While global consumer spending demonstrated some resilience in the second quarter of 2024, the latest PMI data indicates a slowdown in the expansion of consumer-oriented sectors. This trend is being fueled by persistent inflation and high interest rates, prompting consumers to explore more affordable options. The pre-owned and refurbished goods market has emerged as a popular alternative, offering significant cost savings compared to new products. This shift aligns with the growing consumer preference for sustainable choices, further bolstering the appeal of second-hand goods.
The pre-owned and refurbished goods market has witnessed consistent growth in recent years, transitioning from a niche segment to a mainstream consumer choice. This expansion reflects the principles of a circular economy, aiming to minimize waste and enhance resource efficiency through recycling and reusing existing products. Second-hand markets play a pivotal role in extending the lifespan of products and reducing the demand for new materials.
Several key players have demonstrated impressive performance in the second quarter. eBay, a prominent e-commerce platform, reported strong second-quarter results with net revenues of $2.57 billion and non-GAAP earnings of $1.18 per share, exceeding consensus estimates. Notably, refurbished and pre-owned goods contribute significantly to eBay’s gross merchandise volume (GMV), representing approximately 40% of its total. The company has further expanded its offerings in this segment, introducing refurbished golf clubs, warranty services for pre-owned clubs, and simplified return policies. To enhance the second-hand apparel market, eBay has integrated new Gen AI features like “Shop the Look” and “Explore,” enabling a more personalized shopping experience. In collaboration with Certilogo, eBay has introduced a “Click to Resale” feature, simplifying the listing process for sellers.
ATRenew, a leading provider of multi-category recycling services, achieved notable growth with net revenues reaching RMB 3.78 billion ($519.7 million), representing a 27.4% year-on-year increase. Non-GAAP operating income surged to RMB 94.1 million ($12.9 million), a significant improvement from the previous year. The company transacted 8.4 million units of products, demonstrating a substantial increase from the prior year’s second quarter. ATRenew’s GMV for its multi-category recycling service business witnessed a remarkable near-400% year-over-year growth. The company’s partnership with JD.com, a leading Chinese e-commerce giant, has contributed significantly to this growth. During the June 18 (618) shopping festival, sales of refurbished electronic products experienced a staggering 100% year-over-year increase. ATRenew continues to expand its services, catering to the diverse recycling needs of consumers, including luxury goods and digital products. CEO Kerry Xuefeng Chen expressed confidence in the company’s unique circular economy business model, positioning it for sustained long-term growth.
LKQ Corp, a prominent provider of vehicle parts, reported an 8% year-on-year revenue increase, reaching $3.7 billion. However, adjusted net income contracted by 10.4% to $261 million, primarily due to challenging macroeconomic conditions. The company generated operating cash flows of $213 million and free cash flows of $133 million, demonstrating strong financial performance. During the second quarter, LKQ Corp repurchased $125 million worth of shares, reflecting its commitment to shareholder value. Several analysts, including those at Baird, Roth MKM, and Barrington Research, have assigned a Buy or Outperform rating to LKQ Corp, with a consensus price target of $62.43.
PDD Holdings, the parent company of online marketplace Temu, has a dedicated section for used and refurbished items. While its second-quarter results are scheduled for release on August 26, the company’s focus on the second-hand market highlights the growing trend toward sustainability and affordability.
The U.S. recommerce market, encompassing the buying and selling of pre-owned goods, is projected to experience substantial growth, expanding from an estimated $188 billion in 2023 to $276 billion by 2028. This growth trajectory underscores the significant market potential for companies like eBay, ATRenew, and LKQ Corp, which are well-positioned to capitalize on the burgeoning demand for refurbished goods.
In terms of stock performance, eBay shares have risen nearly 30% year-to-date. ATRenew’s stock has experienced an even more substantial increase, climbing almost 45% during the same period. LKQ Corp’s stock, however, has declined by 13% year-to-date, although it has gained almost 5% over the past week. PDD Holdings shares have gained nearly 9% in the past month.
