Is Selling Used Goods a Viable Business Venture?

Recently I came across an article in China Daily regarding the secondhand economy or known to others as the pre-owned market. The article cited changes in lifestyle, consumption habits and the use of technology that spurred the rise in the secondhand sector. The sale and purchase of used mobile phones is one good example. One of the more prominent aspects of this market is the sale of used luxury products by prominent personalities like movie and TV stars. Customers are awed by the idea of purchasing a product pre-owned by these personalities.

This brings me to today’s topic on the used goods market. Those selling new products usually have to deal with a few reliable suppliers of these goods on a regular basis. However, those in the used goods market have greater sourcing challenges in general. Their suppliers are rarely reliable and dependable for a continuous source of used goods. This is understandable since used goods are largely dependent on the sale by those who pre-owned them. Therefore it remains a challenge for those trying to purchase these pre-owned goods for subsequent resale.

Therefore to thrive in the used goods market, there are some things to consider. A good consideration is when the value of the used goods is very high but the volume is low. Here used cars and luxury goods come into mind. Hence there is a thriving market for these products.

When the value of goods is high but not that high, then the volume consideration comes into play. This is the case of products like mobile phones and personal computers or PCs. Given the reasonably high volume of transactions, it is common to see tiny  brick and mortar shops dealing with used mobile phones all around the city.

The next question is whether there is a viable used goods market where the value of goods is low but the volume can be high. The answer is a resounding yes as there is a market for used audio CDs and vinyls, and PC games.

The next relevant question to ask is the margin for used goods. Generally speaking, the margins are better than for the same new product since the opportunity of purchasing the used goods at a lower price is somewhat higher. However this advantage is offset by the difficulties in procuring the used goods.

Finally last but not least is the question of the sale of these used goods. For high value items, it is likely that the potential customer wants to touch and feel the product before parting with their money. Hence the fancy secondhand car showrooms and used luxury goods store. For products with lower value like mobile phones and PCs, online and store sales are both as important. Selling them online is clearly an advantage given the low cost. However the tiny brick and mortar store has the advantage of allowing customers to trade in their used phones for a new or another used phone.

Therefore dealing in the used goods market can be viable if you have a dependable source of supply, and a good way of selling the pre-owned products.

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