Gugus Cheongdam Black (Image courtesy of Gugus)
SEOUL, Feb. 5 (Korea Bizwire) – As consumers grapple with rising inflation and interest rates leading to a domestic slowdown, the recommerce market, involving the resale of used items and collectible goods like luxury and limited edition products, is gaining momentum.
Estimates suggest that the domestic recommerce market has recently surpassed a value of 30 trillion won. With sales channels sprouting rapidly, even department stores in South Korea are joining the fray.
However, the sudden surge in market size brings with it the risks of scams, counterfeit goods, and disputes, necessitating buyers to exercise caution.
According to industry insiders, the size of South Korea’s used goods market is estimated to have exceeded 30 trillion won as of February 4. Hana Financial Investment has highlighted the significant growth from 4 trillion won in 2008 to 20 trillion won in 2020, marking a fivefold increase in just 12 years.
This market’s appeal lies in the opportunity for sellers to offload unused items for cash and for buyers to acquire hard-to-find items at a lower cost. This trend aligns with the value-driven consumption of the so-called MZ generation composed of millennials and Gen Z, who prioritize experiences over ownership and view used goods purchasing as both economical and enjoyable.
Limited editions of shoes at Sold Out Seongsu (Image courtesy of Musinsa)
A report by global market research firm Euromonitor International identifies the emergence of Recommerce 2.0 as a key trend for 2024, driven by digital shopping, e-commerce growth, sustainability demands, and cost-saving concerns.
The proliferation of sales channels varies with the type of goods and transaction methods. Platforms like Karrot Market, Bungae Jangteo, and Joonggonara facilitate consumer-to-consumer (C2C) transactions, offering a wide range of items from used clothing and books to toys and holiday gifts.
Luxury resale platforms include dozens of operators like Gugus, Lux Again, Trenbe, and others, offering consignment sales or acting as intermediaries between sellers and buyers.
Gugus, with its 25 boutiques in department stores since its first opening in Apgujeong in 2003, reported a 20% increase in transactions last year, reaching 215 billion won.
The ‘Second Boutique’ in Hyundai Department Store Sinchon Uplex (Image courtesy of Hyundai Department Store)
Companies like Naver’s subsidiary Kream and Musinsa’s SoldOut specialize in the resale of unworn limited edition sneakers and fashion items, with such transactions sometimes considered investment opportunities.
For instance, a pair of ‘Air Jordan 1 High OG SP Travis Scott Fragment Military Blue’ sneakers sold for 5 million won on SoldOut, over twenty times their original price.
Department stores, traditionally known for new products, are venturing into the recommerce market due to its rapid growth.
Lotte Shopping acquired a stake in Joonggonara in 2021, and Shinsegae Group’s venture capital firm Signite Partners invested in Bungae Jangteo in 2022.
Sold Out’s Warranty Solution (Image courtesy of Musinsa)
Lotte Department Store operates an offline store for the fashion sharing platform Closet Share in its Gangnam branch, while Hyundai Department Store opened a second-hand boutique in its Sinchon branch in September 2022, attracting a significant number of young shoppers.
With the increasing normalization of second-hand transactions, major retailers are also entering the space, indicating a broadening of the distribution market.
However, the rapid expansion of the re-commerce market has also led to a rise in scams, counterfeit goods, and disputes. To combat these issues, platforms are employing experts to authenticate products and have agreements with the Fair Trade Commission and Korea Consumer Agency to recommend resolutions for disputes.
Ashley Song (ashley@koreabizwire.com)
