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Buoyed by Sustainability Concerns, Re-Commerce is Booming in China

Secondhand clothing is taking off in China, where burgeoning consumer awareness about sustainability and the rise of resale and swapping platforms are fueling a “re-commerce boom,” according to Alizila, the news hub for the Alibaba Group.

Preowned’s market share, according to the Center for Internet Economy Research, a Beijing research group, is projected to reach 1 trillion renminbi ($144.7 billion) by 2020. Monthly active users on re-commerce platforms in China also grew 46.4 percent in 2018, or almost double the rate of users in the overall e-commerce sector, per Nielsen.

Despite its strides, China’s secondhand market—which accounted for roughly 0.6 percent of the country’s 2017 gross domestic product, according to National Bureau of Statistics and China Center for Internet Economy Research—still has room for improvement. Though a Mintel survey found that just 30 percent of urban Chinese consumers want to exclusively use brand-new items, only 9 percent of them copped to renting or purchasing clothing secondhand.

But certain factors unique to China can potentially widen resale’s scope, wrote Jing Wang, business intelligence manager at Alizila. Used garments, once shunned as “inauspicious” by the superstitious, are now viewed as the savvy or environmentally friendly choice, especially by millennials. The Sootoo Institute, which studies internet behavior in China, discovered, for instance, that 50 percent of re-commerce platform users in China are under the age 0f 24 and 34 percent between the ages of 25 and 30. More than 60 percent of the 200 million users on Alibaba Group’s re-commerce platform, Idle Fish (also known as Xianyu in Mandarin), were born after 1990.

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“Cost-conscious shopping aside, Chinese consumers these days are increasingly focused on sustainability, and that is driving the secondhand goods market as well,” Wang said. “Chinese millennials, in particular, are emphasizing rational consumption and sustainability in their shopping habits.”

Re-commerce in China also boasts more social and entertainment aspects than the more transactional-driven experience typified by the West. Idle Fish, for example, includes micro-communities, called “Fish Ponds,” that revolve around popular hobbies like photographer or fitness.

“Within each ‘pond,’ users exchange information about their hobby and post used items for sale,” Wang said. “There’s even a separate channel for celebrities, where they sell their personal items to followers. This is particularly popular for luxury shoppers, who trust the authenticity of items owned by celebrities and aspire to follow their fashion tastes.”

Idle Fish even has an in-app “game” that lets users plant virtual trees using points they receive for making eco-friendlier choices, including recycling castoff garments. Because the cartoon trees correspond to live ones in the real world, Idle Fish has reforested 933 square kilometers of land (the equivalent of 130,000 soccer fields) since the program launched last March. It has also diverted 850,000 metric tons of textiles—about 24 million garments—from the landfill.

As such, brands should not overlook the opportunity to appeal to China’s emerging generation of environmentally aware consumers, Wang said. Already, H&M has partnered with Idle Fish to reward shoppers who recycle clothing with e-vouchers they can spend at its flagship store on Tmall, one of China’s popular “super apps.”

“In the future, the ‘recycling and reward’ steps will also be additional consumer engagement points that brands can leverage to increase boost loyalty,” she added. “Also, we will likely see more brands open official stores on re-commerce platforms, making recycling part of the usual shopping journey.”