Analysis of competing second-hand trading apps: Xianyu, Zhuanzhuan, Jiuai and Kongkonghu!

Second-hand transactions still have a long way to go...

1. Market

1.1 Market size

According to the "2016 Sharing Economy Development Report", the size of China's idle market in 2016 is conservatively estimated to have reached 400 billion , and is becoming the next explosion point of the sharing economy.

How big is the online second-hand trading market? At the 2016 Xianyutangzhu Conference, Taobao’s second-hand platform released a set of data based on a user survey report, showing that more than 98% of people have idle items. According to iResearch Consulting, the size of the domestic second-hand idle goods market reached 400 billion last year, which is only 10% of the total online shopping volume in 2015. In this era of booming online shopping, there are "shopping addicts" everywhere, and selling unused items is becoming an increasingly mainstream demand.

Judging from the data from Taobao alone, the number of registered users of Taobao in 2012 exceeded 800 million. Based on the 80% share, there are still more than 600 million people with a large number of idle items. According to data previously released by Xianyu, the cumulative number of registered real-name users exceeds 100 million. Taking into account the diversion of users from other competing products in the market, there are still nearly 500 million potential users in the second-hand trading market. Among them, a large number of vertical consumer areas such as second-hand electronics, second-hand luxury goods, and second-hand maternal and child products have seen particularly significant growth in the second-hand trading market.

1.2 Development Trend

The circulation of a trading market must rely on the joint efforts of buyers and sellers. Although my country's per capita purchasing power is increasing year by year, how many people are willing to buy second-hand goods?

The following figure is the Baidu Index of second-hand transaction attention from 2011 to 2015:

The Baidu Index gives a population portrait of second-hand transactions between 20 and 40, mostly women, and they are concentrated in some first- and second-tier cities in the eastern coastal areas such as Beijing, Shanghai, Guangzhou and Shenzhen. With the rise of the younger generation of consumers, people's acceptance of second-hand goods is gradually increasing.

Let’s look at a set of data released by Xianyu: “In the past 15 months, its transaction volume has increased by 15.6 times , and 170 million idle items have been sold .” Then, with the improvement of national consumption levels and the change in everyone's consumption awareness, driven by young groups and penetrating from coastal cities to inland areas, low- and middle-income consumers will definitely prefer second-hand goods, and the scale of second-hand transactions will definitely become larger and larger in the future.

1.3 Industry structure (product data)

Since this article aims to conduct a product analysis on the Xianyu app and its competitors, the product data is mainly based on comparing the user downloads and financing status of each app.

Second-hand trading app comprehensive index rankings in April 2016:

The main objects of analysis this time: Xianyu, and three selected competitors: Zhuan Zhuan, Jiu Ai, and Kong Kong Hu.

No matter from which point of view, Xianyu, which has Taobao genes and first-mover advantage, was born out of Taobao second-hand and has firmly occupied the first position in the market; Zhuan Zhuan, a subsidiary of 58, has performed well, and the number of users has continued to grow after its release on Double Eleven last year, which should also be partly due to the traffic diversion of 58 second-hand; Kong Kong Fox focuses on the transaction of women's idle clothing, targeting the high-frequency idle clothing transaction needs of young women aged 15-25; Huzhezhan Jiuai was the latest to go online, but the number of registered users exceeded 300,000 within two months of its launch, and the monthly transaction volume reached one million yuan.

2. User Demand Analysis

After verifying that the space and user demand for the second-hand market do exist, we started from the demand point of second-hand transactions, sorted out the online transaction process of the two parties, and refined their respective demand points:

User positioning and needs are clear:

Main user group: Buyers

Buyer's needs: Find the products they are interested in and pay for them. The main factors to consider in this process are:

• Price: The advantage of second-hand items lies in their price. If the price of a second-hand item is the same as that of a new one, who would buy a second-hand item?
• Find/browse products: fast product search and product display. Overseas shopping, browsing based on interests, etc.
• Quality: The general environment of second-hand transactions is C2C, and the thing that individual sellers cannot guarantee the most is the quality of the goods, so another issue that derives from this is after-sales service.
• Trading and logistics:

Main user group: sellers

Sellers’ needs: Convenient and fast sale of unused items

• Convenient and fast release of products (everyone has spare items, but not everyone is motivated to sell them online)
• The selling efficiency and price of goods (we don’t expect to make money by selling unused goods, but in the case of competition, if the activity, selling efficiency and success rate of one platform are obviously higher, users will shift away)
• Logistics options: logistics solutions for large and overweight products
• Transaction security

To summarize:

OK, now that we have clarified the above issues, let’s see how each product solves them.

