Saying goodbye to the free era, is Xianyu anxious to make money?

Recently, Xianyu announced that it would implement a charging policy for all sellers, which not only attracted the attention of a large number of users, but also triggered discussions on the future development direction of Xianyu. This article will explore the logic behind Xianyu's charging policy, its impact on individual and professional sellers, and how this strategy affects Xianyu's community atmosphere and business ecology.

"In the most popular year, I sold hundreds of unused items on Xianyu." As a senior user of Xianyu, Li Li was once very satisfied with the trading scene of Xianyu. She believes that sellers can make money by cashing in their unused items, while buyers can get bargains at reasonable prices.

High-frequency, natural, and free transaction scenarios have attracted thousands of sellers like Li Li, who have jointly built a user ecosystem for Xianyu. According to the latest report from data platform QuestMobile, Xianyu's monthly active users reached 162 million in April 2024.

Compared with other e-commerce platforms that use transaction as their underlying logic, Xianyu's main business line in the past revolved around the recycling of idle resources. It serves as a bridge between individual sellers and individual buyers, and through algorithm recommendations, it achieves efficient matching among massive buying and selling demands.

However, as the user base continues to grow, in recent years, Xianyu's business branches have further expanded from personal idle items and professional sellers to offline circulation stores, and then to the addition of service content such as house rentals, resumes, and errands.

The accelerator was pressed in mid-November last year.

At that time, Alibaba CEO Wu Yongming listed Xianyu, 1688, DingTalk, and Quark as Alibaba's first batch of strategic innovative businesses at Alibaba's financial report meeting. Xianyu has thus become one of Taotian Group's important businesses, and as a result, Xianyu needs to take on more responsibilities for traffic monetization.

Therefore, in June 2023, Xianyu announced that it would implement a charging policy for specific merchants. On July 26 this year, Xianyu further issued an announcement, announcing that it would officially implement charging for all sellers starting in September this year.

From free to paid, Xianyu is now following the old path of traditional Internet companies.

1. Say goodbye to the free era

At the end of 2018, Xianyu founder Chen Weiye said: "It is inconvenient to disclose Xianyu's specific profit model, but we will definitely not charge transaction commissions."

This promise was "broken" five years later.

In June 2023, Xianyu announced a charging policy for certain merchants. According to the policy, if a user completes more than 10 orders in a month and the cumulative transaction amount exceeds 10,000 yuan, the excess amount will be charged a service fee of 1% of the actual transaction amount of each order.

In the "Xianyu Seller Software Service Fee Charging Rules" released at the end of July this year, Tech Planet discovered that the charging objects of Xianyu have been further expanded. A corresponding service fee will be charged for each order completed on Xianyu. The charging standard is based on the actual transaction amount (including shipping costs), with a ratio of 0.6% (a maximum charge of 60 yuan per order), and the service fee is not refundable after an order is refunded.

In other words, compared with the charging policy implemented for specific merchants in June last year, Xianyu's charging rules are now directly applicable to all sellers. After the announcement, it sparked heated discussions, and many individual sellers said they "could not accept" it.

Li Li believes that idle items are low-priced in nature, and charging will increase transaction costs, and the charges do not mention the corresponding services. "I sell a stroller for 50 yuan with free shipping, and I have to pay 0.3 yuan from the platform. Although it's not much, it always feels not worth it."

Another enthusiast of Goods (a transliteration of Goods, referring to two-dimensional peripherals) mentioned that the frequency of trading collections through Xianyu in the Goods circle is very high. Although the single fee is not much, it is a considerable expense when accumulated.

Although the fee ratio is not high, thanks to Xianyu's user base, Xianyu's revenue is still considerable after charging all sellers. According to data released by Xianyu in March this year, Xianyu's average daily transaction volume has exceeded 1 billion. If calculated at a rate of 0.6%, this means that Xianyu can receive no less than 6 million yuan in software service fees every day.

Xianyu's service fee is not an isolated case. An industry insider told Tech Planet that before Xianyu, second-hand trading platforms such as Zhuanzhuan and Paipai would charge a certain fee to sellers or buyers.

Another e-commerce industry insider believes that the expansion of Xianyu's charging scope is actually catering to Alibaba Group's expectations. When Alibaba, led by Joseph Tsai, refocuses on its core e-commerce business, Xianyu is a key part of it.

This is indeed the case. Against the backdrop of increasing saturation in the e-commerce market and peaking traffic dividends, the still-growing Xianyu is undoubtedly one of the hopes for Alibaba's e-commerce business.

In its second quarter financial report for fiscal year 2024, Alibaba described Xianyu as continuing to grow strongly as an interest community and market platform. The financial report also showed that as of September 30, 2023, Xianyu's DAU had increased by more than 20% year-on-year. In the official data released in May this year, the number of Xianyu users has exceeded 500 million.

"With a huge traffic pool, it is inevitable for Xianyu to bid farewell to the free era," the above-mentioned e-commerce industry insider analyzed to Tech Planet.

2. The Double-edged Sword of Professional Sellers

Due to its low threshold, light operation and weak supervision, Xianyu once attracted a large number of professional sellers.

Unlike individual sellers who transfer second-hand idle items, professional sellers on Xianyu are mostly factory direct sales manufacturers, offline store merchants, and "one-click delivery" players. Professional sellers play the role of intermediaries, and they earn the corresponding price difference between the source of goods and the buyer.

