|0770%of consumers say its easier to shop second-hand than it was 5 years ago,thanks to the emergence of online marketplaces.The

27、yve introduced a range of logistics services to transport large items,as well as near me functions to find goods in close proximity,removing the need for practical organisation on an individual level.Second-hand MarketOnline marketplacesAuto (Offline&Online)$2.2tn($0.1tn online)Offline$0.1tn($0.1tn

28、online)ALL CATEGORIES EX AUTO$0.1tn Second-hand transacted through online marketplacesNew Goods$1.1tnSecond-hand Consumer SpendEstimated%OnlineClothing$80bn40%Consumer Electronics$50bn50%Furniture&Homewares$20bn50%Home Appliances$15bn50%Books$15bn80%Online Marketplaces Consumer SpendSecond-hand Onli

29、ne Penetration Growth%pt,1921Clothing$80bn+6%ptsConsumer Electronics$50bn+10%ptsFurniture&Homewares$20bn+2%ptsHome Appliances$15bnn/aBooks$15bn+16%ptsTotal Consumer Spend,2021,excluding ChinaAs a result,second-hand sales through online marketplaces have soared to c.$90bn,representing c.50%of the sec

30、ond-hand market;an increase of 8%pts in just 2 years from 2019-21.This also represents c.13%of the total online marketplaces(including new goods)transacted value and is a growing share of online,expected to grow nearly four times its current size by 2026.08|OC&C From rags to riches How theyre transf

31、orming business modelsThe second-hand shift to online has spawned several new and innovative business models,which are in turn introducing new consumers to marketplaces.Emerging models have reduced the barriers to transaction and created vast networks of consumers and businesses able to benefit from

32、 their platforms.By offering users the ability to browse in a retail environment,theyve created a familiar setting which emulates that of purchasing first-hand goods online,removing the logistical difficulties of purchase,a historic pain point of second-hand goods.Market Map of Existing Second-hand

33、Players and New EntrantsOperating ModelNewClassifiedsTransactional Marketplace(Fixed Price)Transactional Marketplace(Auction)RetailersUsedAntiqueMerchandise ConditionCLASSIFIEDSHYPER-VERTICAL SPECIALISTSGENERALIST ONLINE MARKETPLACETRADITIONAL AUCTION HOUSESLARGE-SCALE MULTI-VERTICAL MARKETPLACESONL

34、INE-ONLY AUCTION SITESTraditional Retailers moving into second-hand products Donations C2B2C C2C ListingsConsumer ElectronicsFashionToysACBOC&C From rags to riches|09 Why it wins:Automated processes and easy to use apps to make it easy to buy and sell-e.g.payment processing,categorising items.Cheape

35、st possible model for the platform.These models work best for mass-market second-hand goods,bringing buyers and sellers together in a zero friction transactional model.By focusing on vertical-specific models,marketplaces are most likely to drive growth,catering to consumer interests and offering ext

36、ensive choice within each sub-category.The C2C model is economical in serving low-price transactions,as users can choose from multiple options and compare prices,creating competition that drives quality.CASE STUDYA leading online marketplace for second-hand apparel,accessories and baby,Vinted has gr

37、own its share of traffic against competitor players and is now the leading vertical marketplace with 50m+users across 16 countries.Having begun as,and grown significantly in,a specific vertical(apparel),Vinted is now leveraging its position to grow into a broader set of categories including homeware

38、s and books.France:share of total traffic by player(total visits in the year)EMERGENCE OF HYPER-VERTICAL C2C MARKETPLACES Source:Similarweb69%63%59%16%16%12%18%2%2%1%1%1%26%12%2019Vide DressingVestaire CollectiveStockXBack MarketVintedEbayLeboncoin20202021Vendor(Usually individuals)End consumerVendo

39、rs(usually individuals)list clothes onlineVinted pays vendors,charging a 10%buyer protection schemeConsumers pay through VintedVinted provide delivery,insurance and customer serviceA10|OC&C From rags to riches GROWTH OF REFURBISHED GOODS B2B2C OR B2C MARKETPLACESCASE STUDYThese marketplaces bring to

40、gether a network of small,local refurbishers with individuals.By gaining verification,refurbishers meet minimum standards,meaning the marketplace can offer transparency on condition and warranties and build consumer trust.Why it wins:The marketplace links previously local refurbishers to large audie

41、nces under an asset light model(refurbisher buys and ships the devices)Its the ideal model for high-value electronics,where condition and warranty are critical for success.Enhanced transaction protection and rigorous testing processes for vendors are most likely to generate growth,as theyll help ens

42、ure consumers have confidence in the quality of the product.This trust is essential for second-hand electronic goods,and marketplaces create an easy and unbiased space to compare these across businesses.Renovated goods experts Back Market,launched in 2014,have expanded quickly through establishing t

