JD.com merges used goods platform Paipai with Aihuishou in recycling push

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Workers stroll through the lobby at online retailer JD’s Beijing headquarters, pictured here in November 2018. (Image credit: TechNode/Cassidy McDonald)

JD.com announced today a merger between its secondhand-selling platform Paipai and online electronics recycling platform Aihuishou. The Chinese e-commerce giant lead a RMB 500 million ($72 million) funding round in the new entity.

After the merger, JD will be the new entity’s largest shareholder. Wang Yongliang, Paipai’s general manager, was named co-president of the new company alongside Zheng Pujiang. Other investors include Morningside Venture Capital, Tiger Fund, Tiantu Capital, Genbridge Capital, and Fresh Capital.

A customer-to-business (C2B) platform, Aihuishou buys second-hand electronic items such as mobile phones and laptops from users and resells them to users or to recycling companies. It already has a close relationship with JD and had partnered with Paipai on consumer electronics recycling. JD has also participated in its three most recent investment rounds. Aihuishou’s most recent $150 million round in July last year valued the company at $1.5 billion.

The deal is expected to bring more “synergy” between the two companies in a bid to further standardize the electronics recycling process and improve efficiency by leveraging on JD’s retail, logistics, and insurance technologies, Liao Jianwen, JD’s chief strategy officer said.

Starting from electronic items, the new entity will expand its focus to other categories such as books and home appliances, among others, JD spokesman Brad Burgess told TechNode.

JD.com acquired C2C marketplace Paipai in 2014 as part of a sweeping $215 million deal with Tencent to align the two companies against Alibaba. After a brief shutdown in 2016, the service was relaunched in 2017 to focus on secondhand sales.

China’s secondhand goods market, which hit a trading volume of RMB 202.54 billion in the first quarter of this year, is in a duopoly featuring Alibaba’s Xianyu, or Idle Fish, and Zhuanzhuan of classified listings site, 58.com.

Xianyu leads the market with 24.4 million monthly active users (MAU) as of March, with Zhuanzhuan trailing with 11.4 million MAU Aihuishou and Paipai ranked a respective sixth and seventh, according to a report commonly cited in Chinese media from BigData-Research.