Musinsa will scale back the discounts it had offered to users of its secondhand fashion transaction service "Musinsa Used." Musinsa has continued its top-line growth, posting record sales in the first half of this year. As the Used transaction volume has also grown quickly, the company appears to be tightening profitability management.
According to the industry on the 1st, Musinsa will unify the payout method for sales proceeds of Musinsa Used into "Musinsa Money" starting on the 28th of this month. Previously, users could choose between Musinsa Money, which allows bank withdrawals, and "Musinsa Money Points," which can only be used on the platform without cash withdrawal. With the unification of the payout method, the 3% fee discount that had been offered when choosing points will also disappear.
Musinsa Used is a consignment sales service for secondhand fashion in which, if consumers send in clothes they no longer wear, Musinsa handles everything from inspection to photography, product listing, storage, and delivery. It reduces the hassle in person-to-person secondhand transactions, where sellers otherwise must take photos themselves, negotiate prices with buyers, and ship the items.
Launched at the end of Aug. last year, Musinsa Used has scaled up quickly in less than a year. As of July this year, the transaction amount was about 12 times higher than in September last year, when it was in its early days. In the first half of this year, the number of sellers and the number of products sold rose 30 times and 6.7 times, respectively, compared with September last year.
Musinsa's overall top line is steadily expanding as well. Musinsa said the previous day that its first-half consolidation sales rose 22.5% on-year to 821.7 billion won. It was the largest ever for a first half, with offline and overseas expansion driving sales growth. Standalone sales climbed 30% to 784.7 billion won.
However, the need for profitability management is coming to the fore alongside the expansion in scale. First-half consolidation operating profit was 52.3 billion won, down 11.2% from a year earlier. Higher costs for sub-materials and labor, increased freight and commission fees, and preemptive investments to expand global operations had an impact. Standalone operating profit rose 13.1% to 65.7 billion won.
Given the expanded scale of Used transactions, some expect the end of this discount to lead to improved service profitability. While the fee rate itself is not increasing, the removal of the additional 3% discount applied to point payouts will raise the effective fee burden for sellers who had chosen point payouts. Even if a product sells at the same price, the actual amount settled will be lower than before, while Musinsa's per-transaction revenue will increase.
Musinsa said the discount being ended this time was a time-limited promotion run to increase the inflow of Musinsa Used users. In practice, sellers are known to prefer Musinsa Money, which allows cash withdrawals, as the payout method over points.
A Musinsa official said, "In February, when we revamped the fee policy, we ran a consignment fee discount and an additional discount promotion for point payouts so more customers could use Used," adding, "With the promotion period ending and after considering multiple factors such as user behavior, we are unifying the payout method to Musinsa Money and ending the benefits."