43、rust in the refurbished electronics space.The marketplace enables vendors to list their inventory using a dedicated seller portal which offers industry insights and a unique algorithm to drive margins,creating an effective user experience for both buyers and sellers.Their large inventory also offers

44、 impressive choice to consumers,with 800+partner sellers and over 200k products listed.Their capital raised increased from 0.3m to 510m from 2018 to 2022 and is expected to continue to grow as the business expands globally.Long Tail of Refurbished SellersRefurbishing FactoriesRepair StoresRecycling

45、CompaniesRefurbished Goods Traders and WholesalersLeasing Companies800+TRUSTED PARTNERS IN 2022Electronics sellers are able to apply to list their inventory with Back Market with a dedicated seller portal providing customised industry insights,a unique buybox algorithm to drive margins,and access to

46、 a large online audience of over 20 million monthly visits according to their websiteConsumer2m+MONTHLY VISITS FROM AustriaBelgiumFinlandFranceGermanyGreeceIrelandItalyNetherlandsPortugalSlovakiaSpainSwedenUKUSAJapan200k+LISTING COVERINGSmartphonesMacbookTabletsAudio EquipmentSmart WatchesGames Cons

47、olesTransportationSmall AppliancesCamerasBack Market does not refurbish the products it lists but instead connects consumers to over 200k products listed through its 800+partner sellersSellers Upload StockRevenue Minus 10%CommissionSeller Purchase+ShipmentPaymentBack Market Warranty+FinancingBOC&C F

48、rom rags to riches|11This model provides buyers with verified,quality-checked products,creating trust and willingness to transact.This can involve direct purchase and sale of goods or a consignment based model.Why it wins:High value goods require the highest degree of trust which this high touch mod

49、el brings through item preparation,authentication and escrow services.The model is economically viable due to higher marginsIts a winning model for premium and luxury goods(apparel,accessories,jewellery,watches and antiques),providing trust through verification and authentication.CASE STUDYResale sp

50、ecialists Vestiaire Collective provide product authentication and curation for designer goods.As consumers are seeking premium quality brands or pieces for investment,authentication and condition checks are vital,increasing consumer trust in the platform.These inspections involve a multi-tiered appr

51、oach carried out by a team of industry experts,initially checking the product listing,and then physically examining it once the transaction has taken place.Once an item has been purchased,the seller has the option to send it to Vestiaire or directly to the buyer,covering a range of customer preferen

52、ces.Significant marketing campaigns have led to industry-leading growth and conversion of 19%,compared to 8%for the total market.This is only expected to grow with time,as visits to Vestiaire from customers on other sites is increasing,suggesting growing interest in the platform from luxury consumer

53、 traffic.10%0%10%20%30%40%50%60%21%0%Jul 2020Jan 2021Jul 2021Jan 2022Jul 202270%Vestiaire CollectiveWeighted Avg.of 5 CompetitorsOption#1 for products under$500,sellers can ship direct to consumers without AuthenticationIndividual OR Professional sellerEnd consumerOption#2 ship to Vestiaire Hub,and

54、the product is authenticated for$15,then sent to consumerSource:SimilarwebDIRECT TO CONSUMER RETAIL/AUCTION MODELSYear-on-Year Growth in Monthly Site VisitsC12|OC&C From rags to riches FROM RAGS TO RICHESThe overall second-hand market is expected to grow to c.$330bn by 2027,with existing customers s

55、elling more second-hand goods and new buyers and sellers drawn into the market.Whats in store for the future of second-hand?$330bnSize of the secondhand market by 2027,representing13%pa growth 2022-27As well as several long-term global trends driving the growth of the second-hand market,there is a g

56、reat deal of unlocked potential in goods that we throw out,recycle,donate to charity and everything we forget exists in the garage,loft,and the back of our wardrobes.Even in the most mature second-hand categories such as apparel,there is headroom for growth,with only 30%of items for resale transacte

57、d.Other sectors,such as furniture and homewares,are projected to grow significantly in coming years.By capitalising on locally focused marketplace models,which have potential to explode onto the scene,theyll contribute to the overall rise of the market.Those who shop second-hand are also proud promo

58、ters of the industry,with 75%of customers going out of their way to tell others they do so.This stems from a gradual shift in public perception of the sector,which is now considerably less stigmatised than it was ten years ago.Volume of Clothing Purchased and Re-soldUSAItems PurchasesKept/Not fit fo

59、r resaleDisposed,Recycled or DonatedFit for resale items leaving wardrobeRe-sold1813(71%)5(29%)8(47%)4(24%)Partially addressable:Some lower grade clothing could be resold for a lower price or clothing that is kept but rarely worn could be resoldAddressable to second hand sales:47%of purchased items

60、are disposed,recycled or donated when they could be resoldSource:ThredupSource:OC&COC&C From rags to riches|13Second-hand is,therefore,an emerging form of revenue for retailers.The number of stores getting involved with re-sale has increased by 275%since 2020,and is expected to skyrocket in coming y

