The Trillions Market Under "Internet + Second Hand": Capital Re Focusing On Vertical Track Supply Chain To Control The Key To Competition

With the diversification of consumption choices, the second-hand consumption of "like the new but not tired of the old" has become a trend. People are no longer difficult to speak out because of the purchase of second-hand goods. All kinds of second-hand transactions have built up a trillion level second-hand consumer market. The degree of capitalization of second-hand business is also getting higher and higher. Many vertical platforms and comprehensive platforms of second-hand trading have been favored by the primary and secondary markets.

For example, the second-hand housing market has achieved a market value of tens of billions of dollars of shells to find a house; Second hand car market has emerged melon seed used car, Youxin used car and other platforms; Second hand 3C trading also supported an IPO. On June 18 of this year, the second-hand consumer electronics trading and service platform, everything new (love recycling), landed on the New York Stock Exchange; The second-hand luxury market is also gradually hot. Hongbulin, panghu, Feiyu and other companies have obtained investment from Jingwei China, Wuyue capital N5 capital and red point China respectively.

The comprehensive second-hand trading platforms such as idle fish and zhuanzhuanzhuan are supported by Alibaba and Tencent, and their growth momentum can not be ignored. According to Alibaba's report of fiscal year 2020, the Gmv of idle fish has exceeded 200 billion yuan, with a year-on-year increase of more than 100%. At the same time, since this year, the total financing amount of transfer group and its enterprises has reached nearly 550 million US dollars, with investors including Xiaomi group. Recently, there are also news in the market that the company is seeking a round of $400 million in financing before IPO, considering IPO as early as 2022.

What are the reasons for the upsurge of second-hand consumption and what kind of new consumption trend is reflected? What are the characteristics and advantages of vertical secondary trading platform and integrated platform, and who will show greater value in the future? What are the main barriers to competition for second-hand trading platforms?

The 21st century innovation capital research institute tries to show the development status and future trend of the second-hand economy by interviewing the first-line practitioners and investors of the second-hand track, as well as the statistical analysis of relevant data.

Key words behind second-hand consumption: abandonment, cost performance and circular economy boom

In Japan, Europe and the United States and other more developed consumer society, has formed a more mature concept of second-hand consumption. In the Chinese market, second-hand consumption has become popular in recent years. According to the data of mobdata Research Institute, the annual trading volume of China's second-hand idle was 742 billion yuan in 2018, 964.6 billion yuan in 2019, and increased to 1254 billion yuan in 2020, reaching a trillion yuan scale.

The reasons for the rise of second-hand economy in China can be analyzed from multiple aspects. From the micro level, both buyers and sellers have strong demand for second-hand transactions. From the seller's point of view, selling second-hand goods is the performance of people's advanced consumption, and also has the philosophy of life.

Because in the era of relative shortage of materials, people tend to buy new products to meet their living needs. With the gradual improvement of living standards, some people have more idle resources to trade on the basis of meeting their own living needs.

At the same time, with the gradual enrichment of material life, many first tier urban residents are also faced with the practical problem of limited living space. "Break the house" has become a more and more accepted concept of life. These factors have contributed to the increase of sellers on second-hand platforms.

From the buyer's point of view, the buyers of second-hand goods also have many demands. First of all, buyers may be smarter consumers, pursuing the best value for money. So relative to new products, they are more willing to buy second-hand goods with price advantage. Secondly, buyers may also tend to pursue a more environmentally friendly lifestyle and recognize the consumption pattern of circular economy.

Third, in special areas such as luxury goods, buyers will also have more aesthetic appeal. Through the second-hand platform to buy some rare orphans, there is even a certain collection and investment value.

"Mobile phones and cars are consumables, and the longer they are used, the lower their value. Second hand circulation is basically from the first and second tier cities to the third and fourth tier cities. However, second-hand luxury goods have stronger aesthetic, collection and investment attributes. Many sellers in first tier cities may also be buyers, and the flow of goods is bidirectional. And some second-hand luxury goods, because of their scarcity, will even exceed the price of new products. " Xu Wei, founder and CEO of hongbrin, told the 21st century innovation capital institute.

From the macro policy level, second-hand consumption is also encouraged. For example, in the "notice on printing and distributing the development plan of circular economy during the 14th five year plan" issued by the national development and Reform Commission on July 7, it is mentioned that the second-hand commodity market should be standardized and developed. We will improve the laws and regulations on the circulation of second-hand goods, establish and improve the standards for identification, evaluation and grading of second-hand goods such as vehicles, household appliances and mobile phones, and standardize the circulation order and trading behavior of second-hand goods.

