This story is part of Next in Asia, a series exploring the impact of technological and economic transformations across Asia-Pacific and the influence on local style, community and culture. Read part one on the enduring appeal of Japan s luxury market; part two on South Korea’s next big fashion import; part three on why fast fashion is flooding Japan; part four on the fashion opportunity for Asia’s largest metaverse platform; and part five on what comes after K-beauty.
The secondhand market for luxury goods is heating up in Asia after years of existing in the shadow of the primary market. While resale platforms like The RealReal, Thredup and Depop have gained traction in the West, adoption in Asia has been slower, hampered by concerns about counterfeiting, an ongoing perception of social status being attached to new goods, as well as superstitions around wearing other people’s clothes.
The tide is shifting as younger, upwardly mobile generations in countries such as South Korea, China and Japan show an interest in pre-owned fashion. Thredup estimates that the global secondhand market will grow to $248 billion by next year and to $351 billion by 2027. Demand from Asia-Pacific will fuel the worldwide secondhand market, which is predicted to grow more than three times faster than the new apparel market.
Asia’s luxury resale industry is fragmented, with a variety of business models, due to differences in language, culture and regulatory environments. Some operate as peer-to-peer marketplaces, while others hold inventory from sellers, as well as selling new products mixed with secondhand goods. A large proportion of secondhand sales have taken place across social platforms such as Facebook Marketplace and tend to be low-value everyday goods. That’s changing, however, as newer resale platforms push to make their names known by luxury brands and consumers.
South Korea has peer-to-peer platforms such as Kream, owned by tech giant Naver, and SoldOut, operated by fashion e-tailer Musinsa. Japan has Mercari and Zozoused, which both sell a broad array of pre-owned goods, specialist sneaker site Snkrdunk and secondhand stores like Ragtag and Brand Off. In China, Alibaba’s online secondhand marketplace Idle Fish, online fashion resale site Plum (also known as Hongbulin) and streetwear marketplace Poizon (or Dewu) are paving the way. Asian consumers are also beginning to warm to international players such as Vestiaire Collective, which is now in Hong Kong, Singapore and South Korea, and StockX, which started operating in South Korea in 2021.
While Asia’s resale market is still in its infancy, there is clear potential for further growth, although the drivers are sometimes different to Western markets, with consumers mostly motivated by environmental concerns and affordability. Those factors do also play a role in Asia, with people eager to “flaunt luxury items [without] paying the pinch of paying full price, especially when luxury prices are continuously rising”, according to Victoria Neo, a social strategist at ad giant R/GA in Singapore.
However, there are also varying cultural preferences at play. In trend-driven Korea, there is growing demand from young consumers for limited-edition drops or pieces worn by their favourite stars. Japan is a mature market with plenty of physical secondhand stores, many now also selling online. The focus there is on quality pieces that can find a second home. Meanwhile, the maturing Chinese luxury consumer is developing a greater appreciation for vintage and unique one-of-a-kind goods they may not be able to buy in a department store.
The battle for dominance
South Korea’s Kream is a name to watch. Chief business officer Gabriel Mingook Kim has ambitious plans for the platform to become a dominant player, not only in South Korea (where it already has a 90 per cent market share) but more widely across Asia. Founded in March 2020, Kream made its name as Korea’s go-to destination for hot sneaker styles from brands such as Nike, New Balance and Adidas. To boost user acquisition, it acquired popular online resale community Nike Mania for KRW 8 billion ($6.9 million) in 2021 — “a huge game changer” for the business, according to Kim. “[Nike Mania] had almost a million users back then, and a lot of sneakerheads were part of the community. We needed a huge volume of users in the beginning so that transactions could flow.”
Today, Kream counts 5.3 million monthly active users (about 1 million use the platform daily). It pulled in $1.4 billion worth of gross merchandise volume (GMV) last year — an impressive feat in comparison to peers such as Korea’s largest direct-to-consumer e-commerce platform Coupang, which took four years to pass the billion-dollar GMV mark. Kim’s target is to hit $2 billion in GMV by the end of 2023. Some 50 per cent of GMV derives from sneakers. Kim is keen to develop the broader luxury category. Some of the platform’s most popular searches include various editions of Rolex’s Submariner watch series and Chanel’s Gabrielle, 22 and Boy handbag styles. He also wants Kream to appeal more to women. Currently, 65 per cent of transactions are by consumers who identify as male.
Korean tech giant Naver has set its sights on global expansion to compete against US rivals’ virtual worlds. It’s positioning its metaverse platform Zepeto as an online destination for brands looking to reach Gen Z.
On its current trajectory, Kream will break even by the end of the year, says Kim. In March, Kream raised $168 million (220.6 billion won) in a Series C round that valued it at about $742 million, more than double its previous valuation of $306 million in October 2021. The funds will be used to diversify its business model. Category expansion and strategic M&A are top of mind. The platform recently paid $1.7 million for a 22.47 per cent stake in Shake Hands, owner of Malaysia s biggest sneaker resale community SneakerLah, and it’s invested in several Asian online resale platforms, such as Sasom in Thailand and Soda in Japan. Vietnam is next, according to Kim.