3. Product Analysis

3.1 Product Introduction

3.2 Functional Comparison

3.2.1 Release Function

In terms of release entrances , Xianyu, Zhuan Zhuan, and Jiu Ai all use rudder-style navigation, and the release button, the core function of the product, is located in the center of the tab and highlighted; Kong Kong Hu uses label navigation, but the release button is also clearly marked and placed in the middle of the main position. In addition, Zhuan Zhuan also has a publishing entrance on the personal homepage, and Xianyu can also directly publish products in the fish pond it has joined.

Generally, product navigation based on UGC is divided into 5 tabs. The first tab is "Dynamics", the second tab is "Discover", the middle button is the main UGC entrance, followed by "Message", and finally "Mine".

In terms of publishing format , both options are supported: taking photos and photo albums. Xianyu’s advantage lies in Taobao’s one-click resale. But in fact, the display of goods that are resold with one click is not very user-friendly. It can only display one main picture, and to view the details of the product, you need to click to view the original purchase information of the product.

In addition, Zhuan Zhuan and Kong Kong Hu both support the function of publishing beautiful photos of babies after taking photos . Xianyu closed its PC publishing entrance today in March. Regardless of Alibaba's considerations, it is undoubtedly a blow to those users who like to take beautiful photos with SLR cameras and publish them on PC. In fact, when it comes to items, wouldn’t it be easier to sell them if you edited the photos to make them look prettier?

3.2.2 Search for products and browse products (go shopping)

Search products: The search boxes of Xianyu, Zhuanzhuan, and Kongkonghu are all in the main position at the top of the homepage, which conforms to the design rules of general shopping websites, while Jiuai only has a small search icon on the top right. Let’s imagine a scenario like this: when you want to buy something, after opening Taobao/JD.com, do you habitually enter the product you want directly into the search box? Then the importance of the search button is self-evident.

"Shopping": "Shopping" in second-hand shops is a particularly interesting thing. When you have nothing to do, you like to open your mobile phone and browse Taobao. Who would go out of their way to shop for second-hand goods? 1. Students/people just starting out in the workplace: don’t have much money, like to shop for cheap second-hand goods, pick up bargains, etc.; 2. People with specific interests and hobbies: camera lenses, second-hand action figures, etc.; 3. People with no urgent desire to shop: they shop purely to kill time, have no requirements for whether the goods are new or old, especially some furniture and ornaments. This involves the display (exposure) of the product .

1) Xianyu : home page recommendations, product categories, special topics, fish ponds, and product details page similar product recommendations. Xianyu’s product categories are on the right side of the search box on the homepage, and not in the second navigation tab like other apps, so it is generally not easy for new users to find them. Fishpond connects users in two forms: one is a trading community formed with communities, companies, schools and other places as the core and a radius defined by a certain geographical location ; the other is a fishpond formed based on the same interests , like a small forum. After users join such a small group, they can get timely information on various second-hand transactions, making the transaction of idle products closer to life. Xianyu puts the fish pond in the second tab of the navigation, which also shows Alibaba’s emphasis on it and its desire to develop community social networking . Xianyu has opened up the right to create fish ponds to users. Anyone who meets the requirements of Alipay real-name authentication and has a Sesame Credit score above 650 is eligible to create one. The advantage of the fish pond is that it increases the chances of offline transactions. There are many uncertainties in second-hand transactions, and online display and offline delivery is a more reassuring way, both for buyers and sellers.

In addition, Xianyu can also publish purchase information, but there are no matching recommendations between purchase and sale items.

Refresh function : polish your product every day to increase product exposure. (You can only polish 30 items for free, and the remaining items require shellfish to be polished. I have to complain that when the shellfish function was first launched, each item required shellfish to be polished. Maybe it was criticized too much by everyone, so it was changed back to free not long after...)

Suggestion : You can only choose one fish pond when publishing a product, but as a product, it may have multiple attributes superimposed. I may publish it in the community to which I belong, but at the same time it meets the attributes of an interest fish pond. If I want to publish the same product in multiple fish ponds, I can only publish it repeatedly. Publishing to multiple fish ponds with one click can increase product exposure and improve transaction rates.

2) Zhuanzhuan: home page recommendations, nearby, special topics, friend circle (based on WeChat relationships), and product categories.

