🚨 Re-commerce

Today Korean Social News for Beginners | 2025.09.12

0️⃣ Key Solution for Circular Economy, 88% of Consumers Support Growth

📌 9 out of 10 Consumers Say "Re-commerce Should Be More Active"…Safe Trading and Tax Support Are Key

💬 Recent surveys show that 88% of consumers have a positive view of re-commerce market expansion. The main reason for use was price reduction (86.6%), and environmental protection (25.7%) was also an important motivation. However, consumers picked safe trading systems to prevent fraud (62.2%) and exchange/refund systems (45.5%) as the most urgent tasks. More than 80% of consumers didn't know that value-added tax is charged on used goods the same as new products, and 75% said this was inappropriate. Over 80% responded that usage rates would increase if tax deduction benefits were provided, showing that systematic improvements are urgently needed.

💡 Summary

• Re-commerce is a circular economy model that resells or redistributes used products.
• 88% of consumers are positive about market expansion, but safe trading and tax issues are challenges.
• It's a sustainable consumption method that achieves both price reduction and environmental protection.

1️⃣ Definition

Re-commerce means the process of reselling or redistributing used products for consumption again. It's a concept that goes beyond simple second-hand trading to include various forms of reuse like refurbished and remarketed products.

This is a key way to achieve a circular economy structure of 'production-consumption-reuse-recycling' instead of the traditional linear economy structure of 'production-consumption-disposal'. It contributes to resource conservation and waste reduction, and is gaining attention as an environmentally friendly and economical way of consumption.

💡 Why is it important?

• It helps protect the environment by minimizing resource use and reducing waste.
• It provides consumers with opportunities to buy products at reasonable prices.
• It's a key driver for sustainable social development through circular economy realization.
• It's a business model that actually contributes to carbon neutrality and ESG management expansion.

2️⃣ Re-commerce Market Status and Consumer Awareness

📕 Rapidly Growing Domestic Re-commerce Market

• Market size is expanding rapidly. Key status includes:

  • The domestic re-commerce market is showing growth rates of over 20% annually.
  • Trading is becoming active centered on online platforms like Carrot Market, Thunder Market, and Used Goods Korea.
  • Almost all daily necessities like clothing, electronics, furniture, and books are traded.
  • Consumption trends combining 'value for money' and 'environmental consciousness' are spreading, centered on the MZ generation.

• Consumer usage motivations are diversifying. Key features include:

  • Price reduction (86.6%) appeared as the overwhelming first reason for use.
  • Environmental protection (25.7%) has also established itself as an important motivation, showing the spread of eco-friendly consumption consciousness.
  • Being able to find rare or discontinued products is also an attractive element.
  • The advantage of being able to dispose of unnecessary items and use space efficiently is also there.

📕 Problems Consumers Experience and Improvement Tasks

• Concerns about transaction safety are the biggest. Key problems include:

  • 62.2% of consumers picked improving safe trading systems to prevent fraud as the top priority task.
  • Major fraud types include false marking of product condition, cutting contact after money transfer, and selling fake products.
  • The lack of safe trading places is also pointed out even for face-to-face transactions.
  • Concerns about personal information leaks and misuse are also at a considerable level.

• Inadequate exchange and refund systems are a major obstacle. Key limitations include:

  • 45.5% of consumers recognize improving exchange and refund systems as an important task.
  • Due to the nature of person-to-person transactions, it's difficult to receive the same guarantees as when buying new products.
  • When products are defective or different from descriptions, ways to get relief are limited.
  • There's also confusion due to different policies and standards by platform.

💡 Major Challenges in the Re-commerce Market

1. Transaction Safety: Building systems to prevent fraud and improve reliability
2. Quality Assurance: Establishing standards to objectively evaluate the condition of used products
3. Tax System Improvement: Need for reasonable adjustment of value-added tax imposition methods
4. Institutional Support: Strengthening legal foundations for safe trading and dispute resolution
5. Consumer Education: Improving awareness of proper trading methods and precautions

3️⃣ Tax Issues and Policy Improvement Plans

✅ Reality of Value-Added Tax Imposition Problems

• Most consumers don't know the tax reality. Key problems include:

  • When businesses buy used goods and resell them, 10% value-added tax is imposed the same as new products.
  • However, over 80% of consumers didn't know this fact.
  • 75% of consumers responded that applying the same tax rate to used goods as new products is inappropriate.
  • This limits the price competitiveness of re-commerce companies.

• There are unreasonable aspects compared to major overseas countries. Key comparisons include:

  • The European Union applies reduced tax rates or provides tax exemption benefits for used goods.
  • Japan also has separate tax benefits for used goods trading.
  • In the United States, it varies by state, but many cases provide tax preferences for used goods.
  • Only Korea taxes used goods and new goods equally.