Before 2019, Xianyu did not allow professional sellers to enter, and professional sellers would be directly blocked. But after Chen Lei (nickname "Wen Zhong") became the second person in charge of Xianyu, Xianyu's attitude towards professional sellers changed.

In June 2020, Chen Lei said in an interview with the media that Xianyu is positioned as a C2C platform, which means that transactions between users are not necessarily "second-hand goods". In some specific areas, some professional sellers are bound to appear.

As a result, Xianyu gradually moved from a C2C model to a hybrid model of C2C and B2C. In the Xianyu ecosystem today, these professional sellers are not dispensable. Their influx not only increases the number of sellers and the richness of goods, but also is the key to improving the efficiency of Xianyu transactions.

The above-mentioned e-commerce industry insiders believe that the contradiction of Xianyu lies in that it cannot do without professional sellers in order to expand its GMV scale, but at the same time it is worried that the influx of professional sellers will damage the experience of individual sellers.

In order to balance transaction efficiency and community atmosphere, in addition to strengthening the certification of professional sellers, Xianyu chose to implement a charging policy for some merchants in June last year.

This strategy has been further strengthened this year. According to the new regulations released by Xianyu at the end of July, professional sellers with "high frequency and high value" transactions will be charged a higher percentage of fees.

Xianyu customer service told Tech Planet that after September this year, if the seller completes more than 10 orders in a month and the cumulative transaction amount exceeds 10,000 yuan, the service fee rate will be increased to 1.6%.

Caption: Xianyu customer service responded to the adjustment of software service fee ratio.

Wang Yu, a professional seller who resells blind boxes on Xianyu, has monthly sales orders and amounts that exceed the requirements of the new regulations. He told Tech Planet that, for example, his Pop Mart Big Doll, which is priced at 3,500 yuan, will be charged a software service fee of 56 yuan after the new regulations. "These are not low costs."

Another seller of second-hand mobile phones on Xianyu told Tech Planet that he came to Xianyu because he had a source of goods offline. "At first, I could make tens of thousands of yuan a month by reselling second-hand mobile phones on Xianyu. But now the profit of second-hand mobile phones is getting lower and lower, and with the collection of service fees in the future, the profit is getting thinner and thinner."

But despite this, Xianyu is still the best choice for small B sellers at present.

The above-mentioned e-commerce industry insider said that Xianyu is charging basic software service fees this time. Xiaohongshu, JD.com, Douyin, and Pinduoduo charged such fees in 2018, 2023, 2023, and 2020 respectively, and the proportions are basically the same.

"If you open a store on these e-commerce platforms, in addition to meeting the requirements, you also have to pay commissions of varying proportions." Therefore, for small B merchants, Xianyu is still one of the platforms with the lowest threshold.

3. One step forward is Taobao?

Some individual sellers told Tech Planet that they believe Xianyu is becoming more and more like Taobao, and seems to have changed its original positioning of sharing second-hand goods.

This perception comes from the setting of software service charges on the one hand, and from the changes in the traffic of its Xianyu homepage on the other. At present, Li Li and many senior individual sellers of Xianyu have mentioned a perception: it is becoming increasingly difficult to sell idle items on Xianyu now, with no traffic and no exposure.

A "hair stylist" who works part-time on Xianyu also complained that before July, there were two or three people looking for orders and asking prices every day, and there were almost transactions every day. But after July, there were fewer and fewer new customers, and the exposure of new links on the shelves also dropped to the hundreds.

While individual sellers are struggling with declining traffic, Xianyu is actually increasing its support for professional sellers.

In 2022, Xianyu launched a cooperative investment channel "Xianyu Shop" to recruit suppliers. After becoming Xianyu's cooperative sellers, these suppliers will receive different degrees of support, such as entering the strict selection channel, being searched, screened, and promoted, etc.

An insider of Xianyu said that Xianyu is currently testing a new product for paid promotion.

Once paid traffic replaces natural traffic display, this is bound to become another business of Xianyu. However, it remains to be seen whether individual sellers who sell idle items at low prices in the Xianyu ecosystem will accelerate their escape.

In addition to the adjustment of traffic exposure, another aspect of Xianyu being like Taobao is that Xianyu is also moving from second-hand transactions to new product sales.

Xianyu President Ding Jian (nickname: Jishan) has repeatedly said: "Xianyu is not just about second-hand products." He believes that if it only does second-hand transactions, there will still be a limit, and new products are the driving force for Xianyu's future growth.

In July this year, Ding Jian also mentioned in an interview with the media that Xianyu will cooperate with official brands in the two-dimensional community to launch trendy new products.

Although Xianyu and other e-commerce platforms such as Taobao have more or less stepped into the same river, Ding Jian made it clear that the e-commerce track is already competitive enough and Xianyu does not need to compete with the low prices of white-label products.

Ding Jian said that if Xianyu wants to do B-side business, it must be linked to the idle mentality of Xianyu. He also mentioned that unlike other e-commerce platforms, the transactions completed by Xianyu correspond to strong community and communication attributes.

This year, Xianyu’s first goal is to “increase the scale of users.” However, whether it is the idle mindset, or the community and communication attributes, the presentation of these characteristics is inseparable from the contributions of individual sellers.

When increasing GMV depends on professional sellers, while creating a community atmosphere depends on individual sellers, and the two become a contradictory proposition, Xianyu will be more cautious in its next moves.

(Note: All names in this article are pseudonyms.)

Text | Ren Xueyun This article is written by the author of Operation Party [Tech Planet], WeChat public account: [Tech Planet], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.