The purpose of the friend circle is not only to cheer for my friends and increase their exposure, but can it really promote transactions? Since you are my WeChat friend, why don’t we do the transaction face to face? Do you still want to trade on the Zhuan Zhuan platform? (A few words to complain about Zhuanzhuan, which is based on WeChat friends. This may be done to provide better credit endorsement for second-hand goods, but if I sell second-hand goods, I certainly don’t want all my WeChat friends to see it, okay? And if the goods are cheap, I will definitely choose to give them directly to my good friends. Also, I don’t want to appear in front of my friends wearing clothes they have worn before, okay? Before making a function, can’t we really think carefully about the psychological activities behind the users? If there are 3C items and other items suitable for transactions among acquaintances, wouldn’t it be better to share the link directly to Moments?)

Refresh function: Spin it up and cheer for your friends’ babies.

3) Kongkonghu : topics, categories, and people to follow. Kongkonghu focuses on the transaction of women's idle clothing, and only has a few categories such as clothes, bags, skin care, shoes, accessories, mother and baby, etc. It will launch special topics with different themes from time to time. The product display form is also mainly based on these special topics, and there is also an expert mode. Compared with the high-frequency transactions of idle clothing among women, these topics can better reflect the essence of "shopping" (who says that second-hand idle clothing is not just another round of shopping ==). Kongkonghu puts influencers in the tab, which is different from other apps. It is a bit like a program for cultivating internet celebrities for fashion sellers (cultivating trust in a seller and increasing repeat purchases). Kongkonghu supports these influencers, who may become KOLs in the future, and use them to drive user stickiness. It is also possible that they will develop into a community or shopping guide model in the future.

However, if you are neither an expert nor have anything to add to the special topic, your exposure will be a problem. It can only rely on users to actively search and browse by category.

Refresh function : Light up the baby

4) Old Love : Home page recommendations, product categories, special topics, and people you follow (on your personal homepage). If Jiuai hadn't received investment from LeTV, I would have thought it would be game over soon (you can't say for sure). The recommendations on the homepage have remained unchanged for years, and it has only had 10 iterations from the first day it went online to now.

Refresh function : None.

3.2.3 Comparison of other functions:

1) Xianyu : The entire transaction process of Xianyu relies on Taobao and is very smooth. Sesame Credit is introduced in terms of credit, and Alipay guarantees transactions. The purpose of building the Yutang community is to increase the chances of offline transactions in the same city and improve the credibility of products. Not long ago, Xianyu launched an online courier service based on its own Cainiao Logistics, and promoted its use with coupon discounts, solving problems such as sellers’ inconvenience in finding couriers and expensive postage when selling retail goods. However, the transportation of large items is still a problem, so Xianyu encourages everyone to trade large items in the same city through nearby fish ponds.

In terms of evaluation, buyers and sellers can evaluate each other, and the evaluation can be targeted at one-time transaction items. This type of evaluation has no reference value at all, but it can be changed into a cumulative credit value for personal evaluation, which is also a solution to the problem of using a credit system. In future transactions, you can also let other sellers/buyers see whether this person is reliable.

2) Zhuan Zhuan : Zhuan Zhuan also introduces Sesame Credit and imports WeChat acquaintance relationships. Zhuan Zhuan took 3C services as its entry point and purchased mobile phones in a C2B2C model, which were then quality-checked by official personnel before being sold to buyers. This increased the credibility of product quality and instantly opened up the market. At the same time, Zhuanzhuan’s large items are connected to the 58 Express service, which effectively solves the problem of expensive postage for sending large items and items being bumped during transportation. Zhuan Zhuan’s evaluation system is targeted at individuals rather than single transaction items.

3) Kongkonghu : There is a problem with Kongkonghu’s private chat process. I couldn’t find the private chat button during my use until I tried to place an order but clicked cancel when paying. Only then could I see the button to send a private message to the seller when I checked the order details on my order page.

exo me? Shouldn't I talk to the seller before I place an order? If I have paid for this transaction normally, what is the point of chatting? After sales service?

Kongkonghu does not have any personal certification function, but if he publishes many high-quality products, he can probably be officially certified as an expert. The comments section said that withdrawals were very slow and the customer service processing speed was also very slow. Kongkonghu charged service fees for early transactions, but later cancelled it and became a free platform.

4) Jiuai : Supports real-name authentication with ID card, but the authentication entrance is hidden deep. A large number of comments also mentioned that withdrawals are very slow and the customer service basically ignores them.

4. Let’s talk about operations

Xianyu’s offline bazaar activities in hundreds of cities increase brand awareness, attract new customers, promote transaction completion, and build user trust in the platform and increase stickiness. Especially the flea markets during the college graduation season every year, everyone who has been to school knows about it.

