With the ongoing pandemic and its impact on the global economy, it’s no surprise that thrift stores and used clothes are enjoying an increase in sales during this period. However, it might surprise you to know that this boost in the sale of vintage clothes started long before the pandemic started, and is on a global upward trend.
In a 2019 resale report by ThredUP with research firm Global Data, the US second-hand clothes (also known as fashion resale) market size has grown 21 times faster than the new apparel market in the last three years.
In 2019, the market size was at US$24 billion, and in 2021, at US$36 billion, and is expected to reach US$77 billion by 2025.
ThredUp is a US-based online used clothes store that went public in March this year at a valuation of US$1.3 billion, at the time of its initial public offering (IPO).
It might surprise you to know that back in 2019, a Lithuanian online second-hand fashion marketplace, Vinted, was valued at EUR1 billion (US$1.1 billion), as it operated in eleven European markets.
What about the fashion resale market in Asia?
Malaysia
To find out more about the used clothing market prospects in Asia, I spoke with the CEO of Lokein.com, a Malaysian online marketplace that focuses on vintage and used clothes, Wan Mohd Hafiz Wan Idris (Hafiz).
Lokein started in 2019, and is backed by NEXEA Venture Capital.
According to Wan, the fashion resale market clothing in Malaysia can be categorised into three: first, the thrift stores (known as bundle shops) where the customers are usually the low-income foreign workers, second, the vintage market, where the clothes are closely linked with the music industry and fashion icons, and third, the used luxury goods, where branded clothes, footwear, and accessories, such as original Louis Vuitton handbags, or original Nike shoes can be sold for significant prices.
In the first half of 2021, Lokein.com has at least MYR1.6 million (US$377,000) in Gross Merchandise Volume (GMV), which compared to the same period in 2020, is an increase of 573 per cent, and an increase of 1,0247 per cent compared to 2019.
Lokein focuses more on the second and third categories of used items, vintage clothes and original branded goods while for the first category, it is assisting with their brick and mortar thrift shops to digitalise.
Part of this increase can be attributed to the fact that they created a more secure place for buyers, where a money-backed guarantee to ensure the item bought is received and of good quality.
The buyers are not just local customers, they have seen regular purchases from US buyers as well.
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China
Lokein is now part of the Alibaba ecosystem, and thus, has insights into the second-hand goods market in China too.
“Alibaba had an 11.11 sale last year and focused solely on the sale of second-hand goods, including the luxury used fashion items, with original labels such as Louis Vuitton, Chanel, and so on. They made such a success on this, with a record sale of over 563,000 transactions per single second with their Alibaba Cloud infrastructure in their single event day on 11.11.2020,” said Wan.
Idle Fish, the second-hand marketplace of TaoBao, under the Alibaba group, is seeing a GMV of RMB500 billion (equivalent to US$77 billion) this year compared to RMB100 billion in 2019.
Overall, the used goods reached RMB1 trillion (US$154 billion) in 2020. According to a study by Beijing’s University of International Business and Economics, China has potential for more growth in the second-hand goods market.
The US, the UK, Japan, France account for 22-31 per cent of the sale of pre-owned luxury goods to the overall luxury market. China, on the other hand, only accounts for 5 per cent of used luxury goods in the overall luxury market.
What drives this market growth?
While the pandemic may have been the push factor for the rapid growth in the used clothes and luxury goods market due to consumers being more conscientious about spending habits, and lack of in-store shopping, the market was steadily increasing before the pandemic started.
So there must be other reasons involved. More importantly, will these upward sales trends continue post-pandemic? I asked Hafiz for his insights.
“Fashion resale market is about sustainability and supports a circular economy. An individual may have items that are not needed anymore. However, instead of throwing it out as a waste, why not resell that item and earn money on it?”
“The awareness for sustainability is not just driven by the young people anymore. In China, in the rural areas, the rural “aunties” are buying up used luxury goods, such as second-hand LV handbags and other branded goods.”
Luxury brands’ e-commerce growth in Tier 3 and Tier 4 cities has seen an increase of 80 per cent growth over the year, according to Alibaba.
More people are now concerned for the environment, with a preference for higher-quality clothes rather than fast fashion that are of lower quality, and they do not want their items to go to waste.
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People are now used to the sharing economy, from ride-sharing, bike-sharing, e-scooter sharing, and so on, and hence are also used to having a used item.
Technology, such as online marketplaces, has been the enabler for the vintage and fashion resale market to grow, around the world.
Wan ends the discussion with that second-hand marketplace platforms, other than connecting buyers with sellers, provide the assurance service for the quality of the used items sold are as described.
In addition, he said that that Lokein, as a technology startup company, in the e-commerce space, has also expanded to provide e-commerce mobile storefronts software as a service known as Lokein.Store to the Malaysian small, medium enterprises (SMEs), to help SMEs to continue to operate during the lockdown periods, under the Belanjawan 2021 e-commerce initiative, partnering alongside Malaysia Digital Economy Corporation (MDEC) and Ministry Of Finance.
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