Ventech China has recently completed the investment in Secoo, a 2nd hand accessory company focused on luxury market operating both online and offline. Ventech was the lead investor of this round including other investors such as IDGVC and Bertelsmann.
Over the past five years, China has become one of the biggest markets for luxury consumption (Purchased domestically). China’s luxury consumption reached USD 12.3 billion in 2010, a year-on-year increase of 27.6%, having overtaken the United States to become the world’s second largest luxury consumption country and is expected to overtake Japan in 2015 to become the No.1. According to Secoo’s CEO, 20% of the luxury good stock can be traded. The stock value of luxury goods in China already exceeded RMB 1 trillion (USD 154 billion, including purchases overseas).
Secoo’s current business model is consignment sales: to help customers to sell in 2nd hand their luxury goods on Secoo’s platform (online/offline) and to charge commissions. Beside this main revenue stream, company also provides luxury products appraisal, and customer after-sale service. On this matter, Secoo has strict standards for consignment selling process and the entire inventory received and purchased by Secoo goes through a specific appraisal process.
For better profit ratio, from 2012, Secoo will start transferring the consignment model to direct purchase 2nd hand luxury goods then classical selling model.
Secoo is a pioneer in the 2nd hand sale and after-sale service market of luxury. With two years of development, the company reached RMB 145M revenue in 2011(USD 23M) and reached break-even (compared to 0.45M revenue in 2010). At the same time, with very limited resources, Secoo’s website contributes 15.7% of the revenue in October 2011, which shows great potential for online 2nd-hand luxury trading.
The number of Secoo’s customers is increasing considerably. Currently, the total number of individual customers has been around 30,000. Nearly 80% of the suppliers become customers and around 50% of the customers are also the suppliers. More than 30% of the customers consume repeatedly.