Many of us have splurged on luxury items only to wish we hadn’t when essentials such as school fees suddenly require paying. Then there is that tendency to buy something, only to realise it was not truly needed.
But those valuables and other items, sometimes hoarded or underused, can become a viable source of fresh funding. People are increasingly liquidating possessions — and several UAE channels have evolved to enable their transactions.
Maya Khatoun founded Riot in 2017, a pre-owned designer fashion online marketplace helping people unlock dormant value in their wardrobes while reducing the industry’s environmental impact by prolonging the life of existing clothing.
“There are thousands of dollars’ worth of assets lying around in our closet,” says the Beirut-born co-founder. “We hoard luxury designer items because they are expensive and it’s difficult to let go of them.”
But that mind-set is changing and people are coming to the realisation that they can monetise pre-loved items, either to finance themselves or donate to charities, Ms Khatoun says.
There has been a global cultural shift towards buying pre-owned in recent years. The resale market has grown 21 times faster than the retail apparel market over the past three years, according to the 2019 Resale Report from online thrift store ThredUp. The total second-hand apparel market, which was worth $24 billion (Dh88bn) in 2018, is set to double by 2023 with the resale sector driving the growth.
“Statistics show one in three women shop pre-loved,” she says. “Approximately 13 per cent of pre-loved shoppers are millionaires; celebrities such as Sarah Jessica Parker, Drew Barrymore, Jada Pinkett Smith and Julia Roberts not only shop pre-loved but are constantly advocating it.”
There is still a regional stigma towards buying used items, says Ms Khatoun, but she sees that evolving rapidly.
“There is a huge shift in the mind-set of consumers,” she says. “People are buying with a resale value in mind, and going for high-end quality manufacturing that promises a long life but for much less than they would have paid in retail, making it more affordable to buy quality.”
Kunal Kapoor, founder and chief executive of The Luxury Closet, agrees. Similar to Riot, the online site allows people to buy and sell authentic designer items, such as handbags, clothes, watches and jewellery, at discounts of up to 70 per cent off.
“We can see a big change in customer consciousness about their spend and their cash,” Mr Kapoor says. “Buying and reselling pre-owned items used to be a big barrier for locals, but we see in the past two years ladies really started to declutter their closet and use the cash for charity or other purchases.”
In addition to charitable causes, Mr Kapoor says that people are using the money made from selling their used and valuable items “to finance new collections but also to fulfil basic needs like housing, school or just maintain a certain lifestyle”.
The payback can be huge. Shelina Jokhiya, founder of professional space reorganisation service DeCluttr Me, says one of her clients raised around Dh50,000 from selling her "decluttered" designer gear.
The pre-owned market can be a way to unleash emergency cash when needed. Updating the pawnshop model, BuyBackBazaar’s online service enables people seeking extra funds to sell their items for instant cash with the option to repurchase them later. People have sold assets that range from mobile phones to luxury watches valued at Dh60,000 and luxury cars priced at Dh300,000.
Ricky Husaini and Pishu Ganglani started the Dubai-based platform in early 2018. After 25 years in banking and witnessing people with genuine needs struggle to secure emergency funding or resort to short-term borrowing, often with exorbitant charges, they sought an alternative solution.
“The top reasons people need urgent cash is to send it back home, pay rent or for a medical emergency. With our service, people can access fast cash in a safe, secure and dignified manner,” says Mr Husaini. “Our model is unique because it addresses the cash needs of both the unbanked and underbanked.”
A nominal service charge covers fees for shops to assess, store and take the risk of depreciating prices while they hold items instead of selling them. For example, sell your phone for Dh1,000 and you could buy it back for Dh1,065 in a month. Mr Ganglani says 87 per cent of his customers re-purchase their item.
“Our platform disrupts [the pawn shop] model by connecting customers directly to the secondary market of shops who specialise in buying and selling their assets,” he says. “Customers get two to three times more than they would traditionally from a pawn broker. And the service charge is significantly less.”
The pawn broker industry is conservatively estimated to be $3.5 trillion in size, growing more than $175bn per year, according to Mr Ganglani.
So does BuyBackBazaar’s growth signal more cases of hardship or are people simply becoming better at managing financial dips?
“Historically, the pawn market has little correlation to the usual parameters like GDP, business boom and recession cycles, real estate trends et cetera,” says Mr Husaini. “We all have cash emergencies in our lives, irrespective of macroeconomic conditions.”
There is also the post-it-yourself model, whereby one can claw back cash directly and without fees. Facebook has a plethora of pages for buying and selling, some linked to communities — such as Al Reef Village Online Flea Market in Abu Dhabi or Arabian Ranches Second Hand Market in Dubai. The latter has 11,000 members, as does nearby Remraam Marketplace, selling everything from appliances to cakes. "Buy and Sell — Dubai Hub" has close to 50,000 members, while Abu Dhabi Market Place has nearly 70,000.
Often names of the groups are repeated or are similar, but there seems to be enough demand to spread around. Abu Dhabi market place (original) has 24,000-plus members.
“People use it as it’s convenient and busy, so things tend to sell quickly and you have to post the prices so it’s honest and upfront,” says Dawn Fish, one of the group's administrators.
There are no restrictions on prices and everything up to cars are listed, but upselling concert tickets is banned.
Baby items are particularly popular in the pre-loved market, as by definition they have a finite utility. Natalie Humphrey recognised how costly raising a child in the UAE can be, particularly in the early years when clothes and accessories are swiftly outgrown.
Soon after her first son, Riley, was born in 2012 she launched Baby Bazaar, regular markets at Times Square Centre in Dubai where parents buy and sell pre-loved baby equipment and mums can mingle.
“I found buying clothes for my baby an absolute rip off,” says the Briton. “I realised I needed a second-hand market for baby and toddler items in Dubai so I initially started it for me. It took off before I could even think about it.”
Quality baby, toddler and maternity items are traded, giving parents opportunity to get back spent cash or pick up pre-loved kids items for less.
“It works because it is a win-win: people saving money and people making money," she says. "People want to get money back on expensive items they’ve bought and new mothers, second or even third-time mothers, can snatch them up for a ridiculously low price.”
Mrs Humphrey says stigma for pre-loved in a city often associated with upscale goods has diminished and Baby Bazaar has grown to two regular markets a month.
“There’s always been a market for pre-loved … people are just more upfront about it now.”