Deconstructing the second-hand e-commerce: Opportunities and challenges coexist, where is the future heading?
$ATRenew(RERE.US)
Source | Dongge's E-commerce Insights
Author | Li Chengdong, Jin Shan
During this year's record-long Double 11 shopping festival, many people took advantage of national subsidies to score new appliances and computers. The "trade-in" policy ignited consumer enthusiasm and became the main growth driver of the promotion. Behind this, secondhand trading is evolving from a policy-driven trend to a fashionable lifestyle, and secondhand e-commerce platforms have delivered their report cards.
On November 20, ATRenew (AiHuiShou) released its earnings report pre-market. The financial report showed that Q3 2024 revenue reached 4.05 billion yuan, up 24.4% year-over-year; non-GAAP net profit was 90.06 million yuan, surging 89.3% YoY, with the non-GAAP net profit margin increasing from 1.5% to 2.2%.
Amid the wave of rational consumption, young people are "recouping costs" by selling 闲置 items like cameras, gold, and 潮玩. The industry is also ramping up 布局: influencer Xiaoyangge sold 二手 iPhones on livestreams, Xianyu transitioned from online to offline by opening new stores, and Zhuanzhuan launched doorstep recycling services across thousands of cities...
With the 二手 boom, how can players in this 赛道 break through and capitalize on this 红利 while facing new competition? How can 低频 businesses like 二手 achieve both revenue and profit growth?
Can the YoY Profit Turnaround Be Sustained?
Taking ATRenew as an example, total net revenue hit 4.05 billion yuan, up 24.4% YoY. Product net revenue grew 25.6% to 3.67 billion yuan, primarily driven by increased sales of 二手 electronics via 线上线下 channels. Service net revenue rose 13.9% to 379 million yuan, mainly due to growth in Paijitang and multi-category recycling services.
Operating costs and expenses totaled 4.03 billion yuan, up 21.8% YoY.
Cost of goods sold was 3.24 billion yuan (+24.2% YoY), the largest expense component, due to higher product sales. Fulfillment costs increased 20.7% to 350 million yuan, driven by expanded recycling activities and store networks.
Operating profit was 24.9 million yuan, versus an operating loss of 28.1 million yuan in Q3 2023. Adjusted operating profit (non-GAAP) reached 104 million yuan, compared to 73.8 million yuan a year ago.
Net profit stood at 17.9 million yuan, reversing from a net loss of 44.2 million yuan. Adjusted net profit (non-GAAP) surged to 90.1 million yuan from 47.6 million yuan.
As of Q3 2024, the group held 2.35 billion yuan in cash/cash equivalents, restricted funds, short-term investments, and 第三方 payment balances.
For Q4 guidance, ATRenew expects total revenue between 4.74-4.84 billion yuan, representing 22.4%-24.9% YoY growth.
Multi-Category Recycling Expands Margins
Beyond riding the 红利 wave, ATRenew has proactively 布局 through its multi-category strategy—the most crucial move.
Since 2022, ATRenew added 回收 services for handbags, watches, gold, liquor, and apparel in stores. This strategy has now become a growth engine, with Q3 2024 multi-category recycling volume hitting 950 million yuan (+270% YoY), driving over 400% service revenue growth.
The boom reflects rising consumer demand. Young people increasingly hunt for bargains in 二手 markets—"It's not that new products are unaffordable, but 二手 offers better value." "Secondhand shame" is fading as 理性消费 grows. Consumers buy business suits, rare collectibles, treadmills, and more 二手 goods.
As 二手交易 thrives and platform trust strengthens, consumers also "declutter" to recoup costs. ATRenew's brand equity from 线上线下 channels now garners user trust and traffic.
Category expansion increases user engagement frequency while meeting broader recycling needs. The asset-light platform model also controls costs and widens profit potential.
Traffic: High-frequency drives 低频。 New users from gold/apparel categories inject fresh 客流 into ATRenew's 低频 3C electronics channels. 二手交易 is a lifestyle habit—users overlap. Multi-category expansion helps ATRenew 破圈. Once trust is built, these users may turn to the platform for 3C needs.
Store productivity gains. Versus 3C, multi-category is asset-light with controlled costs, directly boosting profits. Post-expenses, 46% of Q3 multi-category recycling volume contributed to store profits, enhancing competitiveness.
Finally, multi-category offers vast potential. China's 二手 luxury and gold recycling markets each hold billion-scale opportunities.
How to Grow Retail in a 低频 Business?
The industry traditionally viewed 二手 as 低频 with limited short-term potential. Yet ATRenew achieved steady Q3 retail growth.
Q3 self-operated retail revenue (JD Paipai, AiHuiShou 官网， offline stores) surged 120%+ YoY to 970 million yuan. Sales via JD Paipai，自有 channels, and 新媒体零售 rose 87.4%, 301.3%, and 114.6% respectively.
This stems from ATRenew solving core industry pain points: consumer trust and product standardization.
二手交易 is tough—fragmented supply/demand and non-standard products make quality/price assessment difficult. How to assure quality while offering fair prices?
First, ATRenew controls upstream supply by aggregating 分散流量， securing lower costs and quality control.
China's 二手 electronics market remains fragmented with numerous small offline merchants. Chain stores build trust.
As of Q3 2024, ATRenew operated 1,637 stores across 263 cities. Founder/CEO Chen Xuefeng stated: "We expect accelerated store expansion in the next 2-3 years."
Online, ATRenew tapped e-commerce "trade-in" scenarios. JD dominates 3C electronics 心智. Beyond e-commerce, ATRenew partners deeply with brands like Apple, which accounts for half of phone 回收. Since 2023, ATRenew has handled Apple's trade-in program for 官网 and flagship stores.
Product standardization remains key to trust. Each 二手 item differs in scratches, accessories, and condition, complicating pricing. How to standardize?
Traditional small shops rely on manual inspections prone to errors and lowballing. ATRenew's digital/automated 质检 systems like Matrix 3.0 reduced inspection errors by 19% annually.
Automation improves efficiency, accuracy, and scalability. In Q3, non-GAAP fulfillment expense ratio dropped to 8.5%.
With upstream supply control and backend automation, ATRenew's full-chain 布局 shows early results.
When 二手交易 Becomes Trendy
Dual supply/demand growth is transforming 二手交易 from policy 红利 to a lifestyle trend. The industry's counter-cyclical nature shines amid economic headwinds.
Huatai Securities data shows China's 二手 e-commerce GMV hit 548.65 billion yuan in 2023 with 580 million users—up from 4.59 billion yuan in 2015, with penetration rising from 1.2% to 35.68%.
Before the 二手 boom, ATRenew's years of supply chain/store network building established core advantages and user 心智 to capitalize on current opportunities.
Post-earnings, ATRenew's stock soared 13.8% to $2.8 on November 20, earning market recognition.
The circular economy is a long-term play—二手行业's path ahead remains long but bright.
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