Can Douyin save second-hand e-commerce?

The problems currently faced by second-hand e-commerce platforms are traffic problems and user trust problems. In the face of growth difficulties, short videos and live broadcasts have become the "hope" of second-hand e-commerce platforms.

Xiao Yang, who was rumored to have changed his career, recently resumed live streaming and sold second-hand mobile phones for 100 million yuan. The biggest winner of this live streaming was the second-hand e-commerce company Zhuan Zhuan.

“The original price of the iPhone 15 Pro Max 512GB is 11,999. But it doesn’t matter. Brother Xiao Yang didn’t do any live broadcasts this month, so I just kept bargaining, and today I can get it for four figures. Here, 8,888 yuan, 2,000 units first!” Brother Xiao Yang promoted the product hard in the live broadcast room that day.

Compared with the same model sold at 11,999 yuan in Apple's official store and the price of 10,599 yuan after discounts on e-commerce platforms such as JD.com, the price in Xiao Yangge's live broadcast room is directly 2,000-3,000 yuan cheaper, which has attracted many buyers.

Normally, the price of Apple products does not fluctuate much, so how can Brother Yang offer a discount of 3,000 yuan?

Brother Yang introduced the product as a "quasi-new Apple phone" during the live broadcast. "It was a product that was returned by a customer seven days after purchase. We selected it from Zhuan Zhuan and Foxconn, and it has no signs of use."

People in the industry often call them "resource phones." They are genuine Apple products, 99.99...new, almost brand new, but they do not support national warranty. The main sales channels for this type of phone are second-hand e-commerce and third-party channel dealers.

As the supplier of second-hand mobile phones in Xiao Yangge's live broadcast room, Zhuanzhuan has always been a frequent visitor to short video platforms. People who often watch short videos will definitely notice that Zhuanzhuan's ads are everywhere. Bloggers of many types such as store visits, cars, movies, games, etc. have received Zhuanzhuan's advertising, and content forms such as small theaters, short plays and sand sculpture videos are all popular.

Not content with just being a short video "face-swiping", Zhuan Zhuan has even appeared in the live broadcast rooms of big anchors. In 2020, Zhuan Zhuan brought a nearly new phone into Luo Yonghao's live broadcast room, and the 900 iPhone 11 series phones originally in stock were sold out in seconds, and the 800 emergency restocks were also sold out in seconds. After that, Zhuan Zhuan opened an official live broadcast room on the Kuaishou platform, setting a record of sales of more than 75 million in one event.

"I scrolled through Douyin for a while, and it was full of ads for Zhuan Zhuan." Even though she had never downloaded Zhuan Zhuan, Xiao Meng, a girl born after 1995, was very familiar with Zhuan Zhuan's 3C product recycling properties. "The video was advancing the plot, but the blogger suddenly wanted to sell a mobile phone. It was brainwashing enough."

App Growing data shows that in 2023, Zhuanzhuan ranked fourth on the 2023 e-commerce app hot investment list. On the one hand, it bought traffic to promote its own app, on the other hand, it advertised in bloggers' short videos, and on the other hand, it increased sales in the live broadcast rooms of big anchors.

The reason why they rely on short video platforms is related to the traffic dilemma faced by second-hand e-commerce. Due to insufficient internal traffic, they have to seek new sources of traffic from outside. Similarly, Aihuishou and Paipai, both subsidiaries of JD.com, have also opened multiple live broadcast rooms on short video platforms.

In addition, the second biggest problem facing second-hand e-commerce is the issue of trust. There is a stronger sense of trust between big anchors, short video bloggers and their fans, which is also the reason why second-hand e-commerce companies choose to deploy Douyin.

In the past two years, second-hand transactions have been hot, but second-hand e-commerce companies such as Zhuan Zhuan have not been favored by capital. Among them, Zhuan Zhuan has not announced new financing for many years, and has not announced its operating and user growth data since 2020. When it was listed in 2021, Aihuishou's stock price once exceeded US$18 per share, and the company's total market value reached nearly US$4 billion. But now, its market value has shrunk by more than 90%, leaving less than US$400 million.

Short videos and live broadcasts have become the lifeline for apps like Zhuan Zhuan that are deeply anxious about growth.