“C2C [customer-to-customer] resale is a new type of commerce that will happen in every single country,” Kim predicts. “When it comes to commerce, being a global player is difficult because local operation is critical. We see a lot of synergies in having a cross-border inventory network.” Consolidation is a priority. “Each APAC country has its own winner in the C2C resale category, so we decided to find the one with the most potential and invest up to 40 per cent.” The preference for taking majority stakes, rather than outright acquisition, retains and motivates company founders, he notes.
Building trust
Streamlined services, fast transactions and high service levels are key to a platform’s success, says Damien Yeo, consumer and retail analyst at research firm BMI.
At launch, Kream offered zero buyer and seller fees to help boost sales. That’s a strategy that can easily be copied and isn’t sustainable in the long run, says Kim. Kream now takes a 4 per cent seller fee and 3 per cent buyer fee — still lower than the industry average (StockX, for example, takes a 15 per cent commission on sales).
Storage service is one feature that sets Kream apart. The platform encourages sellers to store their inventories in its warehouse in order to facilitate “a much better buyer experience” and speed up the process, says Kim. “We can do the authentication before the transaction happens, and once the product is sold, we can ensure fast delivery — as quick as within a day.” While Kream has to manage the logistics of storage, it’s worthwhile because it stops users from listing their products across multiple sites, he says.
But the biggest challenge for luxury resale platforms in Asia is counterfeiting. Many consumers are concerned about being deceived by scams, experts say. “Platforms should ensure rigorous processes to guarantee the authenticity of products, although it may require investment in technology and expertise,” advises R/GA’s Neo.
An incident in January 2022 cemented Kream’s reputation as a reliable platform. A customer who purchased a Fear of God Essentials shirt from competitor Musinsa attempted to resell the product on Kream. Upon inspection, Kream concluded the shirt was counterfeit and noticed several questionable Essentials products listed on its platform. Sales of Essentials T-shirts were suspended, and clients who had bought fakes were reimbursed at double the cost of their original purchase.
At the time, Musinsa dismissed the possibility of its products being dupes and said that it had requested authentication from the Korea Appraisal Institute of Luxury Goods. The move sparked debate about whether Kream itself was trustworthy. Fear of God then confirmed the products were indeed counterfeit. “Normally, luxury brands don’t comment on these kinds of things, but they confirmed that the products were not made in their factories. They pointed out the reasons, such as stitching, which is exactly what our team identified,” says Kim. “People realised our authentication was reliable, and that improved our brand awareness dramatically.”
Products on Kream’s platform are scrutinised for flaws, no matter how minor, he says. “If we see a scratch, we’ll take a photo and ask the buyer if they still want it. It’s their choice. They can say no. The important thing is seeing all these processes, which help to build trust.”
Global influences
Social media plays a big role in influencing consumer behaviour in Asia. Young consumers have long been motivated by K-pop trends and local heroes such as Blackpink’s Jennie. They have also sought to emulate the styles of Western stars such as Kendall Jenner, notes Kim. But change is on the way. Now niche influencers are developing their own online communities around specific interests. “Three to four years ago, a pop star like G-Dragon could drive the trend. That era of celebrity-driven fashion is almost over. Jennie was the last one who had a huge influence on the consumer,” claims Kim.
China’s so-called ‘fan economy’ is much discussed, but “the reality is that only a handful of celebrities truly have the power to drive consumer purchases,” says Pablo Mauron, managing director and partner of Digital Luxury Group in China. There’s opportunity aplenty in the key opinion leaders or micro-influencers who have built up a fanbase on platforms like Xiaohongshu (Little Red Book), he argues. “People are looking for alternative voices and are turning to Red because they want to see what people like them have to say.”
Asia’s young consumers do prefer to shop for the same brands rather than strike out on their own, Kim notes. Many culturally homogenous societies across Asia find comfort in conformity rather than individuality. “Out of the 50 million people living in Korea, almost half of the population live in Seoul. Everyone’s looking at each other and how they’re living. It’s a country where everyone wants the same thing,” he reflects. Nike Dunk Low shoes dominated searches in 2020 before consumers moved onto Adidas Gazelle and Samba styles and Ugg’s sheepskin boots in 2021 and 2022. Today, Crocs and rain boot brands such as Hunter and Moon Star, as well as offerings by Chanel and Celine, are the most popular, says Kim.
Besides streetwear and luxury, Kim hopes to see more contemporary and fashion brands on the platform. Kream launched its B2C marketplace eight months ago, making designer brands — mostly Korean — available to purchase while taking a sales cut of 20-30 per cent. “There are some labels that aren’t present on a C2C basis, but we believe they’re good brands and want to introduce them to our users,” says Kim. Featured brands include Polyteru, Under My Car, Ojos and Stu, all of which have “a very deep fan base”.
South Korean brands are well-placed to thrive, Kim believes. “Gentle Monster is just the beginning. Foreign consumers are curious about Korean brands,” he says, predicting a more substantial global presence over the next three to five years. Kream’s strategy is to make those brands available to the world. B2C currently accounts for 2 per cent of the business, but Kim’s long-term target is 30 per cent.
Regardless of whether a platform is B2B or C2C or both, “a key criteria of success is the ability to provide service, more than just being a matchmaker”, says Digital Luxury Group’s Mauron. “It’s not just a numbers game, but it’s really about the quality of inventory, the service offered and everything that goes around that.”
Kim is banking on Kream’s premiumised offering with its high service levels. “If you want to buy a bottle of water, you go to Coupang,” he says. “But if you want a fancy black dress, you come to Kream.”
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