✅ Tax Support and Policy Improvement Effects

• Market activation effects are expected to be large when benefits like tax deductions are provided. Key prospects include:

  • Over 80% responded that usage rates would increase if tax deduction benefits were provided.
  • The burden on re-commerce companies can be reduced through expanding deemed input tax credits.
  • Plans to provide tax benefits within certain limits for person-to-person transactions are also being considered.
  • It's expected to contribute to spreading eco-friendly consumption culture and realizing a circular economy.

• Comprehensive government support policies are needed. Key directions include:

  • Re-commerce specialized tax benefits and support systems need to be prepared.
  • Platform certification systems or guarantee insurance systems for safe trading should be considered.
  • Building used product quality certification and grade classification systems is required.
  • Setting up dedicated organizations for dispute mediation and damage relief is also necessary.
  • Establishing proper trading culture through consumer education and promotion is important.

4️⃣ Related Term Explanations

🔎 Circular Economy

• Circular economy is an economic model that maximizes resource use and minimizes waste.
  • Circular economy means an economic system that continuously creates economic value by reusing, recycling, and remanufacturing resources, moving away from the traditional linear economy (production-consumption-disposal) structure. It began to spread worldwide when the European Union announced the Circular Economy Package in 2015.
  • Core principles of circular economy include: First, preventing waste and pollution from the design stage. Second, making products and materials last as long as possible. Third, regenerating and restoring natural systems. Through these principles, it aims to achieve both economic growth and environmental protection.
  • Re-commerce is one of the practical implementation methods of circular economy. It plays a key role in building a circular economy ecosystem by extending the lifespan of used products by giving them new value and reducing resource usage and waste. The government is also promoting the transition to a circular economy as a core policy to achieve carbon neutrality by 2050.

🔎 Deemed Input Tax Credit

• Deemed input tax credit is a system that reduces the value-added tax burden in used goods trading.
  • Deemed input tax credit means a system where when a business buys used goods from general consumers, they actually don't receive value-added tax, but the tax law deems there is input tax and allows deduction. Currently, it's only applied to some items like precious metals and fine art.
  • Generally, businesses pay value-added tax by subtracting the value-added tax paid when buying goods from the value-added tax received when selling goods. However, when buying used goods from individuals, they don't receive value-added tax, so there's no input tax to deduct, requiring payment of value-added tax on the entire sales amount.
  • If deemed input tax credit is expanded, re-commerce companies can trade without value-added tax burden when purchasing used goods, increasing price competitiveness. This is expected to greatly contribute to re-commerce market activation by enabling the provision of used goods to consumers at cheaper prices.

🔎 Escrow Service

• Escrow service is a payment system that guarantees the safety of online transactions.
  • Escrow service means a service where a trustworthy third party intervenes between buyers and sellers in online transactions to safely manage transaction payments. It's a method where the escrow company temporarily holds the money paid by the buyer and pays it to the seller after confirming product receipt.
  • The process of escrow service is as follows: First, the buyer orders a product and deposits payment with the escrow company. Second, when the seller ships the product, the escrow company tracks delivery. Third, when the buyer receives and confirms the product, the escrow company pays the seller. Fourth, when problems occur, the escrow company mediates and processes refunds.
  • Escrow service is especially important in re-commerce transactions. Due to the nature of used goods, disputes about product condition are likely to occur, and fraud risks are also high in person-to-person transactions. Building a safe escrow system is what consumers most want improved and can be called core infrastructure for re-commerce market development.

5️⃣ Frequently Asked Questions (FAQ)

Q: What's the difference between re-commerce and simple second-hand trading?

A: Re-commerce is a broader concept of circular economy model that includes second-hand trading.

• Re-commerce is a comprehensive concept that goes beyond second-hand trading where individuals sell things they used. First, it includes refurbished products that are professionally repaired and restored to near-new condition. Second, B2C re-commerce where companies systematically collect, process, and resell used goods is also an important area. Third, extending product usage periods through rental or subscription services is also a form of re-commerce. Fourth, upcycling that adds new value to existing products for rebirth is also included.
• Also, re-commerce aims to realize social values of environmental protection and resource conservation beyond simple trading. Unlike individual and temporary second-hand trading, it plays a role in building a circular economy ecosystem as a sustainable business model.

Q: What should I be careful about when trading re-commerce?

A: Sufficient verification before trading and using safety devices are essential.

• Main precautions for safe re-commerce trading are as follows: First, check the seller's reliability. Comprehensively review transaction reviews, ratings, account creation dates, etc., and avoid trading if there are suspicious points. Second, accurately understand product condition. Request multiple photos and check actual products through videos or video calls. Third, use safe payment methods. Use escrow services or platform payment systems and avoid direct money transfers. Fourth, for face-to-face trading, use public places and preferably go with a companion.
• Also, keeping records of the trading process is important. Screenshots of chat contents, product descriptions, price negotiation processes, etc. can be used as evidence when disputes occur. Most importantly, be especially careful when prices are too cheap or when someone urgently pushes for trading, as these are likely to be scams.

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