Circular trade has grown rapidly – does Chinese junk also threaten the second-hand market?

According to a study by the Finnish Commerce Federation*, Finland is the world’s leading country in the purchase of second-hand goods. In recent years, second-hand shopping has become more common in all age groups, but especially among young people: as many as 81 per cent of people under the age of 30 have bought second-hand products this year.

Traditional flea market sales have only increased slightly, but second-hand trade between companies and consumers has more than doubled and already accounts for a quarter of the total circular trade. However, the vast majority of the market, approximately 62 per cent, is C2C e-commerce among consumers.

More and more companies have joined circular trade

The growth of circular trade between companies and consumers is driven by business models specialising in the procurement and processing of second-hand goods, as well as the range of goods offered by stores becoming more varied, offering both new products and second-hand products.

“For example, Zalando’s expansion into an online store selling second-hand fashion has also created a new second-hand fashion store for Finns. In Finland, Kamerastore, for example, has developed its operations and expanded into the international market,” says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation, mentioning examples of online stores in circular trade that have grown.

The most popular second-hand store among Finns is still their local recycling centre, which has a superior position, especially in the Helsinki Metropolitan Area.

Vinted has taken over C2C e-commerce

Tori.fi is the C2C e-commerce platform that is by far the most used by Finns. However, in less than two years, the Lithuanian Vinted has become the third most popular shopping and sales platform among Finns after Tori and Facebook groups.

“Alongside Tori, Vinted has become the most used C2C e-commerce platform among young women under the age of 30, and huuto.net has become the second most used platform among men of the same age,” says Kurjenoja.

Those considering selling or buying on C2C e-commerce platforms are most afraid of potential scams. The majority also suspect that the products sold by other consumers may not meet their expectations. In addition to scams, the fear of potential inconveniences caused by buyers can also become an obstacle to selling on the platforms. A survey by the Finnish Commerce Federation aimed at students showed that these concerns are particularly emphasised among students who have experience of buying and selling in C2C e-commerce.

“It’s no wonder that a large amount of the youngest buyers and sellers under the age of 30 prefer platforms that use an e-commerce-like business model, i.e. platforms that offer different delivery, payment or display services,” says Kurjenoja.

“The service models offered by the platforms have developed and become more diverse recently. When competing for customers, some platforms may soon resemble both actual online stores and social media platforms more than before,” says Kurjenoja.

Chinese junk is also blocking the channels of circular trade

The trade of second-hand goods is perceived as sustainable, but buyers of second-hand clothes in particular do not always act very sustainably. Nearly one fifth of the buyers of second-hand clothes buy clothes, new or second-hand, that they never use, and nearly 70 per cent of them also buy fast fashion.

As a result, fast and cheap fashion is starting to fill the selection of both circular trade companies and C2C e-commerce platforms.

“For some consumers, donating Chinese junk, for example, is a way to get rid of items that have no resale value. This also jeopardises the business model based on donations,” says Kurjenoja.

If and when Chinese parcels overtake more sustainable alternatives in new purchases, the second-hand market starts to shrink and the life cycle of products becomes really short.

For some, second-hand shopping has become a similar purchasing channel to cheap Chinese e-commerce. More than a quarter of all second-hand shoppers buy second-hand goods very often, i.e. at least monthly, and they often have clothes in their shopping basket. They are more likely than others to justify their purchases by saving money and not owning a similar product before.

“Those who buy second-hand clothes or other goods on a monthly or weekly basis clearly justify their actions by the fact that the products are second-hand and their continuous buying is therefore sustainable. That will hardly save a lot of money,” says Kurjenoja.

For further information, please contact: Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja(at)kauppa.fi

*The study does not look at the sale of used vehicles or apartments or, for example, the aftermarket of admission tickets. The study is based on data from three separate consumer surveys, among others: Statista’s international survey data, population-level data designed by the Finnish Commerce Federation and implemented by Kantar Finland, and a survey designed and implemented by the Finnish Commerce Federation aimed exclusively at students. The Federation of Finnish Special Commodity Trade ETU has participated in funding the study.