Driven by a major merger and a rising demand from rising demand from value-conscious younger consumers, China's secondhand luxury market is undergoing a significant transformation. On Sep 23, 2024 a platform specialising in pre-owned electronics Zhuanzhuan acquired the seven-year old secondhand fashion and luxury e-commerce platform Hongbulin (Plum).

This merger positions Hongbulin to better compete with global players like Vestiaire Collective and The RealReal, both of which have struggled to gain traction in mainland China.

Zhuanzhuan had already invested $100 million in Hongbulin in 2022, and this merger builds on that investment, integrating Hongbulin’s expertise in luxury resale with Zhuanzhuan’s broader platform. While Hongbulin will retain its brand and app, its authentication processes will be folded into Zhuanzhuan’s system, a move aimed at boosting consumer trust—crucial in the secondhand luxury sector.

This merger is part of Zhuanzhuan’s broader strategy to strengthen its position in the highly lucrative secondhand luxury market, projected to be worth over 3 trillion RMB ($420 billion) by the end of 2024. Despite the dominance of platforms like Alibaba's Idle Fish and Zhuanzhuan in the overall secondhand market, the luxury segment remains fragmented, with no clear leader.

While international platforms like Vestiaire Collective have struggled in mainland China, they have performed well in other regions, such as Hong Kong. This challenge may stem from differing consumer motivations: while sustainability is cited as a reason for secondhand purchases, affordability remains the main driver for mainland buyers. These consumers prefer luxury items in near-perfect condition, a preference that has made it difficult for international platforms, which often offer vintage or well-worn goods, to compete.

With China’s secondhand luxury market expected to grow to 217 billion RMB ($30 billion) by 2025, the merger between Zhuanzhuan and Hongbulin could give domestic players an edge. However, broader economic challenges, including inflation and rising unemployment, could impact demand, making it critical for the merged company to navigate these conditions while meeting the evolving needs of value-conscious shoppers.