Supply Chain

Are supply chains fueling the second hand market?

The 2021 supply chain crisis has had an unusual impact on typically depreciating assets... could this be a second coming for the second hand?

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? ​​

πŸ“¦ Depleted product inventories post-lockdown period
βŒ› Equipment & parts shortages delaying new product rollouts
πŸ’³ Paradigm shift in consumer spending for services to physical goods
πŸ›ƒ Port congestion resulting in longer transit times

Widespread demand for a β€œnew” 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.

Second hand car price inflantion suppy chain crisis PalletPal freight

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.

Seller behavior research suppy chain crisis PalletPal golabl trade trends

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.

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