How Flea Market Apps are Changing Consumer Behavior

2018/12/12

With the recent spread of flea market apps, skill-sharing services, and vacation rental platforms, consumers who were once on the side of consuming products and services produced and provided by companies (●●●●●) have now moved to the side of providing their own surplus resources to other consumers (●●●●●). The "surplus resources" mentioned here include clothes that have been "gathering dust in the closet," unused rooms or real estate such as vacation homes, and unused private vehicles, as well as skills such as cooking techniques and language proficiency. Numerous services that enable such transactions have emerged, and a wide range of goods and services are now traded between consumers.

Behaviors such as giving away clothes as "hand-me-downs," giving friends rides in private cars, or letting friends stay in one's room have existed for a long time. However, the phenomenon where such services are provided to people who are not friends or acquaintances, and where compensation is paid in return, is a noteworthy new phenomenon.

Flea market apps are one of the services enabling peer-to-peer (P2P) transactions of surplus resources that have seen remarkable growth in recent years. The spread of flea market apps is changing consumer behavior in various aspects of daily life.

The first change is that a consumption style—consuming only what is needed when it is needed and then selling it to another consumer—is increasing, particularly among the younger generation. In this consumption style, products are shifting from goods to be owned to services to be utilized.

The second change is the increase in purchasing behavior where consumers get what they want regardless of whether it is new or used. Conventional consumer purchasing behavior depicted in marketing textbooks shows consumers buying new products sold by companies. Buying from individuals rather than companies, and buying used goods rather than new ones, can be seen as a change that shakes the conventional wisdom that "what consumers buy = new products sold by companies." For companies selling products and services, this change means further intensification of competition. This is because they must compete not only with traditional competitors selling new products but also with individuals selling used goods. Companies that produce and sell new products will be forced to consider how to face these new consumers.

However, viewing the excitement of the used goods market solely as a threat that steals demand for new products is one-sided. In fact, on flea market apps, limited-edition items such as time-limited products or collaboration goods can sometimes sell at higher prices than their original retail price in the primary market. In other words, items with high scarcity or a strong narrative have the potential to be highly valued in the secondary market.

Furthermore, sellers on these platforms can be thought of as sales channels for a company's own brand. Compared to new products, used goods are generally less expensive. Purchases on flea market apps can be positioned as a place for consumers to easily try out products. If a consumer likes the product and becomes a fan, they may eventually buy it new. Viewed this way, the boom in the used goods market is not a threat, but an opportunity to increase the fan base.

The third change in consumer behavior is the emergence of consumers who buy with the intention of selling. This means that, in addition to price and quality, new attributes—the possibility of resale and the resale price—have been added as factors in purchasing decisions. The act of purchasing a product with a view toward selling it to others later has traditionally occurred in limited product categories such as houses and cars. However, with the advent of flea market apps, behaviors such as buying with the intention of selling, or using items carefully with the intention of selling them, are spreading to other product categories such as clothing and cosmetics.

The spread of flea market apps is also affecting unexpected markets. The growth of the used goods market is creating new demand in the areas of repair and cleaning. The fourth change in consumer behavior is the emergence of actions such as repairing purchased used goods, or repairing items for listing to increase the likelihood of a sale or to boost the resale price. Traditionally, repairs and cleaning were performed to increase the utility value for the owner. The increase in used goods transactions between consumers is creating a new value in the repair market: exchange value, in addition to utility value.

Finally, I would like to mention the importance of governance, which is necessary for peer-to-peer transactions to spread and for a waste-free, circular society to be realized. Transactions on flea market apps are peer-to-peer, and sellers are basically amateurs. This means that transaction uncertainty increases. For a waste-free, rational, and smart consumer society to develop further, ensuring a safe, secure, and highly reliable trading environment is key. To achieve this, it is necessary to develop governance measures such as the exclusion of fraudulent users, mutual evaluation systems, customer support, and compensation services. Furthermore, education to improve the literacy of users engaging in peer-to-peer transactions is also desired.