"Old things are like old friends. When we reach a crossroads in life, maybe we have to part and go different ways and maybe we will never meet again, but still I wish you a bright future." This is what Maozhu, a 33-year-old entrepreneur known by her online nickname, wrote on her blog. "I hope there is a recycling store where my old but precious belongings will find a place so that they are passed on to whoever needs them," she added.

The postscript sparked a new train of thinking. Maozhu thought perhaps she could have a shot at opening a secondhand store herself and that is how in May 2017 she started Déjà vu, her online trading platform for secondhand books where people can buy used books that are still in good condition and sell their old ones. The books she buys go to an offline bookstore that buyers can visit in person and enjoy a cup of coffee while browsing through the titles.

Déjà vu is a French phrase meaning the feeling of having lived through the present situation before. It resonates with young buyers' reason for buying secondhand books. The cheaper price is not the prime reason. They want to experience the sense of going through someone else's experiences, unfamiliar but congenial.

Indeed, people are buying more books from her platform with the number of users surpassing 300,000 in less than three years and monthly sales hitting hundreds of thousands in September 2019. In 2017, Déjà vu received 30 million yuan ($4.4 million) from three investors, including Matrix Partners China. In view of the huge potential, tech giant Tencent became one of its investors in 2019.

Other secondhand businesses are also getting popular, both with the market and investors. According to Forward-The Economist, a Shenzhen-based data analysis platform, China's secondhand market registered a 53.7-percent annual compound rate of growth during 2014-18. In 2018, transaction in secondhand goods hit 740 billion yuan ($107.4 billion). By 2020, the market is estimated to cross 1 trillion yuan ($145.1 billion).

Investors' confidence

While Déjà vu is a niche brand, the most well-known ones in China's secondhand market are probably Zhuanzhuan and Xianyu, two online platforms where all kinds of goods are traded, from digital products and clothes to paintings, cars and jewelry. According to a report by Beijing-based data provider Analysys, in January, the two platforms accounted for 90.9 percent of all secondhand e-commerce users in China.

"In recent years, China's secondhand trading market has registered robust growth. Compared with other countries, China has a bigger market and a broader prospect," Huang Wei, CEO of Zhuanzhuan, told Beijing Review. "We have an advantage especially in secondhand mobile phone transactions as China is now the biggest mobile phone consumption market, which means it will be the biggest circulation market of secondhand mobile phones."

Founded in 2015, Zhuanzhuan has more than 200 million users with its business spread over 564 Chinese cities. Its annual volume of orders doubled as of March 2019. During the annual online shopping carnival on November 11, 2019, China's Black Friday, its gross merchandise volume increased by 72 percent year on year. Despite a downward pressure in 2019, it received $300 million in investment in September, indicating investors' confidence in the company and China's secondhand market.

Huang said the unbalanced regional development in China will bring new opportunities to the booming secondhand economy. "The first- and second-tier cities are not only the trading markets of secondhand goods but also their supply sources. Users from small cities will become the variables of the market, the agents of change," he said.

The platform's statistics in the third quarter of 2019 show 39 percent of its new users are from first- and second-tier cities while 49.1 percent are from smaller cities, indicating there is huge potential in small cities. The data also show goods are moving from big to small cities.

Workers check secondhand mobile phones at Zhuanzhuan's quality test center in Beijing in November 2018 (COURTESY PHOTO)

Treasure hunt

Wang Limin, an engineer with a state-owned company in Beijing, began buying secondhand goods in 2019. That year, he spent nearly 4,500 yuan ($655) on secondhand digital products such as mobile phones and tablets on both Zhuanzhuan and Xianyu.

The 39-year-old told Beijing Review that nowadays, with digital products upgrading frequently, people are changing their devices in one to two years even when the devices are as good as new. Some electronic goods enthusiasts buy new products just to try them out and sell them soon afterward.

"So buyers can always find cost-effective items," he said. "Besides, as technologies are becoming increasingly mature, the quality is relatively reliable."

Regarding the reasons for buying secondhand electronic goods, Wang said while price is the primary factor, trawling for treasures is stimulating. He gets a sense of achievement every time he manages to unearth a good bargain.

There is a contemporary spin to buying secondhand things as well. Huang said the generations born in the 1980s and 1990s live in an age of plenty. So while money is not the primary factor, secondhand purchases are regarded as a means of recycling, which goes with the ecological and green lifestyle many are trying to follow consciously. Buying old things is no longer regarded as something to be ashamed of.

According to the China Beijing Environmental Exchange, a professional platform for trading all kinds of environmental equity, the recycling of electronic items on Xianyu alone reduced carbon emissions by nearly 100 million kg during 2017-19. Since electronic items account for only 10 percent of its total transactions, the benefits for recycling and environmental protection are enormous.

The government gives great importance to the development of the recycling economy. In August 2019, the State Council, China's cabinet, issued an outline encouraging the development of Internet-based secondhand goods market and resource recycling. It committed to effective supervision so that new trading models could develop in a healthy and orderly manner.

A solid foundation of the secondhand economy is the huge increment in consumer goods. From January to November 2019, retail sales of consumer goods reached 37.3 trillion yuan ($5.4 trillion), up 8 percent year on year. In 2019, the volume is estimated to hit 40 trillion yuan ($5.8 trillion), the National Bureau of Statistics said.

According to a report by tech giant Alibaba's research arm AliResearch on December 18, 2019, in 2008, China's retail sales of consumer goods were just half of the United States'. In 2019, it is estimated to exceed the U.S. figure for the first time. With such abundance, consumers need a professional and efficient trading market to dispose of their old items, which spells boundless opportunities for the recycling economy.

During the past 10 years, online sales accounted for more than 20 percent of all retail sales of consumer goods due to the development of e-commerce platforms and the proportion continues to rise. Consumers have got used to making purchases through e-commerce platforms, which is conducive to developing an e-commerce-based secondhand economy.

Growing pangs

However, alongside the explosive growth, there are challenges as well. Huang said while online secondhand trading platforms have grown greatly efficient, online trading in secondhand goods still has a low volume. Taking secondhand mobile phones as an example, only 20 percent of old phones are traded online, though it may increase to 30-40 percent in the future. Offline transactions will continue to dominate the market for a long time to come.

"The issue of trust needs to be addressed to make the switch from online to offline," Huang said. Secondhand goods are non-standardized and product information is not transparent during transactions, hampering trust. To address this, online platforms need to provide standardized services.

Zhuanzhuan's solution is creating a quality test system. It has set up quality test centers around the country where old mobile phones on sale are tested before they are sold. The platform also provides some after-sales services to deal with customer complaints. In the face of fierce competition, secondhand trading platforms are striving to develop distinctive advantages. Xianyu, for example, is strengthening its role as an online community. People like doing research before shopping and it provides them with a platform to get product ratings from other users. Moreover, in a community, it is easier to build trust, which removes the barriers for trade.

Chen Weiye, CEO of Xianyu, once said users who talked with one another in the Xianyu community converted into buyers at a 13.5-percent rate. For those who didn't chat, the rate was only 0.07 percent.

Likewise, community is also what matters for Déjà vu. Maozhu told 36Kr, a Beijing-based tech media, that the essence of secondhand trading platforms is the community, which is what her team concentrates on. Most of her team members once worked for companies with community culture, such as the question-and-answer platform Zhihu and information-sharing platform Douban.

Copyedited by Sudeshna Sarkar

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