61、ears.Retailers have the chance to use these models to acquire younger and more price-conscious shoppers,as well as building positive brand perception.There is growing customer demand for the availability of in-store second-hand products,with nearly half of Gen Z and Millennials stating theyre more l

62、ikely to shop with a brand that offers second-hand clothing.As more retailers opt into this trend,theyre expected to become increasingly in vogue as awareness and ease of access continues to grow.Its also becoming easier to break into the re-sale ecosystem.Former barriers to entry,such as reluctance

63、 of stakeholders and the concern that it would decrease first-hand sales,are being re-examined by brands in the context of ESG policies.The existing schemes vary loosely in their approach;some have care and repair services;others donate a margin of the profit to charity.FARFETCH,for example,enables

64、each customer to split profits with a charity of their choice.Positive re-sale sentiment is increasing rapidly,with nearly 75%of retail executives saying they have,or hope to,offer second-hand to their customers,up 14 pts from 2020.88%of retail executives who currently offer resale say its helped dr

65、ive revenueBrands doing itA number of retailers have launched take-back schemes,in which customers can trade in old apparel in return for a voucher to spend in-store,worth up to 50%of the initial price.Retailers want a slice of second-hand successSource:Thredup14|OC&C From rags to riches There is hu

66、ge potential for a range of companies to participate in the rise of second-hand marketplaces and what you should be consideringWhat do I do about it?BUILD ON YOUR STRENGTHS To date,success has often been driven by vertical-specific proposition;consider building on your existing verticals in where yo

67、ur expertise can solve for consumer pain points.This is particularly crucial in“emerging”second-hand verticals(furniture,homewares).SUPPORT YOURSELVES TO GROW Building inventory is crucial to generate demand and a network of returning consumers(and promoters);invest in your supplier base and incenti

68、vise them to list more and often.BROADEN INTO ADJACENT SERVICES Second-hand propositions still have a long way to go;consider participating in adjacent areas,such as new services that improve transparency,ease of transaction and trust,or even new propositions like service-based marketplaces.if youre

69、 an online marketplaceif youre a high street/online retailerCHOOSE A BUSINESS MODEL Consider which second-hand business model is right for you and your customers;whether it is the“buy-back”of used goods in-store for a voucher,or fully participating in an end-to-end second-hand retail experience onli

70、ne.OFFER SOMETHING MARKETPLACES CANT Leverage your customer experience teams,consumer(buyer)data and stores to offer second-hand in a way that marketplaces cant whether it is for consumers to drop off second-hand inventory,or by incorporating second-hand into the store experience.FORM PARTNERSHIPSWi

71、th second-hand marketplaces and retailers to leverage their expertise and build your own participation.This can be enabled through online marketplaces as a sales channel for stock you buy-back,or as an outsourced channel to handle second-hand.Alternatively,partnerships with logistics providers who c

72、an organise and distribute second-hand returns.OC&C From rags to riches|15KNOW THEIR NICHE AND SERVE IT WELL understanding the needs of the specific verticals and customers they serve and solve for their specific pain points.WILLING TO INNOVATE second-hand propositions are still maturing;the winning

73、 propositions have not yet developed.WINNER TAKES MOST the importance of inventory and the network effect means that the winner takes most;this does not mean that others cant co-exist,particularly when serving specific market niches.ENABLE SECOND-HAND LOCALLY Consider how existing local services(e.g

74、 recycling centres,charity shops and clothes banks)can drive the second-hand flywheel;huge amounts of re-saleable products are disposed of every day and marketplaces can be a way for these to be re-sold.ADAPT THE TAXATION SYSTEM Marginal VAT/sales tax schemes already apply in most markets for busine

75、sses,but its worth exploring whether these schemes are fit-for-purpose in a market that is increasingly transacted online.A growing number of the top 100 online marketplaces offer second-hand,supporting a second-hand market that will be an attractive and resilient market for years to come.We think t

76、he winners are going to be those that:if youre a brandif youre a government bodyif youre an investorGO DIRECT Consider offering second-hand direct to customers through your own store which allows you to provide a curated experience and trust that no one else can provide;this can work well for higher

77、 value goods in particular.FORM PARTNERSHIPSWith second-hand marketplaces and retailers to leverage their expertise and build your own participation.This can be enabled through online marketplaces as a sales channel for stock you buy-back,or as an outsourced channel to handle second-hand.Alternative

78、ly,partnerships with logistics providers who can organise and distribute second-hand returns.OFFICESBelo HorizonteBostonHong KongLondonMelbourneMilanMunichNew YorkParisRotterdamSo PauloShanghaiSydneyWIf you would like to discuss any of the themes covered in this report,wed be delighted to talk.Mostyn Goodwin Ankul Wangoo OC&C Strategy Consultants 2023.Trademarks and logos,including Uncommon Sense,are registered trademarks of OC&C Strategy Consultants and its licensors.For the latest insights follow us on: