August 28, 2018 12:35
The sluggish economy has spurred demand for second-hand products, one of very few areas of business that are booming in Korea.
The market for second-hand products excluding cars is scaled at around W20 trillion, according to industry experts (US$1=W1,114). Up until 2008, the market for second-hand products was worth only W4 trillion, but it has since grown five-fold.
In Japan, which is often ahead in such trends, the popularity of second-hand products can be seen through the success of the second-hand retail app Mercari. The service started in 2013 as an online flea market but has grown into a business capitalized at W5 trillion, rivaling Korea's No. 1 retailer Lotte Shopping, which is worth W5.1 trillion. Mercari accounts for 60 percent of Japan's second-hand market, which draws more than 10 million customers a month.
Investment consultant Kim Ki-joo said, "The market for second-hand products is burgeoning into a huge industry as technological developments brought changes like the spread of smartphones and growing number of single households."
In Korea, banks and venture capitalists are boosting investment in second-hand retailers. Jungonara.com, Korea's No. 1 online flea market, has so far secured W13 billion in investment from venture capital firms.
A staffer at Kiwoom Securities said, "We decided to invest because we expect major growth in the market because the tougher the economy, the higher the demand for second-hand goods."
Jungonara.com CEO Lee Seung-woo said, "Our company got a major boost during the global financial crisis in 2008 and has been making even bigger growth over the last two years."
But the problem is that sales of new products shrink instead. A key example of this is books. Last year, the average monthly spending on books among salaried workers was just W15,000, and it has been declining every year. Industry watchers attribute the decline to the growth of large second-hand booksellers.
The market for second-hand clothes, which constitutes the biggest proportion of the used market, depresses demand for new clothes. Last year, Korea's clothing market shrank 1.6 percent and this year it is expected to shrink another 0.2 percent. The market for new home appliances like air conditioners also shrank 2.5 percent this year.
But some industries benefit from the growing popularity of second-hand products, like delivery and packaging. Other beneficiaries are repair shops.
"Consumers will continue to favor some new expensive products that keep their value can be resold for a good price," said Suh Yong-gu, a professor at Sookmyung Women's University. "We may also see new business opportunities open for high-end brands that whet the appetites of consumers."
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