Second-hand economy goes mainstream as shoppers hit supply knots

Until the pandemic, a new car almost always lost value the moment it left the dealership. That truism of Economics 101 no longer holds up.

The buyer of a Volkswagen Golf in Ireland, for example, could sell that car for an average of 15% more today than what it cost when it was purchased a year ago — and that's with an extra 20,000 kilometers (12,427 miles) on the odometer. The market is in a "truly unique period," according to Tom Gillespie, an economist who crunched the numbers for DoneDeal Ltd., Ireland's largest classifieds marketplace.

Prices in Ireland are particularly high because Brexit disrupted the regular flow of used cars from the UK, and there are few alternatives for right-hand vehicles in Europe. But the trend is playing out elsewhere as shoppers face shortages and delays for a lot of what's new: The secondhand economy is going mainstream and it's not just for the thrifty anymore.

The online retail market for pre-owned merchandise this year is expected to surpass $65 billion, an all-time high for the industry, according to a survey from Mercari Inc., an e-commerce site. Mercari's report showed that three in four people surveyed said they were likely to buy at least one secondhand item this holiday season.

At Miss Pixie's Furnishings and Whatnot in Washington, sales are up 30% in the past few weeks — an earlier-than-usual bump in Christmas demand at the vintage housewares shop.

"A lot of people are like 'I don't know if what I wanted to get somebody is going to get here in time,'" said Pixie Windsor, the shop's owner for 25 years. She's seeing the boost in business not just for smaller gifts like cocktail glasses, decanters and artwork, but also for tables and chairs people suddenly need to host holiday dinners.

Unlike purchases of new items that can be out of stock even in showrooms, Miss Pixie's offers customers the chance to "walk in, see it, touch it here and we'll deliver it in five days,'" she said.

In Germany, the number of people visiting the largest classifieds platform — used mainly to sell used furniture and electronics — was 20% higher in March than a year earlier, a spokesperson for eBay Kleinanzeigen said.

Mainstream retailers have joined the resale bonanza -- like the Ikea program aimed at recycling some of the "millions of pieces of secondhand furniture" that go to waste each year, or fashion giant Zalando's "Pre-Owned."

The drive to sell more sustainable products is particularly helping companies in used clothing, according to U.S. e-commerce platform ThredUp Inc., which said in a report that it sees the segment reaching twice the size of the fast-fashion market by 2030.

It's not only the availability of digital platforms and consumers' motives that have changed -- selling stuff has become a financial necessity for many people.

A survey by eBay Inc. showed that almost three-quarters of respondents across the U.S., UK, Canada, Germany and France started selling pre-owned goods last year as an extra income stream; 14% said that they specifically did so because they lost their jobs.

In addition, a report by eBay Kleinanzeigen in Germany said more than half of the people who recently bought secondhand goods cited cost savings as a key factor -- especially for under 30-year-olds, who've been disproportionately affected by the crisis in Europe.

Buyer listings searching for used cars in Germany, for example, shot up by 25% this October from September 2020, eBay Kleinanzeigen said. Offers on such vehicles, meanwhile, declined by 25%. Manufacturers such as Volkswagen say it will take years before a shortage of semiconductors stops disrupting the production of new autos.

Deidre Popovich, an assistant professor at Texas Tech University who focuses on consumer behavior, says she expects strong demand for secondhand goods to persist even after the supply logjams subside. That's because many consumers adopted more of a value mindset and sharpened their digital tools to shop for used items more easily.

Wendy Hauenstein runs 1830 Vintage, a small antique furniture and art shop in Washington, along with her husband. On the store's Instagram account, items are posted and sold within minutes.

The pandemic has reshaped how she and others in the industry keep shelves and showrooms stocked. When estate sales and auctions moved online last year for safety reasons, hundreds more people could suddenly access events that usually take place in remote locations.

"People are coming for patio furniture that you used to be able to pick up at Home Depot that you can't get anymore," Hauenstein said, giving the example of an outdoor lounge set of three chairs and a love seat that she saw online which would typically sell for $150. "And now it would be like $550. Because people can't get it." 

Disclaimer: This article first appeared on Bloomberg.com, and is published by special syndication arrangement.