Understanding the Luxury Resale Market in Korea

In 2023, about $49.3 billion (€45 billion) worth of secondhand luxury products were sold worldwide, according to management consultancy Bain & Company.

The strength of the secondhand luxury market globally meets the needs of a range of consumer behaviour and expenditure: unstable economic markets have seen many exercise restraint around discretionary spending on first-hand, full price items, while those with sustained spending power can leverage the market for exclusive archival pieces. Meanwhile, environmentally conscious consumers look to secondhand options to counter overconsumption.

One particular market of interest for secondhand and resale luxury is South Korea, which is estimated to have exceeded a market size of $21 trillion as of February 2024, with Hana Financial Investment marking a 750 percent increase over a 16-year period.

South Korea as a whole is already experiencing a prolonged period of economic and cultural growth. It is the fourth fastest-growing luxury goods market in the world, while Hallyu — the Korean wave — refers to the global popularity of the country’s cultural exports and its increased relevancy. As early as 2020, sales of luxury goods in South Korea had reached $12.54 billion compared to $12.52 billion in 2019, defying challenges levelled at major markets and shopping centres globally by the COVID-19 pandemic.

Founded in 2011, re-commerce platform Bunjang is one entity leveraging the growth across South Korea’s secondary market. A market leader in the secondhand trading space, Bunjang facilitated an annual transaction volume of more than $1.8 billion in 2023, with 21 million transactions. Seventy-eight percent of these transactions were driven by Gen-Z and Millennial consumers — a cohort that equates to more than 32 percent of the total population of South Korea who are driving the adoption of secondhand shopping. Through “flex” consumption culture, many within this generational group prioritise experiences, unique items and luxury products as a means of expressing status and individuality. However, alongside this consumption trend is a phenomenon known as “jjiantech” which speaks to mindful, cost-conscious spending. The secondhand market appeals to both sensibilities.

Bunjang’s CEO, Jaewha Choi, appointed in June 2022, has been tasked with phasing in a new era of growth. Central to her strategy is Bunjang’s authentication service, “Bungae Care”, and Bunjang’s active expansion into offline consumer interactions through flea market ventures — an initiative it calls “Secondhand Is The New Black”.

Now, BoF sits down with Choi to understand how appetite for secondary goods in South Korea is evolving, the strategies that are driving domestic and international expansion and the key learnings for the global fashion industry.

How have South Korean consumer preferences and behaviours evolved in relation to secondhand luxury?

When it comes to Korean consumers’ behaviour specifically, I want to emphasise two things. The first is around the e-commerce penetration rate we have seen taking place across the country. Due to the scale of online transactions taking place, and the subsequent behavioural shifts, South Korea boasts the highest penetration of online purchases of luxury goods globally. This is why we’re seeing such an uptick in luxury resale — because these online platforms are democratising access to, and the discoverability of, luxury goods.

Unlike other markets and regions where secondhand thrifting or consignment shopping sit within the cultural mainstream, Korean consumers have historically associated shopping secondhand with financial constraints. Indeed, following the Korean War and two major economic crises within decades, secondhand was once a necessity and connected to economic hardship. But now, thanks in part to the rise of online experiences and a growing desire for luxury goods, perceptions are shifting — and thanks to the younger generations: Millennials, Gen-Z and, more recently, Gen Alpha.

These generations would immediately “experience” luxury goods and quickly resell them rather than patiently save to buy new products and “own” them forever. Sustainability is a big driver behind that, as well as making smarter economic choices. However, they are also attuned to the idea of accessibility. It’s refreshing to see this totally different perspective driving the market.

What strategies has Bunjang implemented to achieve growth in the domestic market?

Our strategies have centred around those key consumer shifts we have seen — the growing importance of immediate accessibility, reasonable prices and, crucially, sustainability. We view these behavioural shifts as a new culture in Korea — one that we need to not only be a part of, moving to meet and answer these new customer needs, but also work to proactively build this culture and drive widespread adoption.

Sustainability is becoming a big driver behind that, as well as making smarter economic choices.

We want to appeal to our consumers as the coolest e-commerce platform for secondhand and luxury — but we have also turned our attention to creating an offline community that supports and stands behind this idea of more mindful consumption.

