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As consumers worldwide embrace sustainability and economic savviness, the secondhand market is booming globally, unlocking the potential for many related business initiatives.
According to consignment company ThredUp's latest report, the global secondhand market is expected to double and reach US$350 billion by 2028. However, businesses venturing into the sector are challenged by the long-existing moral hazard caused by information asymmetry between sellers and buyers of products, which is further exacerbated by the rapid expansion of ecommerce.
Therefore, as the market grows, so do consumers' concerns. GlobalData's Secondhand Selling Market Overview reveals that the global secondhand market is constrained by concerns over the quality of secondhand products and cites authentication services as a key measure to build trust with consumers.
To address these growing concerns and build consumer trust, businesses worldwide are adopting strategic measures, focusing on enhanced trading protocols, rigorous quality controls, and data privacy measures.
Related: What Is Sustainability In Business?
1. Safeguard consumer rights through enhanced trading
As the secondhand market expands rapidly, consumer complaints are being increasingly observed. Research by consulting firm iiMedia Research indicates that concerns about product quality and inability to return were the top two deterrents for Chinese consumers considering secondhand purchases.
Meanwhile, data from a consumer complaint platform associated with China's Twitter equivalent, Sina Weibo, recorded over 200,000 valid complaints about secondhand marketplaces in China in 2021. The number indicates a 103% surge compared to the previous year, significantly outpacing the overall growth of the Chinese secondhand market.
In response to these challenges, China has adopted a dual approach involving industry and regulatory measures. Some of China's largest secondhand trading platforms, including ATRenew, have enabled the 7-day free return policy and 1-year warranty, effectively safeguarding consumers' rights and propelling standardization across the platform. Meanwhile, China's judicial bodies have repeatedly ruled that sellers remain liable for product discrepancies during transactions, even without the "7-day free return" option when the product quality significantly deviates from the descriptions provided.
Secondhand platforms are making significant strides toward building consumer trust by implementing stringent trading protocols. Ecommerce giants, including Amazon, have been refining their condition guidelines for sellers to curb the number of consumer complaints. Amazon has developed comprehensive condition guidelines with variations tailored to each specific product category. Meanwhile, a trained professional team assesses whether products adhere to these guidelines through various methods. Products failing to meet these standards are flagged, and the sellers are notified.
2. Leverage technologies for product authenticity and transparency
Using cutting-edge technologies to ensure products' authenticity and transparency has become an innovative approach by businesses to build consumer trust. In the secondhand fashion market, rampant counterfeits continue to hinder business growth, placing consumers at risk of deception. In response, digital authentication technologies have been leveraged to enable the verification of product records.
A collaborative effort that involves the World Economic Forum and several other parties within the secondhand fashion industry heralds an initiative, employing unique digital IDs for each product to enhance the traceability and verification of products from their origin. The digital ID of each product presents its comprehensive history, confirming its genuineness and quality. This system not only helps identify counterfeit products but also reassures customers about their purchases by ensuring that the products meet expected standards.
Meanwhile, a similar approach has been taken within the automotive industry to address the concern where secondhand dealers easily deceive consumers on the undisclosed accident(s) or mileage records of the vehicle. Rooted in blockchain-based solutions, the BMW Group has developed its VerifyCar application, which enables users to track and verify the complete vehicle history, including accident and mileage records, without risk of data forgery.
3. Address data privacy concerns in secondhand markets
In the digital era, the surge in online transactions and secondhand electronic devices has heightened the urgency for businesses to address data privacy concerns rigorously. As a major global ecommerce platform, Shopify currently hosts numerous secondhand and vintage stores. The platform ensures data privacy through comprehensive adherence to the Payment Card Industry Data Security Standard (PCI DSS). By meeting strict security standards designed to protect cardholder data, Shopify ensures that both shop owners and their customers can engage in transactions safely and with confidence.
The need to adopt robust data privacy measures is particularly urgent for secondhand electronics platforms, where the risk of data misuse is high. Businesses must ensure that all personal data are completely and securely erased from sold devices. However, according to data from cybersecurity provider Kaspersky in 2021, remnants of personal data were found on 90% of the tested secondhand devices, posing serious misuse risks for a range of crimes, including identity theft and targeted phishing.
Related: Unlocking A.I. Success — Insights from Leading Companies on Leveraging Artificial Intelligence
Conclusion
While unlocking abundant opportunities for business initiatives, the rapid expansion of the global secondhand market has also created a pressing call for secondhand businesses to build and maintain trust with consumers. The above three measures — enhanced trading protocols, rigorous quality controls, and robust data privacy — are vital for overcoming the challenges that impede the further growth of the market.
By prioritizing these trust-building strategies, secondhand markets could secure a more prominent role in the economy, offering a reliable alternative aside from purchasing new goods and supporting the world's transition towards a more sustainable future.
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