85% of Canadians participate in second-hand economy valued at $28.5-billion

Garage sale season is in full swing. While the activity may seem quaint, it’s just the tip of a huge iceberg. The second-hand economy—an economic activity that includes buying, selling, renting, exchanging or donating goods—was valued at $28.5-billion in 2017, or 1.34 per cent of Canada’s GDP, according to a report released earlier this year by the Observatoire de la consommation responsible (ESG UQAM).

Last year, close to 2.3 billion items changed hands, up 24 per cent from 2016. The sector contributed between $34- to $37-billion to the GDP. In Ontario alone, second-hand spending exceeded $10 billion.

While 85 per cent of Canadians participate in the second-hand economy, some regions are more active than others. Ontario has the highest intensity index (average total items acquired or disposed of in a year) at 92, followed by Alberta (90), British Columbia (77) and the Prairies (69). Quebec (63) and Atlantic Canada (60) round out the list.

Are people in Eastern Canada less active? No, but their motivations are different. For Quebecers, it’s more about finding a good deal on second-hand goods than donating them, which is more widespread in the rest of Canada.

Although donating is easy, given the many drop-off locations, it isn’t always without consequences. In 2016, independent used booksellers in Quebec wrote an open letter complaining that they faced unfair competition from Renaissance—and with good reason. The non-profit organization, whose mission is to facilitate the social integration of people in need, had developed a network of eight bookstores (10 in 2018) thanks to donated books, which are commodities that cost next to nothing. Does the sector need better supervision?

That depends on what’s being bought and sold and by whom. Overall, women are slightly more active in the second-hand economy than men. Logically, young people buy more, while older people are more likely to give items away. So what are people buying and selling? Mostly clothing, which accounts for one third of exchanges. Entertainment items (DVDs, games) and baby clothing and accessories come in second and third, respectively.

In 2017, Canadians earned an average of $1,134 from selling second-hand goods and saved $825 on their purchases, not exactly small change. Only 10 per cent of Canadians are highly active treasure-hunters (150 transactions or more), and a handful of them have turned their participation in the second-hand economy into a business, even renting storage spaces to store and resell items. No doubt, they’re pleased that 75 per cent of buyers pay the asking price, without even haggling.

How much income does all this generate? eBay is clear on this point: “You’re required by law to declare and pay taxes on income you’ve earned from your eBay sales.” The Canada Revenue Agency has its sights on PowerSellers, in particular, who are very active on the site, have a minimum of 100 transactions and $1,000 in sales per year, and maintain a positive feedback score of 98 per cent or higher. So the average user needn’t worry.

That said, the second-hand market is expanding into higher-end products (furniture, appliances) or goods new to the platforms, which will increase their value in the years to come. For example, in 2012, the Court of Justice of the European Union authorized the sale of used software in many European countries, creating an opportunity not only for sellers (due to layoffs, changes in technology, overstock), but also for buyers, who can save up to 50 per cent on their purchases. In 2017, UsedSoft France, a subsidiary of the sector’s German pioneer, even claimed that 25 per cent of its sales were to government organizations.

In an increasingly virtual world, these types of transactions will surely make their way across the ocean, with their attendant fraud. A classic fraud in the classifieds involves paying a seller through a fake Interac transfer, which the bank only detects a few days later, after the item has changed hands. Nevertheless, garage sales still have a bright future ahead.