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economic observer reporter ren xiaoning on september 23, zhuanzhuan group, a second-hand e-commerce platform, announced the full acquisition of redbulin, a second-hand luxury e-commerce platform. since the anti-monopoly in the internet industry in 2021, there have been only a handful of acquisitions initiated by well-known domestic internet companies, so this acquisition has attracted considerable attention.

hu weikun, co-founder, coo and ceo of zhuanzhuan and hongbulin, told economic observer that after zhuanzhuan acquired hongbulin, its infrastructure capabilities such as door-to-door service, offline stores and offline self-inspection can be reused to generate economies of scale. in addition, the acquisition will also enhance zhuanzhuan's luxury goods authentication capabilities.

in the current second-hand e-commerce market, zhuanzhuan is still a long way from its old rival xianyu. according to data from market research firm questmobile, in april this year, the number of monthly active users (dau) of xianyu app was 162 million, while the combined dau of zhuanzhuan app and zhaoliangji app under zhuanzhuan was 24.08 million (not deduplicated).

however, zhuanzhuan is also promoting a differentiated development strategy. xianyu only opened two offline stores at the beginning of this year. according to hu weikun, zhuanzhuan will open nearly 800 stores across the country by the end of this year. its offline stores mainly rely on natural customer traffic, and the proportion of online traffic does not exceed 30%.

acquisition

the acquisition of hongbulin is zhuanzhuan’s second large-scale merger and acquisition.

hu weikun said that after zhuanzhuan acquired zhaoliangji in 2020, it has been working hard to find new targets since 2021. at that time, it looked at many leading companies in the second-hand vertical field, and hongbulin was the best one they saw. however, in 2022, zhuanzhuan's infrastructure capabilities such as door-to-door service, offline stores and offline self-inspection were not yet complete, so it did not choose to acquire it, but strategically invested in hongbulin.

hongbulin was founded in 2017 and has raised seven rounds of financing with a total amount of about 1.3 billion yuan. investors include matrix partners china, jiuhe venture capital, idg capital, and sinovation ventures. however, after zhuanzhuan invested $100 million in hongbulin in november 2022, other shareholders of hongbulin gradually withdrew.

tianyancha shows that in february 2023, the shareholder structure of hongbulin is as follows: 58.com's affiliated company wuba co., ltd. holds 47.67% of the shares, zhuanzhuan's wholly-owned subsidiary tianjin fatiao shiguang information technology co., ltd. holds 35.23% of the shares, and hongbulin founder xu wei holds 17.09% of the shares.

zhuanzhuan is a subsidiary of 58.com, and the interests of the two companies are the same. therefore, zhuanzhuan's full acquisition of hongbulin requires xu wei's consent.

hu weikun said that in 2023, zhuanzhuan had the idea of ​​acquiring hongbulin in full. from a strategic perspective, zhuanzhuan believed that after the merger with hongbulin, the infrastructure could be reused, resulting in economies of scale and significantly diluting costs, so it began to communicate with the founding team of hongbulin. the founding team of hongbulin had no objection to this, because for a second-hand luxury goods platform, they have always hoped to provide door-to-door services or make offline investments, but this expenditure is a huge capital investment for hongbulin.

"both parties reached a consensus, so the talks went very quickly. we started formal talks after the chinese new year this year, and in less than half a year, all the processes were completed and the contracts were signed," hu weikun told economic observer.

hu weikun also said that the underlying logic of this acquisition is that zhuanzhuan is optimistic about the second-hand market.especially in the field of second-hand luxury goodsit is still an incremental market. the growth areas of second-hand luxury goods are mainly in third-tier and lower cities and the young user market. for many users in low-tier cities, the first luxury goods they consume are second-hand goods. users born after 1995 and 2000 are also very receptive to second-hand luxury goods.

how to integrate

at present, the brands and apps of zhuanzhuan and hongbulin are still operated independently, and the employees of the two companies also work independently. in october this year, zhuanzhuan app will undergo a major revision to add a luxury e-commerce entrance. hongbulin's own customer base, operating mechanism and team will still operate independently, and the supply chain system behind them will be shared.

hu weikun said that the integration of the two parties mainly includes the connection of the middle and back-end systems and the fulfillment capabilities. hongbulin will reuse zhuanzhuan's door-to-door service and store system. zhuanzhuan's luxury goods authentication work will be entirely undertaken by hongbulin. luxury goods authentication is hongbulin's core capability. currently, hongbulin has a team of nearly 100 professional appraisers.

zhuanzhuan and redbubble will also cooperate in offline stores. zhuanzhuan ceo huang wei once said that zhuanzhuan will have 400 offline stores in december 2023. hu weikun revealed that the company will open nearly 800 stores across the country by the end of this year, mainly selling digital products such as mobile phones, computers, and game consoles. the advantage of offline stores is that what you see is what you get. in the future, zhuanzhuan's offline stores may also display luxury goods.

as private companies, zhuan zhuan and hong bulin have not disclosed their revenue, profit and other data. hu weikun said that zhuan zhuan and hong bulin are currently profitable.

hu weikun is optimistic about the prospect of acquiring redbulb. he said that in the second-hand market, the cost of vertical platforms is very high, and customer acquisition and infrastructure must be well matched, which is extremely costly. after the integration with redbulb, it can theoretically bring higher benefits to zhuanzhuan.

however, in the current second-hand e-commerce field, zhuanzhuan is still a long way from its old rival xianyu. according to data from market research firm questmobile, in april this year, the dau of xianyu app was 162 million, while the dau of zhuanzhuan app and zhaoliangji app under zhuanzhuan added up to 24.08 million (not deduplicated).

zhuang shuai, an expert in the retail e-commerce industry and founder of bailian consulting, believes that hongbulin itself is not very large, and second-hand luxury goods account for a relatively low proportion of second-hand goods transactions. for zhuanzhuan, the value of this acquisition lies in hongbulin's team and supply value, and will not have a significant impact on zhuanzhuan's dau in the short term.

compared with xianyu, zhuanzhuan's advantage lies in its offline business. at the beginning of this year, xianyu opened two community stores in hangzhou and shanghai, which is far smaller than the hundreds of offline stores of zhuanzhuan. hu weikun said that zhuanzhuan's offline stores mainly rely on natural customer traffic, and the proportion of online traffic is less than 30%.