In the words of young people: "It's not that new things are unaffordable, but second-hand offers better value for money," this is not just talk.
Currently, the daily transaction volume of idle goods nationwide has exceeded 1 billion yuan, with 4 million idle items being posted on platforms every day, and the scale of the second-hand idle market has broken through the trillion-yuan mark. In idle transactions, young people born after 1995 are the most active, with 30 million new users of the post-1995 generation flocking to second-hand trading platforms last year alone.
Clearly, "buying second-hand and using second-hand" is no longer something that is hard to talk about; instead, it is increasingly advocated by more and more young people, and second-hand consumption has become a popular lifestyle. This consumption trend is reflected on China's leading second-hand e-commerce platforms, showing a trend of performance growth.
The second-hand e-commerce platform Xianyu released data stating that the platform's daily transaction volume has exceeded 1 billion yuan, with over 100 million people posting idle items on Xianyu in the past year; similarly, the financial report of the second-hand e-commerce company Wansheng Xing, which takes Aihuishou as its core business, shows that in 2023, Wansheng Xing's revenue was 12.97 billion yuan, a year-on-year increase of 31.4%.
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The second-hand market is warming up, new traffic is emerging, and second-hand e-commerce platforms are competing for a share of the market.Escalation of Conflicts, New Battles Begin
As the awareness of environmental protection among post-95s consumers increases, the acceptance of second-hand goods is gradually rising. At the same time, unstable economic conditions have prompted people to consume more rationally. These factors further stimulate the potential of the second-hand transaction market, with more buyers and sellers participating, bringing new traffic.
Despite the huge potential of the second-hand e-commerce market, it is in a state of overall steady growth under the existing competition, and second-hand e-commerce platforms are in urgent need of seeking new growth. At the same time, platforms with built-in traffic such as Douyin and Kuaishou have successively entered the market, making it more difficult for other second-hand e-commerce platforms to obtain online traffic.
In this context, second-hand e-commerce platforms such as Xianyu, Wanwu Shengzhang, and Zhuanzhuan have all opened offline service stores, expanding the scale of offline stores.
Xianyu once cooperated with the third-party service provider Huishoubao to set up an offline store "Xianyu Xiaozhan X Huishoubao", but it was not very popular. This year, Xianyu personally entered the market and opened its first full-category second-hand store; Zhuanzhuan has been deploying in the offline market early, and has opened more than 550 offline stores nationwide so far; Aihuishou is also continuously opening offline stores, with a total number of stores reaching 1819.Whether it's Xianyu, which has just opened its first offline store, or Aihuishou and Zhuanzhuan, which continue to expand their offline stores, the reasons and motivations behind the second-hand e-commerce platforms' increased focus on the offline market and the integration of omnichannel strategies are as follows:
Firstly, they aim to expand their market coverage by utilizing offline stores to attract more consumers. Secondly, they provide a physical store experience and more attentive services to enhance brand image and user experience. Thirdly, offline stores can serve as an extension of online business, achieving omnichannel services, and strengthening user stickiness and loyalty.
In summary, the emergence of new traffic in the offline second-hand market will inevitably lead to intense competition among second-hand e-commerce platforms. This is the inevitable logic of market development.
Wuwan Xinsheng adopts a "offline-first, online-second" approach, accelerating the expansion of its boundaries.
During the phase of online traffic explosion, Aihuishou resolutely bet on the heavy asset model, deeply cultivating the offline second-hand transaction market, and has now achieved considerable revenue and a solid market position.The first-quarter financial report shows that Wanshengsheng's 1P (self-operated) product revenue was 3.31 billion yuan, a year-on-year increase of 28.5%. The 3P (platform) service revenue was 340 million yuan, a year-on-year increase of 15.1%. The platform revenue has recovered double-digit growth for two consecutive quarters, increasing the company's operational profit contribution; the number of consumer transaction products was 8.4 million, compared to 7.9 million in Q1 2023, a year-on-year increase of 6.3%.
Now, Wanshengsheng continues to break through the boundaries of online and offline, comprehensively enhancing the supply chain capabilities of the entire industry. The aim is to establish a stronger competitive barrier in the supply chain, explore more business models and market opportunities, and ensure long-term competitive advantage.
Offline, Wanshengsheng actively builds stores, large operation centers, warehouses, and other infrastructure, constructing an efficient and reliable supply chain system through a wide recycling network, strong logistics, and warehousing capabilities.
The well-established supply chain system provides multifaceted security for Wanshengsheng, ensuring its ability to rapidly expand in the market. It is understood that, as of the end of the first quarter of 2024, Wanshengsheng had a total of 711 self-operated stores and 557 franchised standard stores. As of March 31, 2024, Wanshengsheng had 8 regional large operation centers and 15 urban small warehouses.
It cannot be denied that offline stores have unique advantages, not only can they improve recycling efficiency, but they are also irreplaceable in establishing brand image, providing immediate service experiences, and promoting consumer trust. However, offline stores are a heavy asset model, and under the pressure of high costs, the platform will face profitability challenges.Financial report data indicates that during the first quarter of 2024, the operating costs and expenses of Wansheng Growth increased by 25.9% year-on-year, reaching 3.7029 billion yuan. The cost of goods sold rose by 30.9% year-on-year, amounting to 2.9478 billion yuan; fulfillment costs were 309.8 million yuan, a 16.3% year-on-year increase; sales and marketing expenses also saw a 7.5% year-on-year rise, totaling 321.3 million yuan.
