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Alibaba and Tencent-backed pre-owned e-commerce firms enjoy second spring thanks to China’s decarbonisation push

Low prices used to be a major factor driving Chinese consumers of second-hand products, but now they have one more reason to be frugal – fighting climate change by reducing the carbon footprint of their lifestyles.

China’s second-hand e-commerce industry has been booming amid the ongoing coronavirus pandemic and Beijing’s decarbonisation push, and several trading platforms have raised big sums in the first half of this year to fund their expansions.

“With the uncertainty of the current economic situation and growing adoption of recycling and environmental protection concepts, it’s a trend for consumers to trade used items online for some easy money,” said Cao Lei, director of the Hangzhou-based China E-commerce Research Center. The country’s second-hand e-commerce market was worth 374.5 billion yuan (US$57.8 billion) last year, and may grow to reach 411 billion this year, according to the centre.

China, where a quarter of consumer goods retail sales were conducted online last year, has the world’s largest e-commerce market. But this boom has created a big wastage problem, as many goods bought on impulse were not used. Their production and transport, as well as packaging and delivery left a big carbon footprint. To tackle this wastage, Beijing is promoting a circular economy, for which a development blueprint for 2021-25 was published this month. This involves designing products and supply chains in ways that enable them to be broken down and reused to make new products upon their disposal.

This is where platforms such as AiHuiShou International, a major second-hand e-commerce platform for computer, communications and consumer electronics products, Tencent Holdings-backed Beijing Zhuanzhuan Spirit Technology and Idle Fish, which is run by South China Morning Post parent Alibaba Group Holding, come in.

AiHuiShou raised US$227 million through an initial public offering in New York last month. Founded in 2011, Aihuishou began as an online and offline sourcing services provider focusing on electronic devices. The company has also collaborated with JD.com, as well as smartphone makers such as Xiaomi and Huawei Technologies, as a trade-in channel. With more than 800 offline stores in 170 cities around the country, Aihuishou has sold more than 26.1 million second-hand goods on its platforms in the 12 months through the end of March.

Zhuanzhuan raised about US$550 million in the first half of this year, finishing the latest financing round of US$100 million last month led by Chinese smartphone maker Xiaomi. The platform, which is backed by online classifieds firm 58.com along with Tencent and Xiaomi, had 8.7 million active buyers and 3.9 million active sellers last year.

By trading pre-owned items such as smartphones, Zhuanzhuan has avoided the emission of more than one million tonnes of greenhouse gases in the past five years, the company told Chinese media in April. Reselling a second-hand smartphone can help reduce up to 52kg of carbon dioxide, it said.

Second-hand fashion app Vestiaire Collective turns decluttering into billion-dollar business
The six-year-old company also trades in used home appliances, furniture, apparel and games. After merging last May with Zhaoliangji, which means “looking for nice phones” in Chinese, the company now focuses more on used smartphones, computers and consumer electronic products.

Together with Idle Fish, Zhuanzhuan has amassed a 90.9 per cent share of the market, according to a Shenwan Hongyuan Securities report.

Idle Fish, meanwhile, helped prevent 24.9 million tonnes of carbon emissions in 2019, equivalent to 11 per cent of the industrial sector’s carbon footprint in Zhejiang province in 2017, according to a report released in March by the Development Research Center of the State Council in collaboration with the firm.

Its platform attracted about 300 million users as of April, and has recycled an estimated 50,000 tonnes of clothes, 23.7 million books, 3.66 million mobile phones and 1.45 million home appliances over the past four years.

Online second-hand product platforms are also gaining popularity overseas. According to a report by UK online resale platform thredUP, second-hand fashion e-commerce sales were projected to grow by 69 per cent between 2019 and this year, despite an economic downturn that will see the broader retail sector shrink by 15 per cent worldwide.

In Japan, used products sales contributed 2.1 per cent of the country’s total retail sales last year, while e-commerce sales contributed to 10.4 per cent. In China, however, despite e-commerce accounting for a quarter of retail sales, sales from second-hand consumption only accounted for 0.9 per cent.

“Although Japan’s e-commerce market is small, the second-hand trading market is developing in full swing,” said Wang Yi, an analyst with Beijing-based research firm Analysys. “In China, while e-commerce is already very mature, second-hand consumption is still in its infancy.” SCMP

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