Are supply chains fueling the second hand market?

A second coming for depreciating assets

For as long as most of us can remember, cars and other automotive vehicles had been classified as depreciating assets. The general rule of thumb here is that the moment you drive your brand new car off the lot it loses 10% of its value and 15% every year after that. Global supply chain disruptions from semiconductor shortages to unsustainable freight rates have all but toppled this principle... at least for the time being. In fact, cars are not alone. Other typically depreciating products are selling at appreciated values thereby spurring the second hand market.

So, what the freight is fueling this? ​​

📦 Depleted product inventories post-lockdown period
⌛ Equipment & parts shortages delaying new product rollouts
💳 Paradigm shift in consumer spending for services to physical goods
🛃 Port congestion resulting in longer transit times

Widespread demand for a “new” second hand

In Ireland, a Volkswagen Golf owner can now generate a return on investment by selling their car at 15% more than what they had bought it for last year. Online re-commerce players in Europe are seeing 20%-30% more activity today than a year earlier. With new products looking like they're not going to make it in time, buyers are opting for pre-owned alternatives.

From niche market to necessary strategy

What was once a niche market has now turned into a competitive frenzy, with a number of mainstream players having entered the second hand market fray. Even furniture giant Ikea and well-established retailer About You have jumped on the bandwagon. In fact, about 75% of online sellers in Western Europe started selling used goods as an alternative income stream in 2020.

Is this second hand hype built to last?

While 2021's global supply chain crisis is likely to continue well into mid-2022, delays, logjams, and unsustainable rates will subside eventually. While this will alleviate some of the pressure currently hampering manufacturers, the second hand market is here to stay. Millennial and Gen-Z consumers have already generated demand for more sustainable products. So, if anything, this year's trade conundrum has only further accelerated adoption among suppliers and de-stigmatized second hand buying from previously unattainable consumers.