Chinese e-commerce behemoth JD officially released the “Paipai second-hand (拍拍二手)” brand, Chinese media 36kr is reporting. As the second-hand e-commerce market is growing bigger and seeing its arch-rival Alibaba’s second-hand e-commerce Xianyu is doing well in the sector, JD is making a move into the burgeoning but risky market.
Paipai has built-in automatic valuation system to help sellers set the price of second-hand goods. Then JD logistics will pick-up the product from the seller based in Beijing, Shanghai, Guangzhou and 125 other cities in China before 15:00 on the same day and go through the goods identification process.
Personal idle item trading market has enlarged these years, as transaction processes and product evaluation systems have become more mature and Chinese users’ consumption patterns have changed. According to Quest Mobile’s report, as of the end of 2017, the number of Chinese users trading second-hand products was close to 40 million. Zhuanzhuan (转转) and Xianyu accounted for more than 90% of the market.
Alibaba’s idle item trading platform, Xianyu has 19.61 million monthly active users, ranking first, followed by Zhuanzhuan who has 17.47 million monthly active users. Zhuanzhuan was launched by 58 Tongcheng, China’s version of Craigslist, in April this year, and received $200 million investment from Tencent.
Mobile phones are now the most popular product to sell and purchase on second-hand e-commerce platforms. Based on Zhuanzhuan’s data released in August, the total trading volume of the platform reached RMB 2.48 billion out of which the mobile phone business accounted for 31%. The mobile phone second-hand market is the largest business segment with its volume of transactions seeing a year-on-year increase of 316%. In the second quarter of this year, the mobile phone transaction volume reached RMB 2.1 million on the platform.
While the second-hand market looks attractive for e-commerce players, the business has its innate risks. As a longtime e-commerce player, JD has an advantage in the 3C market (computer, communication, and consumer electronics). However, entering the second-hand market means having to deal with counterfeit products and this would put JD’s identity as a direct-purchase e-commerce player under scrutiny.