New Apps Offer Wary Chinese Consumers Online Authentication for Second-Hand Luxury Goods

    With an uptick in sites that sell second-hand luxury goods online in China, these new apps see a market for online luxury goods authentication.
    Photo: VCG
    Qin QianAuthor
      Published   in Fashion

    China has been driving global luxury sales in recent years, but that hasn’t been the case with respect to the second-hand luxury market. But with an uptick in sites that sell second-hand luxury goods online, that’s beginning to change. And with the rise in the second-hand luxury market, there’s a comparable need in e-commerce for online luxury goods authentication. Some startups are jumping into the game.

    One such startup, Zhiduoshao, launched an iPhone app in March that helps users authenticate luxury goods and share their expertise. On Zhiduoshao, which means “how much it’s worth” in Chinese, users can upload photos of their luxury goods to the app, and an expert will give her feedback in 24 hours. By ‘expert,’ of which the site has over 20, the company means either someone with years of experience in the luxury industry or a trained authentication professional.

    For industry experts, according to Xu Shichen, founder and CEO of Zhiduoshao, the authentication process is generally quite easy and only takes a couple of minutes. And it all happens, for the most part, without ever seeing the item in person.

    “It’s totally possible to do authentication online via photos,” Xu told Jing Daily. “About 95 percent of the requests can be solved online.” Authentication professionals will inform a user about what kind of photos they need—it differs depending on what brand or product the item is. Then, via photograph, they will carefully check the details—the fabric, the monogram, the technique—and reach their conclusion.

    In addition to authentication, Xu also wants to create a platform through which users can communicate and share knowledge. He wants to build Zhiduoshao into a community that everyone can rely on when they need to understand more about luxury goods, from brand knowledge and authentication tips to guidance in care and maintenance.

    This idea first occurred to Xu when he was studying abroad in New York. The “Daigou” business—buying luxury goods abroad and selling them back in China with slight markups—has been booming, but authenticity has always been a thorny issue for buyers. Xu realized consumers need a trusted third party to provide professional evaluations.

    Though selling and buying second-hand luxury products is yet to be widely accepted in China, when that begins to change, authentication services, Xu argues, will be essential.

    Chinese consumers spent over 500 billion yuan on luxury goods last year, and are expected to double their spending in eight years, according to a McKinsey report published in May. Such huge spending would surely create a large second-hand market. Some analysts have estimated that that market should be at least 300 billion.

    Zhiduoshao is not the only company in the online second-hand luxury authentication space. Zhende is an app that offers both authentication and second-hand deals. Users can post their second-hand luxury products on the platform for sale. When there are potential buyers, the platform acts as the middleman to authenticate products and facilitate the deal. It also buys products from users. A number of apps offer similar services including Xinshang, Sheyipai and Shejia.

    Worried that it might hurt its credibility, Zhiduoshao doesn’t get directly involved in selling luxury goods. This decision makes it hard to profit from this lucrative market. Especially since Zhiduoshao’s authentication services are currently free. But Xu said that authentication, training and referrals to third parties like luxury care providers could all potentially be profitable.

    At the current stage, the top priority for Xu is attracting users and building a community. The company announced this month that it had raised over three million dollars in investments, so it has the time to prioritize community-building.

    Luxury goods authentication is nothing new in China. The prevalence of counterfeit goods has long troubled consumers. But in the past, there have only been a few authentication centers based in big cities like Beijing and Shanghai. Now that online services are blossoming, more consumers can access such services with ease and at much lower costs.

    “We are seeing many of the authentication demands from second or third tier cities,” said Xu noting that these consumers are much less open to second-hand luxury goods than residents in first tier cities.

    He hopes his startup can help change consumers’ attitudes, improve their knowledge of luxury goods and contribute to a more active second-hand luxury market.

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