01

“It’s too cheap. A big anchor like Brother Yang shouldn’t dare to sell fakes. Besides, there’s a 7-day free return policy.” Seeing 2,000 mobile phones sold out in seconds after being put on the shelves, Axing, a post-90s consumer who was planning to change his phone, also placed an order enthusiastically, even though he didn’t know what a “nearly new phone” was.

But soon, the mentality of picking up a bargain was replaced by worry. Ah Xing, who couldn't sleep at night, opened Baidu and started to search. "One theory is that the Apple store had excess materials ordered and made the machine. Another theory is that if someone buys a new machine and returns it within seven to fourteen days after activation without reason, the programmer will uniformly change the activation date to 1978, which is equivalent to the machine being out of warranty."

At the same time, A Xing discovered that the store that sold the phone, "Caihuoxia Digital Store," was a new store that had been in business for less than 120 days. Regarding the warranty, A Xing consulted customer service and was told that "the two-year warranty is provided by the store," and that "it does not enjoy the official nationwide warranty" was the reason why the price of this product was much lower than the official retail price.

"At the same time, I assure everyone that the iPhones purchased in the live broadcast room will not have any signs of use. They have been tested by Zhuan Zhuan and Foxconn, so don't worry, brothers." In order to reassure the "brothers" in the live broadcast room, Brother Yang brought up the testing of Zhuan Zhuan and Foxconn.

But this did not dispel Ah Xing's concerns. Ah Xing asked the customer service about the source of the product and the agency that issued the test report. In response, the customer service of "Caihuoxia Digital Store" replied that "the source of the goods is not convenient to disclose, and the test report is not convenient to issue for each mobile phone."

"If you are a novice, we still recommend you to buy from the official website", "Dear, the official website is the most reliable", after receiving such replies from the customer service, Ah Xing was not sure whether it was because he had annoyed the customer service or the other party had a change of heart and really suggested him to buy from the official website.

After much deliberation, Ah Xing decided to return the phone. "I would rather pay 8,888 yuan for a second-hand phone than spend another 2,000 or 3,000 yuan to buy a new one, or wait for a while until the price of a new phone drops."

Regarding the relationship between "Caihuoxia Digital Store" and Zhuan Zhuan, Alphabet List found out through Tianyancha that the main company of "Caihuoxia" second-hand mobile phone trading platform is "Beijing Xiakehui Information Technology Co., Ltd.", which is a wholly-owned subsidiary of "Zhuan Zhuan Second-hand Trading Platform".

In other words, the partner of the mobile phones in Xiao Yangge's live broadcast room was Zhuan Zhuan, which was responsible for testing these mobile phones. The nearly two-hour live broadcast that day brought Zhuan Zhuan 100 million yuan in sales.

02

E-commerce platforms have already collectively targeted short video platforms to obtain new traffic, including Taobao and JD.com. As a smaller second-hand e-commerce platform, the need to seek external traffic will only be more urgent, and the dependence on external traffic will only be stronger.

Second-hand e-commerce companies once had their moments of glory. Because they can assist e-commerce giants in handling inventory, returns and defective products, and complete the closed loop of the giants' trading ecosystem, second-hand e-commerce has attracted the attention of the capital market. In 2020, Zhuanzhuan strategically merged with the second-hand mobile phone B2C trading platform "Zhaoliangji" and became a technology unicorn with a valuation of US$1.8 billion. Later, Aihuihui announced that it had received more than US$100 million in E+ round financing.

Competition between platforms is also escalating. Xianyu is backed by Alibaba, and Zhuanzhuan has become a member of the WeChat wallet "Nine-square grid". WeChat's 1 billion-level WeChat user resources are fully open to Zhuanzhuan. JD.com has also strategically merged its second-hand goods trading platform "PaiPai" with "AiHuiHui", and used its own platform and resources to provide traffic and market support for AiHuiHuiHui.

However, the pressure to obtain traffic still weighs on second-hand e-commerce companies such as Zhuan Zhuan. Looking at the entire second-hand industry, there are currently two mainstream business models: one is the C2C model driven by traffic, with Xianyu as a typical example; the other is the C2B2C model driven by the supply chain, with Zhuan Zhuan and Aihuishou both being of this type.

In 2016, Zhuan Zhuan was still doing C2C business. Although it occupied the top spot in the industry, it was difficult for its business to make breakthrough progress. So Zhuan Zhuan turned to the C2B2C model in 2018, targeting the 3C market segment and launching projects such as "Youshu" and the trendy shoe category "Chek" to test vertical transactions. However, in the end, except for 3C second-hand products, most of the other trial projects died halfway.

