Executive Summary
Key insights into Zhuanzhuan’s recent business transformations and market positioning:
- Zhuanzhuan has officially shut down its C2C ‘Free Market’ business, marking a strategic retreat from direct competition with Xianyu and a full pivot toward C2B2C models focused on standardized, high-value items like electronics and luxury goods.
- The platform’s aggressive advertising campaigns and acquisitions, such as Zhao Liang Ji and Hong Bu Lin, highlight its efforts to capture growth in niche segments, but have also amplified user trust issues and cost pressures.
- Despite achieving profitability through C2B2C operations, Zhuanzhuan faces stagnating user growth, with monthly active users at just 16.7% of Xianyu’s, raising questions about long-term sustainability.
- Industry experts suggest that Zhuanzhuan’s strategic pivot may offer short-term gains but requires careful navigation of high operational costs and evolving consumer expectations in China’s dynamic second-hand market.
The Unavoidable Advertising Blitz and Its Backlash
In recent months, users across platforms like Bilibili and Douyin have been inundated with Zhuanzhuan’s repetitive advertisements, featuring catchy slogans about saving thousands on nearly new devices. This marketing surge, while boosting visibility, has sparked widespread criticism for its intrusive nature. Many consumers question the authenticity of claims, such as selling like-new phones at steep discounts, fueling skepticism about the platform’s value proposition.
Zhuanzhuan’s response included launching an official channel dubbed the ‘Zhuanzhuan Girl Group,’ leveraging brand ambassadors to soften its image. However, this approach contrasts sharply with its decision to discontinue the C2C ‘Free Market’ segment, which once drove significant traffic. This move underscores a deeper strategic shift, as Zhuanzhuan pivots away from its roots to focus on more controlled, asset-heavy operations.
Origins of the Rivalry with Xianyu
Zhuanzhuan emerged in 2015 as a defensive maneuver by 58同城 (58.com) against the rising threat of Xianyu, which had rebranded from Taobao Secondhand in 2014. Xianyu’s initial focus on community building, rather than immediate monetization, allowed it to cultivate a loyal user base and expand into services like rentals and job postings—areas core to 58.com’s business. By 2015, Xianyu surpassed 10 million users, prompting 58.com to launch Zhuanzhuan with a emphasis on professionalism in the chaotic second-hand market.
Early differentiators included Zhuanzhuan’s ‘1 Yuan Inspection’ service, aimed at standardizing transactions, while Xianyu doubled down on social features like ‘Fish Pond.’ This divergence set the stage for their distinct paths: one prioritizing community engagement, the other pursuing transactional efficiency. Zhuanzhuan’s strategic pivot began taking shape as it sought to carve out a sustainable niche amid intense competition.
The Demise of C2C and Embrace of C2B2C
Zhuanzhuan’s shutdown of its ‘Free Market’ C2C business in September 2024 signals a definitive retreat from the battle with Xianyu. CEO Huang Wei (黄炜) described the decision as ‘difficult but necessary,’ citing rampant fraud and disputes in C2C transactions that undermined platform integrity. Internal data revealed that C2C contributions had dwindled to less than 3% of gross merchandise volume (GMV), making it unsustainable amid the company’s broader restructuring.
This strategic pivot aligns with Zhuanzhuan’s acquisition of Zhao Liang Ji in 2020, which accelerated its transition to a C2B2C model centered on refurbished electronics. The shift yielded immediate benefits, including a 229% revenue surge in 2020 and overall profitability by 2022. However, it also introduced high fixed costs for quality control, warehousing, and labor, constraining the platform’s agility and narrowing its focus away from diverse product categories.
Financial Implications and Market Response
Zhuanzhuan’s C2B2C model has enabled profitability but at the cost of scalability. For instance, the platform now employs over 2,500 quality inspectors and 3,000 recycling personnel, with a 1.5 billion yuan investment in its Qingdao inspection center. Comparative analysis shows that rivals like Ai Hui Shou (爱回收) faced cumulative losses of 4.6 billion yuan over five years, highlighting the capital intensity of this approach. Investors have expressed caution, as Zhuanzhuan’s monthly active users fell to 35.88 million in March 2025, a 5.3% year-over-year decline.
User feedback on platforms like Hei Mao Tou Su (Black Cat Complaints) exceeds 110,000 entries, citing issues like price manipulation and poor service. These challenges illustrate the tightrope walk in Zhuanzhuan’s strategic pivot: balancing operational costs with consumer trust. As one industry analyst noted, ‘C2B2C models can generate profits, but they must justify higher prices with unwavering reliability to retain market share.’