Zhuanzhuanzhuan Premium Products, 58 Express and JD.com Zone are the three magic tools that ensure the quality of goods.

Kongkonghu is now online in the mall, adding daily sign-in activities

5. Just Talk

5.1 Future Development

There has never been a good business model for second-hand transactions. All major platforms are now free and mainly focus on expanding the number of users. When Kongkonghu was first launched, it charged a commission for each transaction. However, one characteristic of second-hand goods is that they are low in price. If a commission was charged, sellers would feel that it was not cost-effective and appropriate and would quit the platform.

In the idle second-hand trading market, the industry leader is far from being formed. It is a good choice to start from a vertical category, slowly accumulate brand effect, let users trust the platform, and then expand to all categories.

For example, second-hand luxury goods trading/rental : this aspect must have a large market share, and user habits and penetration must be cultivated slowly. Once cultivated, the business model for second-hand luxury goods can actually consider charging commission fees (because the unit price is expensive). However, what the platform needs to provide and guarantee is the inspection process. You can refer to the many second-hand luxury goods store transactions in Hong Kong. There are already apps that are vertically entering this field: for example, Xinshang.

Second-hand books/textbooks : First of all, the market for textbooks and other books is definitely mostly among students (campus), while the adult market is concentrated among a group of people who like to buy and read books. The circulation of books does not require special control over quality, but a large number of books involve logistics, and the transaction of a single book + postage is not competitive for new books, so transactions within the same city are the most convenient. Secondly, book donations can also be linked to charity activities.

According to a survey, the top three reasons for transferring idle properties are: cashing in (49%), low-carbon and environmental protection (46%), and selling to people with similar interests (41%). It can be seen from this that second-hand transactions are not driven simply by economic interests, but have economic, social and public welfare characteristics. "Money conversion" is the economic motive, "selling to people with similar interests" is the social motive, and "low-carbon and environmental protection" is the public welfare motive.

From this point of view, Xianyu’s interest pond has the potential to be developed into a social platform (such as photography, cycling, two-dimensional figures and peripherals, etc.). I wonder if Xianyu will dig deeper and iterate in this area in the next step.

In terms of charity, combined with Xianyu’s current auction business, the selling point is celebrity second-hand donations/auctions . In fact, celebrity second-hand items are similar to second-hand luxury goods. If this activity is linked to charity, I believe many celebrities will be willing to participate. Most of the stars’ costumes, including some dresses they wear to events, as well as their daily clothes and accessories, are disposable and then put aside (they certainly don’t want the same piece of clothing to be exposed too much). As for fans, they like to pay for and consume this kind of star effect. We auction celebrity items in the form of public welfare to attract users to consume, and the platform handles the funds transparently (including subsequent investment in public welfare undertakings, etc.). Both parties gain a good reputation, and it is a good idea.

Secondly, there are the personal donations mentioned above, including second-hand books, second-hand clothes, etc. In fact, everyone has a heart to do charity, but they just haven’t found a suitable way.

Suddenly I thought, will Zhuan Zhuan introduce the second-hand recycling model in the future? Maybe we can find a new profit point in the future.

5.2 Commodity Trading Control

The demand for second-hand transactions has always existed, but why has it always been lukewarm? In addition to the fact that user habits have not been cultivated and the market has not been fully explored, it is also because clear transaction rules and product evaluation standards cannot be established between buyers and sellers. Due to the special nature of the goods and the fact that most of the parties to the transaction are scattered individuals, there is not only a lack of initial trust, but even the subsequent logistics and after-sales cannot be guaranteed. This is also the main reason why many people are reluctant to buy goods on second-hand trading platforms.

The negative reviews in the comment sections of the above four platforms all contain a large number of scammers, counterfeits and other problems. Not only are there scammers among sellers, but buyers are also now giving malicious reviews and asking for refunds without returns, making it difficult for sellers to protect their rights. Zhuanzhuan relies on introducing acquaintances to increase trust. However, the effect is minimal. The trust issue still needs to be resolved based on rules rather than emotions, but establishing rules is not easy and requires slow exploration.

In fact, flea markets abroad are very popular, but they are mostly based offline. Both parties to the transaction can see the actual items and have an estimate of the quality. This is probably also Xianyu’s plan to create a fish pond based on geographical location. The familiarity of people in a community and the offline face-to-face transaction method can increase trust and ensure safety.

All said, second-hand trading still has a long way to go...