On September 13th, the iPhone 15 series arrived as scheduled. Taking advantage of the popularity of the new device, Xianyu decided to personally enter the second-hand market for mobile phones, digital products, and luxury goods.
Recently, Xianyu announced the official launch of its “Help Selling” service. The platform provides quality inspection, warehousing, and transportation services for second-hand goods transactions. Sellers only need to complete three steps: “submitting an order – confirming the quality inspection results and price – confirming participation in the Help Selling service” to complete their idle transactions.
In the past, only relying on two categories with considerable profit margins, namely mobile digital devices and luxury goods, supported the existence of ATRenew, Plum, and other second-hand platforms and offline stores. Now that Xianyu has entered the market, it not only needs to face industry competition but also future investments in door-to-door quality inspection, warehousing, and transportation. Is this a profitable business?
“The majority of other recycling models on the market are mostly C2B2C consignment models with a single clearance channel. They recycle what they receive.” Xianyu General Manager Ji Shan pointed out the pain points in the industry, where it is difficult to balance the diverse ecological roles of buyers, sellers, and service providers in idle transactions. Sellers want convenience and high prices, while buyers want low prices and secure transactions without pitfalls. However, intermediaries often make substantial profits from this process.
This has led to a phenomenon where the awareness of second-hand transactions among Chinese consumers is not high. China produces over 400 million used mobile phones each year, with 90% of them being idle. There are also 100 million unused luxury goods every year, but the recycling rate is only 5%. In comparison to China’s single-digit recycling rate, the United States has already reached levels of 20%-30% or even higher. Nevertheless, the high profit margin in the recycling process still supports a large number of offline stores and online platforms.
Xianyu wants to use the platform’s strategy, based on e-commerce traffic, to incorporate the capabilities of upstream and downstream ecological service providers and provide a new solution. In terms of specific operations, Xianyu provides professional on-site quality inspection services for selling items, which then enter the platform for transactions. This includes increasing exposure through search recommendations, auctioning in the market section, and official live streaming assistance in selling items to help users quickly get rid of their idle belongings.
In this process, Xianyu only plays the role of a matchmaking platform for buyers and sellers. It seems that Xianyu’s model has become “heavier”, but in terms of quality inspection and warehousing, Xianyu also collaborates with service providers such as Huishoubao, rather than solely investing on its own. Currently, Xianyu’s mobile digital category supports on-site appraisal in 50 cities, covering first- and second-tier cities. They have a professional team of over 500 on-site quality inspection engineers and cooperate with authoritative institutions such as China Inspection and Quarantine (CIQ) and China Traceability System (CTS), establishing an appraisal and after-sales service system.
SEE ALSO: Alibaba Replaces Manager of Second-Hand Goods Platform Xianyu
“Why do we need to focus on ‘heaviness’? It’s because there are some experiences that cannot be solved solely by being ‘light’,” said Ji Shan. As the number of users reaches 500 million, Xianyu has evolved from a simple C2C model in the past to an ecosystem where professional sellers, direct manufacturers, and other diverse roles have emerged. This has posed challenges to user experience.
For high-value goods like mobile electronics and luxury items, in order to address the trust issues of users, it is necessary for platforms to establish quality inspection channels, make heavy investments in credit systems and service guarantees. These are choices that must be faced during the development process.
Although Xianyu has already established itself as the leading second-hand e-commerce platform in terms of user numbers, the growth of user penetration rate remains a core goal for the platform. According to Alibaba‘s latest financial report, Xianyu saw an 18% year-on-year increase in DAU (daily active users) for the quarter ending on June 30, 2023. The “Help Selling” service is primarily aimed at addressing trust issues in transactions and improving user experience and engagement. Additionally, it also presents another possibility for commercialization through value-added services.
Ji Shan expressed that currently and in the foreseeable future, Xianyu does not prioritize pure commercialization as its core objective. However, commercialization attempts are necessary. “Currently, we will charge a small fee for extremely high-profile sellers to cover the costs of quality inspection, warehousing, transportation, and other processes.”
Since its internal testing, Xianyu’s “Help Selling” feature has helped over 230,000 users sell their unused items. During the testing process, Xianyu’s industry and operations manager, Xuan Yi, observed that the biggest challenge faced by “Help Selling” is still the issue of trust. Additionally, as a company with a strong internet DNA, Xianyu will need to venture into offline door-to-door services which require a lot of manual work and more detailed service.
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