Sun, Jul 09, 2017 page15

• Used goods might be the new thing in Southeast Asia

  • By Adam Minter / Bloomberg View
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  On the second floor of a 2,200m2 used-goods superstore in the suburbs of Kuala Lumpur, Koji Onozawa pauses beside some old Japanese surfboards. He has spent nearly two decades at Bookoff Corp — a corporate legend in Japan that is barely known outside it, with 832 second-hand shops across the country.

  Now he is running Jalan Jalan Japan, the company’s first true foray into selling more than just used books abroad.

  “We’re not a representative of Bookoff here,” he said. “We’re a representative of Japanese second-hand goods.”

  He is not being melodramatic. According to data supplied by the Japan Re-use Business Journal, more than two dozen Japanese companies have set up at least 62 shops or distributorships selling second-hand Japanese goods in eight Southeast Asian countries.

  Those stores receive much of the nearly US$1 billion in used goods that Japanese companies legally exported in 2015 — illegal shipments were at least as large.

  While Japanese second-hand goods will never overtake new ones in Southeast Asia or elsewhere, they are rapidly growing into a multibillion-dollar industry — and one of Asia’s most surprising export growth stories.

  The used goods trade is as old as capitalism, of course. Its downmarket reputation is relatively recent — a result of the Industrial Revolution, mass-market production and the introduction of the endless upgrade cycle.

  In Japan, public perceptions of second-hand goods soured in the 1950s as people embraced Japan’s new wealth and flashy products.

  By the time Bookoff was founded in 1991, Japanese were hooked on the upgrade cycle, second-hand goods were synonymous with pawn shops, and used bookstores were niche businesses perceived as dingy and dark.

  After Japan’s bubble burst and consumers started looking for bargains, Bookoff upended that image. Its stores feature bright lighting, wide aisles and well-organized shelves filled with books that look new — thanks to a machine that shaves off yellowed and frayed edges.

  To a contemporary American visitor, the shops do not look much different than a Target, Wal-Mart, or — if you squint — a Uniqlo. Thanks to Bookoff and its many imitators, second-hand retail accounts for 4.36 percent of Japan’s total retail market. For luxury brands, second-hand accounts for more than 10 percent of the market.

  Bookoff eliminated not only the shame associated with buying used goods, but that of selling one’s unwanted stuff.

  Its cheery slogan — “Please sell us your things” — and friendly, customer-centric store clerks eased doubts among middle-class Japanese who would not have been caught dead near a pawn shop.

  Bookoff executives consider their ability to source high-quality goods one of the company’s great competitive advantages.

  They might even be too good. In 2015, the company bought 489 million individual items from its customers, while it was “only” able to sell 331 million of them.

  A bigger problem is looming: Japan’s fading demographics mean that more stuff is likely to come to market, with fewer people to buy. Put differently, hand-me-downs in a country with a shrinking population do not have much of a future.

  To deal with that surplus, Bookoff decided that it needed to export. Southeast Asia seemed like the ideal location, given the region’s long-standing ties to Japan and — in cities at least — consumers’ strong affinity for Japanese products.

  Additionally, the region’s large families, big homes and upwardly mobile consumers mean demand for middle-class consumer goods is growing rapidly.

  Sure enough, on a recent weekday visit, I found Bookoff’s first Malaysia store packed with mothers and young children, browsing second-hand stuffed animals, women’s clothes, flatware, strollers, car seats, bassinets, handbags and shoes — none of which had sold in Japan.

  On a monthly basis, the shop sells 15,000 items of women’s clothing alone, while 25 percent of overall sales come from children’s items. Many of those second-hand Japanese goods were manufactured in China.

  However, Onozawa said that does not matter.

  “They were used in Japan, so they’re good in the eyes of the Malaysian customers,” he said.

  Selling 15,000 articles of women’s clothing per month will only put a small dent in Bookoff’s surplus of used goods.

  However, Jalan Jalan Japan is just the start. In addition to its four planned stores, the company might eventually open a logistics base for second-hand goods in Malaysia, and possibly even begin buying and selling Malaysian goods. For Southeast Asians, old stuff might soon be the new thing.

  Adam Minter is a Bloomberg View columnist. He is the author of Junkyard Planet: Travels in the Billion-Dollar Trash Trade.

  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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