Online, Wansheng Growth has strengthened its connection with the JD.com channel and has attracted more user attention and participation through online marketing activities, social media interaction, and content marketing, thereby expanding its user base.
For Wansheng Growth, online channels are also a very important part of acquiring new users. On one hand, by promoting and advertising on online platforms, users are attracted to offline physical stores to experience and purchase products; on the other hand, by integrating and analyzing online and offline data, it can more accurately understand user needs and market trends, thereby optimizing inventory management and marketing strategies.
In this light, Wansheng Growth has certain advantages in the offline market, but in the long-term competition, a purely offline model may be limited. Wansheng Growth needs to consider a comprehensive omnichannel development strategy. By leveraging the synergistic effect of physical stores and online platforms, it can maximize resource utilization and optimize user experience, thus securing a favorable position in the second-hand e-commerce market.
Xianyu adopts a "primarily online, with offline as a supplement" approach, quickly filling in the gaps.For a considerable period in the past, Xianyu's market penetration rate reached 72.9%, with the largest user base and the highest user activity in the industry, making it a top performer in the second-hand e-commerce sector. However, the second-hand e-commerce market is never short of change, and everything is only temporary.
At present, although Xianyu remains the first choice for second-hand e-commerce, it has lost some of its former glory. Data from the third-party statistics agency Analysys Qianfan shows that Xianyu's monthly active user count peaked in June 2021, successfully surpassing 140 million, but by January 2023, Xianyu's monthly active users had dwindled to just 97.39 million.
The reasons for this are twofold: on one hand, fierce competition from rivals such as Aihuishou and Zhuanzhuan, as well as new entrants like Douyin and Kuaishou, have eroded Xianyu's position and created competitive pressure. On the other hand, as the market evolves, the growth potential of the online market is limited, which is the source of Xianyu's anxiety.
Currently, the online growth of the second-hand e-commerce industry has plateaued, and the market has entered a phase of competing for existing shares. Many platforms are increasing their offline market presence to seek additional growth opportunities beyond the online market. Xianyu has also recognized the importance of the offline market and is refocusing on its offline strategy, accelerating efforts to fill the gaps in its offline presence.
In January of this year, the first Xianyu Recycling Store (a full-category second-hand physical store) opened in Gongshu District, Hangzhou. The store primarily operates as a community shop, serving consumers within a two-kilometer radius of the community and local city dwellers, offering a full range of idle consignment services, as well as services such as errand running, dog walking, and pet waste disposal.Before this, Xianyu had opened offline service stores such as Xianyu Xiaozhan and Xianyu Baoxiang, but these offline stores were mainly focused on traditional recycling services. In contrast, Xianyu's circular stores offer a two-way consignment service. This move can be seen as an upgrade and innovation of Xianyu's business model, indicating that Xianyu is gradually recognizing the importance of the offline market and actively changing its strategy to better meet consumer needs.
Whether it is one-way recycling or two-way consignment, the purpose of Xianyu's successive bets on offline channels is the same: to expand brand influence, meet consumer needs, explore new profit models, and so on. Offline stores can bring new vitality to the Xianyu brand, but they also bring new challenges.
Firstly, offline stores require additional costs such as rent, labor, and operational expenses, which means that Xianyu will face greater cost pressure. Secondly, compared to Zhuanzhuan and Aihuishou, Xianyu's full-channel layout is relatively slow, so it is not yet clear whether it can gain a larger market share in the competition. Lastly, while opening offline stores can enhance brand influence and user experience, there are also unknown risks and challenges.
In summary, with the traffic support of the Taobao ecosystem and other Tao systems, Xianyu is in a leading position in terms of traffic. However, Xianyu cannot always be a "dead fish." As Xianyu gradually develops independently, its commercialization issues have become a key topic that needs to be considered urgently. Under the pressure of commercialization, whether Xianyu can operate the offline community well remains to be seen by time.
Seeking new growth and telling new stories.After years of development, the user base and competitive landscape of China's second-hand e-commerce market have largely stabilized, making the search for new growth a main theme for platforms like Xianyu and Aihuishou. A key question arises: where is the fulcrum for growth?
Firstly, with the slowing growth rate of the second-hand e-commerce market, the offline market is one of the few "open cards." Looking across the market, platforms such as Xianyu, Zhuanzhuan, and Aihuishou are accelerating the pace of opening offline stores, seeking growth in the offline market.
Secondly, returning to the essence of second-hand e-commerce operations, it is crucial to provide a "comprehensive" service system. By innovating and optimizing omni-channel services and experiences, user satisfaction can be enhanced, and existing users can be revitalized. The market for second-hand e-commerce is highly competitive, and offering a comprehensive service system is key to gaining new growth. Only by ensuring the consistency and stability of service quality can word-of-mouth spread, thereby bringing more business opportunities and revenue.
Furthermore, telling a "youthful" new story is essential. By exploring and expanding into new user groups, platforms can tap into new market potential, increasing transaction volumes and user activity. Second-hand e-commerce platforms can attract more young users through mainstream social media, creative markets, second-hand markets, short videos, and live streaming.
Overall, the rise of new entrants with built-in traffic like Douyin and Kuaishou has disrupted the original order of the second-hand e-commerce market. Established second-hand e-commerce platforms urgently need to re-evaluate their positioning, reshape their brand images, create new stories, and explore offline growth markets to attract more young users and generate more business opportunities.