Don’t go discarding your old watch or leather accessories — chances are there is an online business that could sell them. And they needn’t even be luxury labels or sought-after brands to find potential buyers out there.
In the UAE, online shopping portals offering pre-owned merchandise are starting to show up more frequently on buyers’ radar. in the first wave, those catering to the high-end — portals such as The Luxury Closet — have managed to win over buyer and investor attention.
And now, it could well be the turn of pre-owned shopping portals that aim for a wider user base to start getting a similar kind of attention. “But unlike luxury portals where second-hand designer clothes have sizeable demand, it could be other product categories that sell through mass-market shopping sites,” said Ali Haji, Head of Retail at GCP, which operates DubaiBazaar.ae and its sister-sites — secondstore.ae — selling pre-owned goods.
“Below the luxury range, the second-hand market has margins in specific sectors and segments. It could do quite well for belts, shoes, leather bags, etc.
“But when it comes to clothing, the issue becomes one of hygiene. The other problem would be if second-hand clothes are the main category, the portal could run the risk of acquiring a flea market image. Only if these are addressed properly can the clothing category acquire an attractive positioning.
“What we do see is a sea-change in attitudes when it comes to shopping online for pre-owned goods, luxury and below.”
And it’s not even a niche market that these portals are going after. According to the private equity firm MEVP (Middle East Venture Partners), across the region, the luxury category could clock annual growth rates of 5 per cent a year to touch nearly $1 billion (Dh3.57 billion) in sales by 2020. Add in all the volumes generated by mass-market portals and it will build up to quite a size. Enough for more entrants to try and gain a presence.
Investment houses like MEVP have been quick to spot opportunities — it has taken up shareholding in The Luxury Closet as well as in the equally luxury-focused Modacruz and Designer-24. “Consumers in the region, and women in particular, are increasingly tapping into the pre-owned or renting category to diversify their wardrobe without breaking the bank,” said Walid Hanna, CEO of MEVP. “In the “pre-loved economy”, buyers — or renters — can own up to 10 luxury goods for the price of one.”
For pre-owned online vendors finding a consistent supply of merchandise is the key. Even here, certain curation standards need to be met.
“Sellers — or owners — can monetise on items sitting idle in their closets, and in some cases while still owning them, which has proven to be a great source of alternative income,” said Hanna. “Hence the value for pre-loved marketplaces is becoming increasingly relevant since it offers unique opportunities for both the sellers and buyers.”
So, when should pre-owned portals hope to see a return on their investments? “Theoretically, there should be no difference on the path to profitability for pre-owned merchandise stores and platforms,” said Ali. “Currently, the acceptance of such a platform at the mid-end still needs time, especially in a place like the UAE. However, we feel the time is ripe for such a platform to establish itself as a niche offering.
“Inventory is the make or break factor in any retail set-up. The challenges are somewhat higher as the product is being acquired from a variety of vendors and quality control becomes paramount. Other than that, the basic risk factor remains the same.
“The USP for the model remains the price point, and it is this that will define the product range. As the online market continues to mature, the number of opportunities will continue to proliferate. Accordingly, we will continue to offer platforms to the marketplace that we feel are appropriate for the industry.”
Retailers change tack to target value-conscious buyers
Sales and seasonal promotions are not the only ways UAE retailers are targeting consumers these days. Pre-owned portals and outlet malls are also figuring as options.
According to Vijay Samyani, Managing Director of Concept Group, “It’s never the case that consumers in any income group will completely stop spending on their fashion and accessory choices. It is at these times that retailers should try and create different price points through off-season merchandise sales via outlet stores.” Concept operates the “brands4u” outlet stores in the UAE and plans to take it other Gulf markets.