Stagnating Growth and the Quest for New Audiences
Zhuanzhuan’s user base has plateaued, with QuestMobile data indicating a penetration rate of just 3.7% among new blue-collar workers in 2020, compared to Xianyu’s 14.4%. By 2025, Zhuanzhuan’s monthly active users stood at 35.88 million, barely one-sixth of Xianyu’s 215 million, reflecting a widening gap. This stagnation has intensified the platform’s reliance on performance marketing, including targeted ads on Douyin that generated 1,422 creatives in one week post-iPhone 17 launch.
To counter growth hurdles, Zhuanzhuan’s strategic pivot now targets affluent consumers through the acquisition of Hong Bu Lin (红布林), a luxury second-hand marketplace. The move aims to tap into China’s burgeoning second-hand luxury market, projected to exceed 100 billion yuan by 2030. However, this segment brings its own complexities, including subjective valuation and authentication hurdles, which could exacerbate existing trust deficits.
Advertising Overload and Brand Erosion
Zhuanzhuan’s aggressive ad campaigns, reminiscent of Zhao Liang Ji’s earlier tactics, have fueled short-term engagement but long-term resentment. For example, the platform’s use of influencer marketing and character-driven content, such as the ‘CC’ recycler persona, seeks to humanize the brand. Yet, viral comparisons showing used iPhones priced higher than new units on Pinduoduo have sparked ridicule, eroding credibility.
Data from Hei Mao Tou Su reveals recurring complaints about opaque pricing and quality disputes, suggesting that Zhuanzhuan’s strategic pivot must address foundational trust issues. As COO Hu Weikun (胡伟琨) acknowledged, ‘Vertical e-commerce faces a survival curve where scaling increases acquisition costs, but stagnation caps growth.’ This dilemma underscores the need for Zhuanzhuan to refine its value proposition beyond transactional efficiency.
Expansion into High-Margin Segments
Zhuanzhuan’s foray into luxury goods via Hong Bu Lin represents a calculated bet on higher margins, but it inherits similar challenges, including over 5,000 complaints on Hei Mao Tou Su related to counterfeit risks and high commissions. Unlike Xianyu, which leverages community features to diversify into services like pet-sitting and digital vouchers, Zhuanzhuan’s asset-heavy model limits its ability to experiment with non-standard offerings.
The strategic pivot toward luxury items highlights Zhuanzhuan’s urgency to monetize, yet it risks alienating its core user base. By exiting C2C, the platform severs a key traffic funnel, forcing heavier reliance on paid campaigns. Industry watchers note that luxury resale demands meticulous curation and trust-building—elements at odds with Zhuanzhuan’s current mass-market advertising strategy.
Comparative Strategies: Xianyu and Beyond
While Zhuanzhuan retreats from C2C, Xianyu continues to innovate within this framework, integrating social commerce to foster user loyalty. Platforms like Xiaohongshu (小红书) have also gained traction by catering to niche communities, such as anime collectors, demonstrating the power of targeted engagement. Zhuanzhuan’s strategic pivot, in contrast, emphasizes standardization over spontaneity, potentially missing out on emergent trends.
Expert insights suggest that second-hand platforms must balance scalability with specialization. For instance, Ai Hui Shou’s founder Chen Xuefeng (陈雪峰) disclosed that a single storefront requires approximately 70,000 yuan in hardware and 30,000 yuan monthly in operating costs, illustrating the financial barriers Zhuanzhuan faces. As the market evolves, Zhuanzhuan’s ability to adapt its strategic pivot will be critical in maintaining relevance.
Navigating the Future of Second-Hand Commerce
Zhuanzhuan’s journey from a C2C contender to a C2B2C specialist underscores the volatility of China’s second-hand market. Its strategic pivot has yielded profitability but at the expense of user growth and brand perception. Key takeaways include the importance of trust in transactional platforms and the risks of over-reliance on capital-intensive models. For investors, Zhuanzhuan’s case highlights the need to assess not just financial metrics but also consumer sentiment and adaptive capacity.
Looking ahead, Zhuanzhuan must prioritize transparency and innovation to sustain its gains. This could involve enhancing quality guarantees, exploring hybrid models, or forging partnerships to diversify revenue streams. As the second-hand economy expands, platforms that successfully integrate community values with operational efficiency will likely lead the next wave of growth.
For professionals monitoring Chinese equities, Zhuanzhuan’s strategic pivot offers a cautionary tale on the trade-offs between short-term profitability and long-term market positioning. Stay informed on regulatory updates and consumer trends by following authoritative sources like the National Bureau of Statistics and industry reports. Engage with our analysis to make data-driven decisions in this rapidly evolving sector.