So, we have been hosting a lot of flea markets to showcase how secondhand can be fun, changing those historic cultural perceptions. These events have become a developed strategy, hosting a flea market as often as once a month, because they act as an important strategy for raising awareness and showcase what Bunjang is all about. We have received a lot of positive comments from celebrities and influencers who want to be part of this, which is very promising and indicates that those cultural perceptions about engaging with the luxury secondhand market are shifting.

What logistical innovations are contributing to Bunjang’s growth?

Initially, due to our business model, every individual and household on our platform operated as individual warehouses across Korea. Those users — our customers — played a huge role in not only our growth, but also in keeping our logistics simplified.

However, when we opened our first authentication centre last year, we encountered fresh logistical challenges, such as intercepting product for authentication checks in the middle of transactions. Instead of a labour-intensive solution, we focused solely on building the right database and prioritised automation.

Secondhand luxury is a long-tail business because every product from an individual has a different price point due to factors such as age and signs of wear — even if items are from the same brand or even the same product.

While there have not been clear catalogues when it comes to the secondhand market in the past, artificial intelligence is set to play a huge role in making this a reality. At Bunjang, we are investing significantly into this area — everyone who opens our app has a customised, personalised feed and receives personalised product recommendations.

What are Bunjang’s strategic objectives in terms of international expansion?

When you think about the growth of e-commerce, platforms like Amazon can operate in almost every single market in the world without much differentiation in terms of products, services and logistics. The growth of the resale market looks different to the primary market because it relies on transactions between individuals. That variable results in a lot more cultural nuance and context that operators in this space have to take into consideration, making it hard for one global player to standardise the market.

For us, strategic partnerships with key players in new markets is therefore critical to building out our advantage and creating synergy with global customers. For instance, partnering with Mecari in Japan has offered a powerful route into that market.

What we find works is connecting the listings. For example, a recent feature we launched for Korean users on our platform is that, via a few clicks, they can purchase a dress from a Japanese individual they have never met — and there are a lot of innovations behind the scenes to ensure that this can take place with minimal friction for our customers. For instance, if the buyer and seller don’t speak the same language, an AI will translate all copy, including an individual’s description. Then, we alleviate the stress of delivery customs and the hassles you have to go through buying from an individual, as an individual.

The growth of the resale market looks different to that of the primary market, because it relies on transactions between individuals. That variable results in a lot more cultural nuance and context.

Lastly, I do believe a key, driving factor behind our international expansion is the appetite for Korean goods at a global level: K-brands are rising in fashion; K-pop artists are taking over the world; Korean culture, merchandise and goods are all experiencing popularity within the global mainstream — and we have the best listings. I believe it gives us international appeal — we can connect a global audience to this product. We are very focused on partnering up with the best players in the market to make that a reality.

What barriers remain to broader consumer adoption?

We continue to fight against the historic perceptions of the secondhand market — the idea that shopping within the secondary market indicates financial hardship. Just four or five years ago, when we would approach influencers about potential collaborations or deeper partnerships, we were met with some resistance thanks to the stigmas around secondhand luxury.

Educating consumers, showing them that engaging in this space isn’t far removed from buying new products on a typical e-commerce site, has been critical to growth and adoption. To make that a reality for our consumers, we are working to build an online environment where, even if you are dealing with an individual, users feel our presence. The experience has to be excellent — it is why we are working to replicate the standards you experience across regular e-commerce websites, particularly as fashion is now by far the largest category that we offer in terms of transaction volume. It’s all about creating a response to that.

In terms of user behaviour, many Koreans still wire transfer for goods, even before receiving the product. We want to change that process to eliminate buyer risk by investing significantly into solving pain points throughout the whole e-commerce journey through our platform — and to educate our consumers, to change people’s perception and habits from those that are now outdated. We were one of the first players in the market to introduce an escrow service.

What trends do you foresee shaping the future of the resale market in Korea?

I have observed shoppers using our platform are increasingly skewing towards the high-end, buying from premium brands at the top of the market such as Hermès, Louis Vuitton, Chanel and Dior. As these luxury brands dramatically increase their prices, smarter, savvier consumers are buying secondhand because it makes more sense and grants them access.

It is a natural behaviour of these younger generations to buy and sell, and to have a more transient relationship with goods. As more shoppers embrace this circularity and fully embrace resale as a key channel, we have seen the average price point per transaction grow every year. The secondhand market increasingly feels like consumers’ first choice.

This is a sponsored feature paid for by Bunjang as part of a BoF partnership.