Secondhand, not Second Rate: How China’s Internet Marketplace is Changing Consumer Behavior
China’s internet marketplace offers it all to consumers, and nurtures the growth of the market for secondhand goods. Learn why e-commerce holds the potential to catalyze changes in consumer behavior in China.
It’s no news that the internet has taken off in China. Whereas only five years ago, the internet was by-and-large an unreliable source for basic information like restaurant locations and contact numbers, it is now a place where users can obtain special discounts on restaurants, order food and request delivery with just a click of their mouse. And, where purchasing goods both small and large previously entailed all day treks across town, endless haggling, and dubious warranties, Taobao (for those who have never heard of it, think Ebay + Amazon) has made carpal tunnel the only physical hazard involved with such exhaustive searching these days in China.
You can now buy almost anything you need online in China. Clever entrepreneurs have even opened Taobao stores that resell Ikea furniture and other goods nationwide: for customers who must have a Scandinavian-designed armchair but do not live in one of the few cities in China with an Ikea outlet.
E-Commerce in China Revolutionizes the Art of Fleecing
This is not to say that the explosion of internet-based commerce in China has ironed out all the pesky, persistent wrinkles. Transactions made online in China are vulnerable to the same, if more digitally savvy, forms of hucksterism: from misinforming the buyer, to the ol’ bait-and-switch, as well as the straight up failure to deliver goods. More recently, the US has taken issue with plain view online peddling of counterfeit goods (we are not in Kansas anymore, and this is not your run-of-the-mill back alley fake Gucci purse operation).
While Chinese commerce websites have endeavored to prevent and address the incidence of these maneuvers in much the same manner as their American counterparts — for example, holding payment until the customer receives the item, incorporating user review-generated seller profiles, and introducing order dispute mechanisms — the burgeoning sector has still faced its fair share of troubles. In February, Taobao’s top two executives resigned amidst revelations that the company was involved in fraudulent activity.
Some 2,300 of the site’s top sales volume companies — Taobao’s bread-and-butter, since they pay a service fee on every transaction — were discovered to have been defrauding customers over a two-year period. They were assisted by some 100 members of the sales team, who set and maintained the sellers’ “gold supplier” rating, despite customer complaints of fraud, while buoying their personal commissions. Since then, an industry of “reputation scrubbers” has emerged (perhaps started by the former Taobao sales team?) to help companies with marred online reputations appear to be as pure and right as the day they were born.
Consumer-to-Consumer Business on the Rise, Secondhand Marketplace Explodes in China
The emergence of e-commerce “with Chinese characteristics,” or the inability of China’s corporate middleman to ensure a reliable, standardized and scam-free consumption experience may be driving customers to more direct online purchasing.
Until recently, most e-commerce transactions were mostly business-to-consumer in nature. That is beginning to change, as consumer-to-consumer (C2C) transactions increase. Moreover, many of these C2C transactions are in secondhand goods — with everything from used bicycles and appliances to recyclable scrap materials and unwanted gifts on offer. Ready for a new air conditioner? Sell your old one online. Just received two cartons of premium cigarettes from a potential client but don’t smoke? Let someone else enjoy the fruits of your gift-garnering labor.
Much of this trade is not novel. Secondhand goods have been traded for years in China, and trade in them was a common practice in the years before economic reform, when new goods were either extremely expensive or difficult to come by.
What is new is the use of the C2C platforms like Ganji, 58 and Baixing to facilitate person to person goods transactions on a wide scale. Taobao is also playing a major role in these trades. As of May, Taobao’s listed private merchants numbered more than 36,000. Advertisements for these C2C sales platforms abound in buses and subways in China’s major cities, and commonly populate commercial breaks on television. Clearly, this form of commerce has been identified as having major market viability and growth potential in China.
For those readers familiar with Craigslist in the US and other countries, this may not seem like such a big deal. Moreover, the incidences of Craigslist-enabled fraud and even criminal behavior suggest that China, too, will face growing pains as consumers start dealing directly with individual merchants without ways to verify their credibility or link to them beyond the online platform.
Secondhand Does Not Mean Second Rate
China’s suite of online C2C trading platforms ultimately offers consumers the tools they need to efficiently allocate resources. Every used computer resold directly to someone who does not need or cannot afford a new computer is one less that ends up in an unsafe, environmentally destructive electronic waste yard. Each time someone purchases a secondhand bicycle, instead of buying one from the supermarket, the energy used to manufacture a new bike is saved.
It is clear that the emergence of a robust online marketplaces is bringing about a vast and well-organized secondhand marketplace. It may simultaneously be encouraging Chinese consumers, more well-heeled and capable of living a disposable lifestyle with each passing day, of the value of used goods.
Though consumer-to-consumer online commerce platforms cannot alone bring about a more completely closed loop system of reuse and recycling in China, it is a positive first step in reminding Chinese consumers, with their varying socioeconomic means and consumption preferences, that secondhand goods are not necessarily second rate. Given the Chinese government’s slowness to broadcast this message through public awareness campaigns and school curriculum, the role of the private sector in catalyzing behavior changes should not be underestimated.