What:  Despite a significant drop in sales for major online luxury goods platforms in South Korea due to the economic downturn, the pre-owned luxury market has shown resilience.

Why it is important: The luxury resale segment has also grown for online platforms annually.

Despite major online luxury goods platforms in South Korea experiencing a significant sales drop due to economic challenges, the pre-owned luxury market has remained resilient, with record transaction volumes reported recently, coinciding with the new school year. The leading platforms, collectively known as "Mutbal," including Must It, Trenbe, and Balaan, all reported operating losses in 2022. Trenbe's revenue decreased by 54.5 percent to $28.6 million, Balaan's dropped by 56 percent to $28 million, and Must It saw a 24.5 percent decline in sales to 24.98 billion, resulting in operating losses for each platform. Despite this, online luxury shopping and platforms gained popularity during the Covid-19 pandemic due to the contactless shopping trend, according to a retail industry official.

As the COVID-19 pandemic transitioned to an endemic phase, consumer behaviour shifted towards purchasing luxury goods during overseas travel, while high inflation reduced spending, resulting in a sharp decline in sales for major online luxury platforms in South Korea. Excessive marketing spending worsened financial strains, leading to intense competition and significant advertising expenses totalling over $47 million in 2022. To address financial challenges, these platforms cut marketing budgets, reduced personnel costs, and sold office buildings. CatchFashion ceased operations due to financial troubles, contrasting with the resilience of the pre-owned luxury goods market. Gugus, with 26 offline stores, reported a 20 percent increase in gross merchandise value to $153.8 million in 2023, driven by categories like handbags, watches, and jewelry. The resale market's strength reflects both consumers selling luxury items for cash and others seeking discounted premium goods during economic downturns. Premium brands like Hermès, Louis Vuitton, and Chanel raising prices in 2023 fueled demand for more affordable pre-owned luxury items, leading to increased sales in this segment.

Korea’s luxury resales sector thrives while sales drop at major luxury sites