Zhuanzhuan, a leading second-hand trading platform, is reportedly gearing up for an initial public offering (IPO) on the Hong Kong Stock Exchange.

In a recent exclusive interview with Hong Kong media, Zhuanzhuan's founder, Huang Wei, revealed that the company aims to go public within the next three years, with Hong Kong identified as the preferred listing venue.

Following its latest funding round, Zhuanzhuan boasts a valuation of approximately $3 billion (equivalent to over 20 billion RMB). Over its decade-long journey, the company has secured nearly $1.1 billion in funding, with tech giants Tencent and Xiaomi among its key shareholders.

Publicly available data indicates that Zhuanzhuan's total revenue surpassed 20 billion RMB last year, although the company has yet to confirm these figures.

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Originally incubated as a C2C second-hand channel by 58.com, where Huang Wei served as vice president, Zhuanzhuan gained independence in November 2015 and underwent a rebranding in June 2016.

At the time, 58.com's founder, Yao Jinbo, recognized that second-hand transactions constituted the largest segment of information matching platforms in foreign markets, accounting for 50%-70% of total activity. In contrast, second-hand listings on 58.com represented only about 20% of its information. This discrepancy highlighted the immense potential of second-hand trading in China, despite the nascent stage of mature buying and selling habits among Chinese users.

Around the same time, Alibaba's second-hand trading platform, "Taobao Second-hand," was rebranded as Xianyu. The market also saw the emergence of other players like Aihuishou and Diwan Bus, specializing in second-hand digital products.

Xianyu enjoyed the backing of Taobao, offering a diverse range of products, while Aihuishou forged a strategic partnership with JD.com, leveraging its rich 3C resources. In April 2017, 58.com secured a $200 million investment from Tencent for Zhuanzhuan, gaining access to WeChat's vast user base.

However, in the pure online C2C second-hand trading space, the gap between Xianyu and Zhuanzhuan widened, with Xianyu enjoying a 7:2 penetration ratio in 2018. Around 2019, Zhuanzhuan shifted its focus to the C2B2C model. In 2020, it merged with second-hand 3C retailer Zhaoliangji, cementing its position as the "top online platform for second-hand mobile phone transactions."

Post-merger, Zhuanzhuan's strategic direction became clearer, concentrating on second-hand mobile phones and other 3C products.

In the broader second-hand market, mobile phones rank third in volume after housing and cars. They are relatively high-value items with clear depreciation rates and stable demand, making them closer to standardized products in terms of transactions.

On September 22, 2025, Zhuanzhuan announced its decision to gradually phase out its C2C business line. Huang Wei described this move as a "strategic retreat," citing the business's limited revenue contribution and inability to cover costs. Zhuanzhuan's core operations now revolve around C2B2C "official verification" services.

Zhuanzhuan opted not to compete directly with Xianyu in the C2C space, recognizing their differing business models. Xianyu functions more like an "interest community," uniting users based on shared hobbies and offering a wide array of goods and services. Zhuanzhuan, unable to compete in selling "everything," chose to specialize in mobile phones and 3C products.

To bolster its position, Zhuanzhuan invested over 200 million RMB in 2024 to expand its quality inspection department. By conducting in-house inspections, providing official reports, and offering after-sales support, Zhuanzhuan transformed transactions into a more standardized process, reducing trust costs and facilitating smoother deals.

Aihuishou, another C2B2C player, has successfully implemented this approach and achieved profitability. Its revenue structure is straightforward, with self-operated sales serving as the primary profit driver. Its latest financial report revealed a net profit of 340 million RMB.

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Zhuanzhuan's focus on second-hand mobile phone C2B2C represents a highly promising and relatively standardized market.

China witnesses approximately 500 million old mobile phones being replaced annually, yet only 17.1% are properly recycled. This leaves a vast number of old phones underutilized.

This presents a direct opportunity: abundant supply but inadequate recycling infrastructure and unclear industry standards. Whoever can streamline the recycling, inspection, and sales process stands to capture this market.

