[Jeon Youngsoo's Population Prism] How Did Korea's Danggeun Market and Japan's Merukari Captivate the 'MZ Generation'?

Carrot Market, which is growing by promoting 'commission-free peer-to-peer secondhand direct transactions.'

Customer acquisition is the absolute variable that determines business success or failure. Capturing not only target customers but also potential customers is everything for corporate survival. However, customers change. Their numbers fluctuate, and their thoughts evolve. This is due to rapid changes in demographic structures. In short, the quantity decreases while the quality diversifies. The macro environment also encourages customer shifts. The restructuring into a mature society amid a contraction economy changes the purchasing power and values of customer groups. Customer changes give birth to new consumption instead of building old consumption. This marks the beginning of a new economy driven by demographic changes. Some new consumption trends even evolve into major trends. Used consumption is a representative example. The desire to buy 'new' items, once taken for granted, decreases, while the utility value of 'used' items rises.

The renewed focus on 'used' items is natural. It is even more so for subsequent generations accustomed to low growth. They have little hesitation about items previously owned by others. Even the X generation born around ±1970, who are parents of Generation Z, have low psychological barriers to used transactions. A common trait among those who have embraced used consumption is that they were born after the population peak in the pyramid, specifically after the 1970-71 birth cohort with annual births exceeding one million. They are also the first group to experience 'high growth → low growth' during their social debut. They are accustomed to austerity due to employment crises and income stagnation. Like Generation Z, who live in an environment with significantly lower growth rates, they take recessions for granted. The value of consuming 'new' items is being reconsidered. Enthusiasm for new products is being restructured.

Renewed Focus on 'Used'... Reconsideration of 'New' Consumption Value
Explosive Growth of Used Market and Resale Market Among MZ Generation

The emergence of new customers buying 'used' items confounds existing markets because it is a previously unseen new desire. Therefore, avoidance strategies are problematic. A fleeting boom and a massive trend are distinct. For the MZ generation, referring to the Millennials and Generation Z, 'used' items represent a new value point that fits them well. They differ from the established customers who equate 'owning new luxury or durable goods = life happiness.' The actual consumption values of new customers differ considerably. Practical use takes precedence over new ownership. In this regard, used consumption shares commonality with the sharing economy. It is worth noting that the used market and resale market accompany demographic changes. The value system of buying only what is needed and reselling afterward, rather than permanent ownership even after purchase, is close to common sense for subsequent generations.

At the same time, it is a form of cooperative purchasing. This is because buying and using first, then sharing the cost with others later, creates an effect. It is a form of joint ownership and cooperative consumption. The reason lies in changes of the times. First, the market for used transactions has been established. Compared to the past, used transactions have become much more convenient and safer. As a hyper-connected society, markets form anytime and anywhere. This is thanks to technological advances driven by IT. Reliable trading platforms are also spreading. A shift in perception prioritizing personal taste over external display has also played a role. This is a change in the value system of new customers responding to the times. Above all, the reduction in desire for ownership and purchasing power was decisive. The 'long-term recession = used consumption' equation is complete. This is why the future looks bright.

Used consumption inevitably spreads because it reflects changes in the times. Currently, it is close to an early market. Looking at the Korean situation, we have entered a turning point where paradigms on a large scale and life models on a smaller scale are changing. The harsh reality of 'population bonus → population onus' closely linked to 'high growth → low growth' is expected to become entrenched. Since the times have changed, reasons for existence and life pursuits also change more dynamically. Nevertheless, it has become harder to work harder or acquire more. This is a typical reality of a mature economy and a contracting society. Most people have had and done everything, so the irrational strategy of holding present efforts hostage to dream of future happiness is excluded. It is nothing but hope torture. In a society of diminishing marginal utility, the consumption landscape changes rapidly. Rather than simple quantitative ownership economics, a new consumption function of qualitative satisfaction gradually resonates and expands among the MZ generation. At this time, used consumption is an excellent alternative consumption combining supply and demand with value.

Exterior view of the Tokyo office of Japan's largest secondhand trading platform, Mercari.

Korean Danggeun Market Reads MZ Generation's Desires
Japanese Mercari Becomes Unicorn Company and Listed on Stock Exchange

Signs are visible. The growth of Danggeun Market, which dominates the used market along with Bungae Nara and Bungae Jangteo, is representative. It is a 5-year-old startup that surpassed 10 million users and became the second most popular shopping app after Coupang. Its transaction volume grew from 4.6 billion KRW in 2016 to 700 billion KRW in 2019. Although the reduction in face-to-face consumption due to COVID-19 had a significant reflective effect, that is not all. The key was perfectly deciphering the new desires of new customers. It accurately read the cravings of the MZ generation. Now, it is expanding its value beyond simple used trading to a community based on local regions. The Korean used market, excluding used cars, is worth about 20 trillion KRW, comparable to convenience stores. It has grown fivefold in the last decade. Looking at Japan, where the used market opened earlier than Korea, rapid growth in used consumption is anticipated. The used market is regarded as a symbolic case of overcoming threats caused by demographic changes through new innovative attempts.

Japan's used market continues to expand daily despite backlash from shrinking new product consumption. The used transaction app 'Mercari' is a representative unicorn company and has even been listed on the Tokyo Stock Exchange. It is popular mainly among women in their 20s and 30s, but now also among elderly people for organizing belongings. Meanwhile, the paradigm of new product purchases has lost its presence. The perception that it is wise to buy used items if they have utility and sell them if unnecessary is spreading. The competition for customers and products is fierce. The Japanese government is even considering including used transactions in GDP calculations. Originally, it was excluded from GDP as it was a transfer of ownership. Although statistics vary, Japan's used market is rapidly growing. Based on early 2020 data, it is known to have potential ranging from at least 3 trillion yen to as much as 8 trillion yen in personal transactions and store sales (Ministry of Economy, Trade and Industry & Japan Recycle Communication).

Professor Jeon Young-su, Graduate School of International Studies, Hanyang University

Shift from Ownership to Use... Expansion of Used Usage Value
Used Trading Is Practical New Consumption, Not Nihilism

Korea, experiencing more rapid demographic changes than Japan, is in an even more favorable situation. High growth has recently ended, and there is a large amount of low-utilization idle assets that are poorly used but abundant as byproducts of mass production and consumption economy. The reduced quality gap between new and used items is also a background for increased transactions. The consumption shift from 'ownership to use' and the booming used market among new customers in Japan provide hints for Korea as well. Although industry conflicts and government regulations pose limits, the market is bound to open. Usage purchase and used transactions with shared value among the MZ generation and others have matured. Although still focused on traditional categories, the expansion of used usage value to lifestyle services is a matter of time.

The used market is innocent. It is accused of shrinking the market by reducing new product consumption, but this is not necessarily true. The number of MZ generation customers who buy new products assuming they will sell them later is increasing. If a new product costing 100,000 KRW is assumed to be resold for 50,000 KRW, a sense develops that the actual price is 50,000 KRW. This lowers the price resistance for new purchases. The perception of 'purchase = asset,' as with cars, aligns with the free and expansive consumption points of new customers. Many existing companies that only offered new products are also entering the used transaction market. Toyota launched a used car purchase service in April 2020. It is a strategy to compensate for sluggish new car sales with profits from used transactions. Used trading is practical new consumption, not nihilism. The new values of changed new customers are closer to opportunity than crisis.