For a long time, there have been unique forms of second-hand transactions in various countries in the world, such as flea markets in Europe and the United States, ancient shops in Japan, or ghost markets in ancient China, which constitute an important part of the circular economy.
With the development of the times, second-hand transactions are no longer limited to offline forms, such as eBay, Mercari and other e-commerce platforms have emerged one after another, and began to provide online second-hand trading functions. China has also seen the emergence of online second-hand trading platforms such as Zhuanzhuan, Hongbulin and Duozhuayu. Some of them focus on recycling services for books and consumer durables, while others cover almost all categories of second-hand goods.
Xianyu is a representative of the latter, and it is the leading second-hand platform in China. According to the FY 2021 (April 1, 2019 to March 31, 2020) report, its Gross Merchandise Volume exceeds RMB 200 billion (About $31.4 billion), which makes it the Top 1 used transaction brand in China in 2021. In early April 2021, Xianyu even set a GMV target of RMB 50 billion, which shows its ambition.
In this article, we will introduce the development of this Chinese head second-hand trading platform.
Born from Taobao
Most foreign netizens may not have heard of Xianyu, but should be no stranger to one of China’s largest e-commerce platforms, Taobao. In the first years of Taobao, both merchants were selling new goods (like Amazon) and individuals selling used goods (like eBay). But then, to meet China’s regulatory requirements, Taobao raised the bar for individual sellers to use Taobao. It becomes not worthwhile to register a separate Taobao seller account to occasionally sell one or two used items.
So in June 2014, the original Taobao second-hand project, officially with the name Xianyu from Taobao in the independent, separately opened a website. Taobao has completely become Amazon, and Xianyu is eBay.
When Xianyu was founded, because the product manager did not want to have too many Taobao marks on Xianyu, it did not use too many Taobao resources, which also made it later have a unique style different from Taobao.
Xianyu, taking the meaning of the Chinese homophone “闲余”, “闲” is idle time, while “余” is the idle items and space. The word “闲鱼” directly translates to “idle fish”, and its slogan is “Let your idle items swim”, which is a name very much in line with the tone of the second-hand trading platform.
Before Xianyu, Alibaba Group already had two billion-level e-commerce platforms: Taobao and Tmall. Taobao is the foundation from which Ali Group started, with a significant number of medium-sized merchants, while Tmall houses major brand flagship stores and large merchants. As mentioned above, both of them have a certain threshold, yet the emergence of Xianyu provides a platform for small and micro businesses and individuals to trade freely.
In China, Xianyu is not the first platform to do second-hand transactions, 58.com, baixing.com and other websites are older than it. But because material conditions in the past were far less favorable than they are now, the Chinese second-hand market remained relatively inactive for a long time.
In recent years, as China’s per capita GDP has been growing year by year, people’s consumption concepts have gradually started to change. People are becoming more and more fond of shopping and the number of unused items at home is increasing. There are also some consumers who want to buy goods but cannot find suitable ones on e-commerce platforms such as Taobao, which has likewise given rise to the demand for second-hand transactions.
According to a Taobao user survey, almost all Chinese people have unused items at home, but most users don’t have the free time and energy to resell unused items, or don’t know the channels to resell used goods. The Chinese second-hand market has a large development space and good prospects, which is the basis for the birth of Xianyu.
Although Xianyu is independent from Taobao, it still uses Taobao’s account system and Alibaba’s Alipay payment system. Users can directly use their Taobao accounts to log into Xianyu and even resell the goods they bought in Taobao with a single click in it, which greatly reduces the use and learning costs for users and brings a significant user base to Xianyu. Alipay, one of the largest mobile payment apps in China, is proven in terms of security and convenience.
In addition, compared to other second-hand trading platforms, Xianyu uses almost the same transaction guarantee system as Taobao. The buyer pays the money to Xianyu first, the seller ships the goods, the buyer receives the goods and checks if they are satisfied, confirms receipt, and it gives the money to the seller. Having Xianyu in the middle as a guarantee greatly improves the security of conducting second-hand transactions.
