Why Should Luxury Brands Join The Secondary Market?

　　 France - Louis Vuitton Creative director for men's wear Virgil Abloh is Instagram Faithful users of limited time dynamic story functions 。 After he brought the first men's show to the brand, he sent several screenshots on Instagram almost every day, or forwarded the contents of other accounts. The most interesting part is a interception. Second hand Men's wear A picture of the website grailed.com shows a gift T-shirt ready for each guest at the press conference on the day, which is priced at $2000 at the website. Abloh drew a huge orange arrow pointing to the $2000 price tag on the screenshot and mentioned the website. Compared to words, this number 2000 is more telling.

Show gifts can be used. luxury goods market Abloh must be proud to sell such a high price, because he has proved the value of Louis Weedon. Bain & amp; Co. (Bain & Co.) data show that the global market for second hand luxury goods in 2018 is expected to reach US $6 billion.

From the very beginning, most luxury brands are deliberately away from the secondary market, and insist that second-hand trading products will damage brand value. Although the term "investment piece" has been used quickly, it is actually a rare product with the ability to preserve value. Most luxury goods begin to depreciate at the very beginning. For example, the retail price of a Louis Vuitton Speedy bag in the US is US $1020, but it sells for $795 on the secondary trading website The RealReal. Bain's partner, Aaron Cheris, said: "luxury goods are just like cars. The newly purchased Oscar de la Renta dress began to depreciate sharply from the moment it was put on.

Second, counterfeiting, luxury brands think. Secondhand market It will encourage counterfeit trading. In March 2018, Chanel sued the What Goes Around Comes Around, a luxury luxury retailer based in New York, claiming that the latter constituted trademark infringement, not only selling counterfeit products, but also letting customers mistakenly believe that they had a cooperative relationship with Chanel.

But many brands are beginning to see the benefits of joining the second hand luxury market. Bain company Data show that this sub market accounts for 10% of the luxury market. Luca Solca, director of luxury goods division at Exane BNP Paribas, Paris, France, said: "luxury companies are more active in participating in luxury luxury goods spanactions. Similar to the automobile market, this will not only enable consumers to buy more new products, but also help improve the quality of the secondary market. "

Solca also mentioned that Richemont has acquired the second-hand wrist watch trading platform Watchfinder, which indicates that the secondary market has gradually become a part of the hard luxury market including jewelry watches. And some of the soft luxury goods market dominated by garments and accessories also began to try to participate in second-hand spanactions. In October 2017, The RealReal, the major US luxury goods supplier, signed a long-term cooperation agreement with Stella McCartney. Customers who sell Stella McCartney second-hand products on The RealReal can get a gift card worth 100 US dollars, which can be exchanged at all self owned stores of the brand. )

In June, Julie Wainwright, chief executive of The RealReal, attended the annual "France America luxury industry exchange conference" (French-American Luxury Exchange) and said at one of its thematic meetings: "some brands still hate us. But those more progressive brands like The RealReal, because the second-hand market helps improve the sales of new products. If a customer knows that a product is available, Secondhand market They may be more willing to buy. Luxury companies such as Kering have launched more serious negotiations with The RealReal and other second-hand trading websites, and are exploring ways to better cooperate.

Pam Danziger, founder of Unity Marketing, a luxury industry research firm, said: "luxury brands should ensure that their products can be quality oriented and adopt a pragmatic and reliable way to recycle customers' products so that they can keep up with the trend and enhance their long-term loyalty. In fact, the only effective way is to exchange new products for secondhand goods, to recognize the value of secondhand goods, and then to sell them together. This strategy is clearly in line with the millennial thinking. "

The practice of recycling products is very common in the automotive market. Apple, which can be regarded as a luxury brand, is also selling recycled second-hand products.

But how can we make it happen? Luxury industry Full participation in second-hand spanactions? Bain partner Cheris also said: "for a single brand, joining the secondary market is very difficult. In order to make the secondary market really run, we must set up a coordinator among different brands. "

Danziger points out: "selling second-hand products is completely different from the existing business of luxury brands. In order to do a good job in second-hand business, luxury companies can only buy second-hand luxury trading platform such as The RealReal to get relevant capabilities.

Here we also list six advantages of the secondary market in helping luxury brand operations:

First, increase the sales volume of new products. Wainwright claims that 80% of The RealReal sellers spend the proceeds from the sale of second-hand products on new products, especially when they feel that they will have the chance to get the two sale in the market in the future. They will feel that buying new products is more cost-effective. Cheris said, "customers who buy new products will feel that they have spent less money, because this product has considerable residual value."

Two, expand customer groups. Secondary market allows brands to get more customers. Although low-priced goods are a common channel for consumers to come into contact with luxury brands, such as perfume, cosmetics and small leather products, the secondary market can play a similar role. Once consumers experience the products of a luxury brand, they are more likely to exchange their second-hand products for higher priced new products.

Three, increase profits. Forester Research analyst Sucharita Kodali said: "if the direct sale of second-hand goods by the brand, the brand can get some profits from the secondary market." Since 2017, Levi 's has been selling "licensed" used jeans at its own stores. APC reclaims second hand jeans from customers with new product discounts. After being renovated, these jeans were labeled Butler and sold again at APC stores, priced at the same level as the new jeans. Patagonia launched the Worn Wear program to sell second-hand outdoor clothing. For brands that are surrounded by nostalgia, selling second-hand goods is especially good for brand development. Take Prada as an example, the second-hand market is having great enthusiasm for the nylon bag launched by the brand in the 90s of last century.

Four, enrich the brand narrative. Taking the $one billion Street apparel brand Supreme as an example, its distribution strategy of Limited clothing led to the market's fanatical pursuit of its products. The emotional value of Supreme products has been best represented in the secondary market: the retail price of $36 T-shirts is used. market The selling price is over $1000 and has become a narrative tool for enriching the brand myth. Nike also adopted a similar strategy for its limited products. There are few luxury brands that will be appreciated after the sale, but none of them has the clever use of the brand narrative function of the second-hand market, just like street clothing brands. "If a luxury brand is based on quality and tradition, then it's second hand," says Richie Siegel, founder of Loose Threads, a consultancy. market It seems to prove this. But no luxury brand has taken advantage of the characteristics of the second-hand market.

Five, generate new data. At present, the brand can only get the product usage data before checkout. If you can track product life history data in the secondary market, these data will enable brands to make smarter decisions in designing new product lines. For example, if the second-hand price of a limited bag is higher than the average price in Louis Vuitton, then the brand will probably launch a duplicate version of this bag.

Six, more control 。 If luxury brands improve their participation in the secondary market, whether they are directly selling second-hand products or working with second-hand trading platforms, they can strengthen the second-hand market. market The control will eventually reduce the number of counterfeit products, stabilize product prices and better protect the brand. "The gap between second-hand products and new products will also shrink," Cheris said. This is a value-added service with little negative impact on the market. "