Role of trust in secondary marketplace success

When trust is for sale, everybody loses. Lucie Macleod, a 25-year-old entrepreneur from Wales, built Hair Syrup into a multimillion-pound business on TikTok Shop. But her success was quickly undermined when counterfeit versions of her products flooded the platform. The fakes were easy to list (a forged letter was all it took), and the damage was real: customer complaints, brand reputation harmed, and revenue slashed in half. This vividly reveals how fragile the foundation of digital marketplaces is and the critical role trust plays in it.  When platforms allow counterfeiters to thrive, they poison consumer confidence. And once trust is gone, no algorithm can bring it back. There are lessons here for every founder, every brand, every platform: Scale without safeguards creates vulnerability. Growth without verification invites fraud. Accessibility without accountability undermines trust. Lucie’s story is a cautionary tale of platform dependency but also a reminder that if you don’t own your customer relationship, someone else will exploit it. TikTok Shop may survive this. But as consumers migrate back to established e-retailers, it’s clear: trust will always be the ultimate currency of commerce.

This month, a lot of eyes have focused on the world of startups, their shareholders and investors. This attention has given the key players in the secondary market for private company shares an opportunity to take stock and collectively commit to building a market centered around trust.  As we’ve always believed at EquityZen, every private secondary marketplace serves three stakeholders. In a 2016 blog post, we described them as “the company, its shareholders looking to sell, and the qualified investors looking to make the investment.” Like a three-legged stool, if there is an asymmetry in addressing the needs of one of these stakeholders above the needs of the others, the stool won’t stand for long. If a marketplace is too focused on investors, they may seek to do as many deals as possible, at the detriment to the shareholders and private companies they serve. If too focused on shareholders, there may not be investor interest or willingness to sell at a price that's fair. If too focused on the private companies, the ability to provide investment access and liquidity at all could be stifled given the work and liability involved. It’s a delicate balance and too much asymmetry in any direction can cause a breakdown in trust, which hinders the network effect that happens in a successful marketplace - one where willing parties come together to collectively have their voices heard and needs met. While it may be most expedient to focus on the investors and shareholders (whose transactions provide the fees that support the marketplaces), private companies are a crucially important stakeholder.  A reporter had asked us earlier this month if we had seen an uptick in investor and shareholder interest. We had, but perhaps more importantly we have also heard from private companies. They recognize the need for a secondary market and what they want, and have always had with EquityZen, is a voice in the process. We consider them key partners. Private companies know that addressing liquidity needs helps to both retain employees and acknowledge the commitment of early investors. By using this tool to release the pressure of delivering liquidity, companies can have the flexibility to IPO on their own timeline. Liquidity needs become more urgent as private companies stay private longer than ever. Whether liquidity is needed for an early employee looking to fund a business idea, buy a home, or pay medical expenses, the 400+ private companies we have worked with understand the needs of their shareholders and simply want to be part of an orderly process. This is why every transaction on EquityZen’s marketplace is approved by the private companies themselves. Continued in comment below... 👇

Do you know the pre-owned watch retailer that disrupted the sector so successfully that Richemont Group acquired it for a reported £250 million? Meet Arjen van de Vall, Chief Executive of Watchfinder, who was our latest guest in the Luxury Society podcast (link in comments). Some important elements shared by Arjen: ⌚ The Pre-Owned Revolution: The secondary watch market has matured into a $30 billion annual industry that's reshaping how consumers think about luxury timepieces. Younger generations see "less of an obstacle in buying pre-owned," blurring the lines between new and secondary markets. As Arjen puts it: "What we're selling is trust. So of course we sell watches, but first and foremost, what we sell is trust." 🔍 The Authentication Arms Race: The fake watch problem has completely flipped - seven years ago, 80% of counterfeits were "terrible" and 20% were good. Now it's reversed: 80% are sophisticated fakes that require a 60-step authentication process. With 40 million counterfeit watches sold globally each year, generating $1 billion in profits, trust has become the ultimate differentiator in the pre-owned luxury market. 🏪 The Omnichannel Evolution: Traditional boundaries between primary and secondary retail are dissolving. Rolex's new Bond Street flagship dedicates an entire floor to certified pre-owned, while brands like Cartier partner with specialists like Watchfinder for CPO programs. The future isn't about primary vs. secondary - it's about integrated luxury experiences across all channels #LuxuryWatches #PreOwnedLuxury #MarketAnalysis #WatchIndustry #Richemont

Why do smartphone trade-in values In Europe vary so much? Would you trade in your smartphone if offers ranged from €121 to €236 for the same device? Trade-in value discrepancies like this, among Europe’s top operators and retailers, raise serious questions about transparency and fairness. For consumers, such inconsistencies erode trust in trade-in programs, discouraging participation. This trust gap is a major obstacle for Europe’s secondary mobile market, where trade-in rates already lag behind other regions, particularly the U.S. The issue runs deeper than just trade-in values. Europe’s secondary market faces unique challenges, from fragmented regulations to fewer financial incentives and cultural habits that favor holding onto devices longer or reselling directly. Despite the secondary market representing 10-15% of the primary market, the attach rate—devices traded in versus new devices sold—remains far too low to meet growing demand. What’s the solution? To unlock the full potential of the European secondary market, the industry must focus on improving transparency, standardizing trade-in programs, and offering fairer financial incentives. By addressing these gaps, the market can build consumer confidence and encourage more sustainable trade-in practices. Read full article https://lnkd.in/e5S5X3AE. #Smartphones #TradeIn #CircularEconomy #Sustainability #SecondaryMarket