The viability of this business is evident in the financial data of Aihuishou and Shanhuikeji.

Let's examine Shanhuikeji, which is also backed by Xiaomi.

Shanhuikeji's core business encompasses four main areas: trade-ins, idle recycling, second-hand mobile phone sales, and enterprise recycling with offline sales. Its primary sources are not online individual sellers but partnerships with over 75,000 offline retail stores of mobile phone brands (such as Xiaomi, Vivo, and Honor) and the three major carriers. When consumers trade in old phones at these stores, Shanhuikeji, as the backend service provider, utilizes its SaaS system to inspect, price, and recycle the devices.

However, even focusing on the second-hand mobile phone market is no easy feat. Building out inspection, warehousing, logistics, and after-sales capabilities requires substantial ongoing investment. With low profit margins on second-hand phones, any inefficiency in these areas can quickly erode profits or even lead to losses.

According to Shanhuikeji's latest prospectus, its revenue for the first half of 2025 was 809 million RMB, with a gross profit of 50.72 million RMB and a loss of 24.63 million RMB. From 2021 to 2024, Shanhuikeji accumulated losses exceeding 300 million RMB.

The primary reason for these losses was high sales costs, which nearly consumed all revenue.

So, what are the costs in this industry? They include procurement costs for second-hand consumer products, marketing services and commission fees, and logistics costs paid to third-party providers.

These are the same challenges Zhuanzhuan faces under the C2B2C model. To turn a profit, it must find ways to reduce these costs.

Now, let's consider Aihuishou, which earned 340 million RMB last year by profiting from the difference between recycling and resale prices. It operates as both a "recycler" and a "seller," incurring significant fixed costs for quality inspection, refurbishment, and offline stores. Once revenue growth slows, profits can be quickly eaten up by fixed costs.

Zhuanzhuan, entering this business, will face the dual challenge of external growth and internal cost control.

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The second-hand e-commerce market is indeed expanding. In 2024, China's second-hand e-commerce transaction volume reached 645.02 billion RMB, with a user base of 660 million.

But more players are entering the field. Dewu and Xiaohongshu are rapidly growing in the toy collectibles and apparel second-hand markets; Douyin and Kuaishou are entering transactions through livestreaming.

Behind all these models lies the same fundamental issue: trust.

China generates hundreds of millions of waste mobile phones annually, yet the proportion entering formal recycling systems remains low. This is not a supply issue but a trust issue.

Users hesitate to sell because they fear being underquoted; they hesitate to buy because they fear scams.

This is why the industry has witnessed a significant shift in recent years: standardized quality inspections, automated pricing, and AI-assisted detection.

For instance, some platforms have started using automated systems to grade and price devices, transforming a process that once relied on human judgment into a replicable workflow.

This is an attempt to create "industrialized trust." If successful, it means transactions can be scaled up and costs compressed, making the profit model truly viable.

A clear signal is that more platforms are becoming "heavier," with offline stores and inspection centers becoming standard. Zhuanzhuan is building a quality inspection system, Aihuishou is streamlining its recycling-distribution chain, and Xianyu is experimenting with fees to strengthen transaction order.

This means second-hand e-commerce is evolving from a typical internet business into one closer to retail and supply chain management.

Zhuanzhuan even opened a 3,000-square-meter "Super Zhuanzhuan" offline store in Beijing Friendship Mall, offering second-hand luxury goods like Hermès, LV, and Chanel, as well as photography equipment, footwear, watches, and game cards. The goal is to create more scenarios for users.

Looking back, from 2015 to now, Zhuanzhuan, Shanhuikeji, and Aihuishou have all transformed into heavily operational companies with quality inspection systems, offline networks, and supply chain capabilities. This transformation reflects the broader evolution of the industry.

This article does not constitute any investment advice. It also references reports from China Entrepreneur and Dianshang Online, with gratitude.