The combination of these advantages makes Xianyu stand out among Chinese trading platforms.
In 2016, according to the 2016 Sharing Economy Development Report published by the First Financial Business Data Center, the size of China’s idle item market is conservatively estimated to have reached a scale of RMB 400 billion (About $62.8 billion). Xianyu and the entire Chinese second-hand transaction market have ushered in a booming phase of development. on May 18, Alibaba Group merged its auction business with Xianyu, with Group CTO Zhang Jianfeng saying, “After joining forces, Xianyu and Auction will jointly explore a variety of sharing economy business forms including Xianyu auction, Xianyu second-hand transactions, and Xianyu used cars “.
In the same year, the project team found that mobile was more in line with user needs and more convenient to use, so they closed the publishing function on PC and focused on the App. Today only the promotional page as well as the download portal remain on Xianyu’s official website.
China’s second-hand market size reached RMB 883.4 billion in 2019, up 19% year-on-year, and is expected to exceed a trillion RMB in 2020, reaching RMB 1,040.9 billion, with 182 million users. The second-hand e-commerce platforms such as Zhuanzhuan began to increase investment, and traffic platforms such as Kwai and Tiktok began to enter the second-hand e-commerce platform. Xianyu naturally did not lag behind, launched the “carefree purchase”, “Huiwan community”, “new offline” three business, and digital luxury goods and other high-priced items trading portal moved to the banner position.
According to BigData-Research, Xianyu had 82.34 million monthly active users in March 2020, far exceeding other similar second-hand trading apps in China and even higher than the sum of their monthly active users.
In September 2020, Alibaba’s Vice President Ping Cao had said in an interview that Xianyu‘s GMV exceeded RMB 200 billion in the past year, and online sellers reached 30 million. And Its monthly active users reached 90 million, and the items listed for sale in Xianyu have exceeded 1 billion pieces per year.
In 2021, the number of registered users of Xianyu has exceed 300 million. In April, Xianyu even revealed the news that GMV is expected to exceed RMB 500 billion by the end of 2021. Although the latest financial report has not yet been announced, it is already the rightful No.1 in China’s second-hand trading platform sector.
Not just second-hand
Xianyu focuses on second-hand transactions, but also hopes to build an e-commerce content community with youth attributes. It first created a community called “Fish Pond”, and then upgraded “Fish Pond” to “Huiwan”, and placed the entrance in the most obvious tab on the home page. It hosts functions such as “circle” and “square”, where users can join groups in different fields and post news to share. You can think of it as a mini Instagram embedded in the app.
The community content, which seems unrelated to second-hand transactions, further deepens the trust between users. While enhancing Xianyu’s user stickiness, it also promotes transaction conversion.
There are even many “Star users” on Xianyu – famous Chinese actors, singers, hosts and more. When they post second-hand goods, they sometimes interact with netizens or share their stories. Many netizens say that through Xianyu, they don’t feel so far away from the stars.
In addition, Xianyu has also increased the rental, recycling old things, used cars, used houses and even domestic cleaning and other functional entrances, can be described as a small but complete.
With the boom of live commercing in China, Xianyu also launched a live streaming function in early 2020, which is claimed to be “0 threshold”. Ordinary users only need to have “posted more than five products” and have their real names verified to become hosts and broadcast live on Xianyu. It can be considered one of the platforms with the lowest threshold for live commercing in China’s e-commerce industry.
A survey by Alibaba Group shows that the top three reasons users now transfer unused items are “to cash” in (49%), “go low-carbon” (46%), and “sell to someone with the same interests” (41%). It can be seen that today’s second-hand trading market is no longer just around the “transaction”, the concept of environmental protection and similar interests also have a pivotal position, these coincide with the concept of Xianyu.
Xianyu has grown from a small project within Taobao to the top of China’s second-hand market in less than a decade, and this is due to its long-standing emphasis on community content.
Today China’s second-hand transaction market still has huge potential, and I believe that Xianyu’s goal of GMV 500 billion RMB will be reached in the near future, and it will also be able to make its mark in a broader market.