We should encourage the development of "Internet + second-hand" mode, strengthen the management responsibility of Internet trading platform, strengthen the supervision of trading behavior, provide standardized and standardized services for second-hand commodity trading, encourage platform enterprises to introduce third-party second-hand commodity professional business operators, and improve the efficiency of second-hand commodity transaction. Promote the standardized construction and operation of offline entity secondary market, and encourage the construction of centralized and standardized "flea market".

Platform game: comprehensive platform pays more attention to information exchange value; vertical platform focuses on service capability

In the second-hand consumer market, there are not only comprehensive platforms such as idle fish and transfer, but also vertical platforms such as shell house search, second-hand car use of melon seeds, love recycling and red bollin. What are their respective values?

We believe that the comprehensive platform mainly plays the value of information exchange, and is suitable for the second-hand commodity transaction with relatively low customer price or extremely non-standard and scattered supply, such as clothes, toys, furniture, game cards, etc. Because of the extreme non-standard, both sides of the transaction tend to face-to-face inspection and pricing. Because of the extreme dispersion, it is impossible to become a vertical scale industry.

So for idle fish such as C2C trading platform, more suitable for this kind of commodity trading. At the same time, due to the diversion brought by Taobao, the idle fish platform has a huge user base and a wide variety of trading items, which makes it easier to achieve these small and scattered transactions.

For houses, cars, mobile phones, luxury goods and other high customer price goods, the relative degree of standardization is higher, but there is a certain degree of professionalism, ordinary users can not identify whether there is information difference between the information obtained by them and the seller, so it is more important to provide services and guarantee in the middle.

The vertical platform has better service ability, which helps to solve the credit endorsement problem of these commodity transactions. At the same time, the supply and demand of these products are very strong, the upstream and downstream industrial chain is long enough, and there is sufficient space for integration of industrial chain and profit space. The above characteristics also give these categories the opportunity to become a large market segment independently.

As a result, there have been shell looking for houses in the second-hand housing market, melon seeds used cars in the second-hand car market, love recycling in the second-hand 3C market, and hongbulin in the second-hand luxury market. The size of these four vertical tracks is large enough, and they are also the four golden tracks most valued by the industry.

Taking the second-hand 3C industry as an example, China's second-hand mobile phone 3C industry has become a market of hundreds of billions because of the huge stock on the supply side, the sinking domestic market and the strong demand for overseas exports. According to the CIC report, China's second-hand consumer electronic transactions will reach 188.6 million units in 2020, and will maintain an annual compound growth rate of 23.7% in the next five years, and is expected to reach 545.8 million units by 2025. From the perspective of Gmv, in 2020, China's second-hand consumer electronics total transaction Gmv will reach 252.2 billion yuan, which will maintain an annual compound growth rate of 30.8% in the next five years, and is expected to approach a trillion yuan market by 2025.

In the second-hand luxury industry, according to the Research Report 2020 on the development of China's second-hand luxury market jointly released by YouSHE Yipai and the University of foreign economic relations and trade, China's luxury stock in the past decade is about RMB 4 trillion, and the market stock is huge. However, China's second-hand luxury market only accounts for 5% of the total market size of luxury consumption industry, which is not high compared with 20% or even 30% in developed countries. However, if the average proportion of second-hand luxury goods is estimated, China's second-hand luxury market will reach a trillion in the future.

At the same time, it should be noted that the transaction targets of houses and cars are not only one-off second-hand business, but also the extension of follow-up services to bring income. For example, the second-hand housing of shell also has the business of renting house and new house. Many cars are used, and there are also after car services.

Xu Wei told the 21st century innovation capital institute that second-hand luxury goods also have the imagination of value-added services. For example, we can cooperate with brands to obtain advertising revenue and data service income, and extend to the consumer side to do luxury identification services, maintenance services, etc“ We are also trying new luxury products. It is a natural extension from second-hand to new products, because many users who buy second-hand luxury goods are also potential users of new luxury goods. " She said.

In addition, we have also seen some leading companies such as catching more fish in the field of second-hand books, which have obtained investment from Tencent and Jingwei China. But on the whole, the second-hand book market's capital attention is far less intense than the four major tracks mentioned above.

In this regard, an investor who pays attention to the second-hand track analyzed the 21st century innovation capital research institute that the second-hand book trading originally existed offline, so the logic of the second-hand book trading platform after moving online was established. However, the customer unit price of second-hand books is relatively low. At the same time, the demand for credit endorsement of second-hand books is not so large, and the difference between the comprehensive platform and the vertical platform is not big. This may also be the reason why the second-hand book trading platform receives less attention from capital.

(this paper is the result of the consumer service research of the industry investment and Financing Research Institute of the 21st century.)