The emerging phenomenon of the Second-hand Luxury Market in China: Online clothing rental services | Daxue Consulting
How popular are clothing rental services in China?
The second-hand luxury market in China meets the sharing economy through online retail services in China’s clothing rental industry. While income levels rise, the cost of luxury in China increases as well. Luxury goods now cost a large percentage of an individual’s monthly income. This causes luxury goods to become difficult to own. Women in particular have a demand for beauty and fashion that increases year on year much more than men. Due to this demand, they continue to want to spend money buying more clothes. However, costs affect their ability to meet their demand. To address this problem, clothing rental services have emerged in China over the last few years. These services are e-commerce platforms geared towards women’s wear that allow users to rent various amounts of clothing and accessories through a subscription.
The sharing economy in China continues to grow
The sharing economy in China is no longer niche and has become quite a large part of the Chinese retail market, with a market value of 2.94 trillion Yuan. There are rental services in China for products like cars and bikes, and consumers are showing increasing interest in sharing everything from household items to their vehicles. The most recent trend of the sharing economy in China is beauty booths. Following the success of rental services in China, clothing rental services have also become quite popular not only among consumers but also among investors. Since their founding, platforms such as YClosest and MSParis, have received large investments from e-commerce giants such as Alibaba Group, Softbank China Captial, China Growth Capital, and many others. Factors that promote the growth of popularity of clothing rental services in China include:
- Demands from consumers for everyday wear
Fashion consumers constantly update their look and add variety to their wardrobes to keep up with the latest trends not only outfits for special occasions.
- Hard to shop for clothes in China
When shopping you will find either really expensive clothing, fakes, or low-quality clothing. Problems with sizing arise as well, especially with buying online where you cannot see how something fits until after you have purchased it. Clothing rental platforms give users the chance to familiarize themselves with collections and labels that they otherwise would not have bothered to try when shopping online, and find the size and style that suite them.
- Puts China’s luxury market in an affordable price range
Consumers, who could not afford full-time ownership of luxury goods, can now rent, with the possibility to buy, luxury goods through the second-hand luxury market in China.
Shifting attitude from Chinese consumers on China’s luxury market
As luxury in China continues to rise in price, consumers cannot afford to buy them outright so having an alternative that allows Chinese consumers to obtain luxury items within their financial capability is becoming more popular. Consumers are also growing more and more rational with luxury purchases, along with participating in the development of the sharing economy more. More sustainable and eco-friendly attitudes are being applied to fashion as well. Consumers in first-tier cities are less concerned about issues surrounding the second-hand luxury market in China, as they are more educated on the occurrences of similar trends existing in other countries. They are more open to trying out all types of rental services in China, not only those within the clothing rental industry.
Influence of the sharing economy in China
The increasing popularity of the sharing economy is encouraging new habits and trends among Chinese consumers. With clothing rental services in China, the sharing economy is stimulating the act of exchanging and renting clothes. This is due to a number of factors:
- Affordability – With luxury goods becoming too expensive, clothing rental services in China allows for luxury goods to be extremely affordable for those who wish to have a luxury lifestyle.
- Allows ‘keeping face’ – Being able to obtain luxury goods reduces occurrences of embarrassing moments such as wearing the same dress/attire as someone else, and allows individuals to keep up with their status, or identity, through the style of clothing that they wear.
- Reduces waste of clothes and saves money – Women in China no longer have numerous amounts of clothing that were worn once, twice, or not at all sitting inside their closets. They can put them up for rent, or sale, saving the quality of the clothing and saving money for individuals who actively utilize the sharing economy.
Online clothing rental services: Impact on the Chinese luxury goods market
While the second-hand luxury market in China continues to grow, the growth of luxury goods becomes negatively impacted. As consumers become more open to purchasing second-hand luxury, the sales of luxury items directly from stores declines. Not only does this harm the revenue of luxury in China, but it harms the pricing of the items as well. If consumers are buying more second-hand luxury clothing items because of their affordable prices, luxury brands will have to lower their prices to maintain a grasp of their consumers. Otherwise, sales will continue to drop, and China’s luxury market will slowly gravitate towards becoming a niche market, only affordable to the rich.
A famous Chinese clothes sharing platform: YCloset (衣二三)
Founded in 2015, YCloset is a popular Beijing based platform for clothes sharing. Users pay a monthly subscription fee of ¥499 to rent an unlimited amount of apparel and accessories. This Chinese clothes sharing platform offers delivery and cleaning services without any additional fees. Users can also purchase their favorite outfits at reasonable prices instead of continuing to rent it.
The app targets females ages 20 to 30 in first-tier and second-tier cities who are searching for office outfits, party wear, travel apparel, and dating attire. Other statistics include:
- # Registered Users: 15M+
- # Items provided: 1M+
- # Brands covered: 500
Brands include luxury dress, high street brands–brands bought on main streets where all the banks and shops are in towns and cities– and designer items. Approximately 70% of the items come from third-party clothing brands, while the remaining 30% comes from individual buyers. Clothing is packaged in bags.
An online luxury clothing rental service in China: MSParis (女神派)
Also founded in 2015, MSParis (女神派) is an online clothing rental service where users subscribe to enjoy renting up to 4 items of apparel per order. The service started out with a focus on gowns and luxury items then expanded to everyday wear.
MSParis offers two tiers of service: “light luxury” and “basic luxury.” The basic service targets women aged 18-24, or college-aged consumers. The light luxury service targets slightly older women who are looking for stylish office wear. The service also has:
- # Members: 100,000+
- # Items provided: 1M+
- # Brands covered: 300+
Designer brands covered include Vera Wang, Diane von Furstenberg, and Marchesa, to name a few. Similar to YCloset, clothing is packaged in bags.
The future of the clothing rental industry in China
As previously mentioned, Chinese consumers have become more price sensitive, posing a challenge to the retail of luxury in China. This is not the only thing proving to create hardships for luxury retailing. Another factor that aids in this hardship is that consumers are growing towards minimalist living, showing increasing interests in sharing everything. This is why the sharing economy in China has become prosperous. Rental services in China have bloomed with the use of services such as Didi, Mobike, Ofo, and other rental services as well as second-hand retail services. Within this sharing economy, the clothing rental industry in China has seen success with platforms such as YCloset and MSParis. The success of both services provides evidence that this aspect of the sharing economy with continue to see growth and success.
Author: Shyaiah Mitchell
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