After the transformation, Zhuan Zhuan’s original traffic advantage is no longer obvious, and it lacks the support of the overall business ecosystem, resulting in high traffic costs and poor results for the platform; on the other hand, as traffic growth slows, Zhuan Zhuan has to step out of the comfort zone of being "fed" by WeChat traffic, and the pressure to acquire traffic is increasing.

With their own traffic drying up, Zhuanzhuan and other platforms have turned to external traffic platforms. Dewu, Zhuanzhuan and Pinduoduo were once known as the three major sponsors of Douyin advertising. For those who often use Douyin, the slogan "Buy second-hand products on Zhuanzhuan" is not unfamiliar.

While attracting traffic to its own app and increasing brand exposure, Zhuanzhuan has also entered the live broadcast room. Although entering the live broadcast room of a big anchor often requires paying a high pit fee and commission, high exposure can quickly bring real sales. At the same time, Zhuanzhuan is also equipped with industry standard features - brand self-broadcasting, launching CEO live broadcasting to bring goods, and launching a super brand day promotion event in cooperation with Kuaishou.

Obviously, Zhuanzhuan has long regarded short video platforms as important sales and traffic platforms. During the Double 11 last year, Zhuanzhuan also launched the "trade-in" service in cooperation with Douyin e-commerce. Douyin e-commerce users can use the recycling service provided by Zhuanzhuan when purchasing mobile phones, laptops, headphones, watches, and tablets on the platform. Zhuanzhuan's dependence on Douyin has become even stronger.

03

In fact, it is not only Zhuan Zhuan, a second-hand e-commerce company that specializes in 3C, that is targeting Douyin. Second-hand luxury goods have long regarded Douyin as an important sales channel. Second-hand luxury platforms such as Feiyu and Panghu have started regular live broadcasts on Douyin.

According to the Daily Economic News, online sales have become the main channel for second-hand luxury goods. An industry insider said, "Nowadays, almost all offline second-hand stores will start live broadcasts, and even the majority of their sales revenue comes from live broadcasts."

Zhuanzhuan is also related to the second-hand luxury market. In 2022, Zhuanzhuan made a strategic investment of US$100 million in the fashion lifestyle platform Redbulin. The important direction of Redbulin's business is second-hand luxury.

Second-hand e-commerce companies are collectively targeting short video platforms. On the one hand, the platforms have abundant traffic to tap, and the scale of users determines their commercial value. Zhuanzhuan once claimed that its user base exceeded 200 million in 2020, but then stopped disclosing its user base; Aihuishou’s user base only exceeded 15 million as of December 31, 2023.

Another important reason is that live streaming can supplement the sense of trust that second-hand trading platforms hope to gain.

Second-hand e-commerce platforms have been in the vortex of a trust crisis. A search on the Black Cat Complaint Platform by Zizibang showed that the number of complaints about second-hand trading platforms remained high, with 169,772 complaints about Xianyu, 84,395 complaints about Zhuanzhuan, and 7,608 complaints about Aihuishou. Especially for 3C products, the main reasons for complaints include inconsistent promotion with actual performance and deliberate price reduction for recycled mobile phones.

Last year, Zhuan Zhuan was caught in a whirlpool of public opinion over the "yin-yang inspection and evaluation report". A netizen bought a mobile phone at a Zhuan Zhuan offline store, and the inspection and evaluation report showed that the phone had only minor scratches and wear. Half an hour later, he went to another Zhuan Zhuan store and sold the same phone, but the report issued by the store showed that the shell had scratches and the camera had light spots, etc. As a result, the price difference between the sale and recycling of the same mobile phone reached 30%.

Aihuishou was not immune to this, and was labeled as "maliciously lowering prices" by users on social media such as Xiaohongshu and Weibo. These problems not only affected the user experience, but also aroused public doubts about the service quality and integrity of second-hand e-commerce.

This is why Zhuanzhuan and others want to enter the live broadcast room. Even if it is a self-broadcast, it is easier to build trust in the form of interactive live broadcast than selling products in the App.

The influence of big anchors and the trust of fans can greatly enhance the trust endorsement. Of course, from another perspective, while the live broadcast room gains traffic blessing, once a trust crisis breaks out, the negative public opinion impact will be greater.

If Zhuanzhuan wants to break out, they still have a long way to go.