Apple this week reported a year-over-year quarterly decline in sales growth for new iPhones in China. But there’s another market for Apple products that’s thriving despite the country’s slowing economy; Alibaba helps sell China’s used goods.
Just ask Li Jiaxin, a 25-year-old video editor who lives in Beijing. In his spare time, Li manages an online community in which more than 120,000 Apple aficionados buy and sell used Apple gear. The community, part of a smartphone-centric used-goods marketplace operated by Alibaba Group, contains listings for some 20,000 pre-owned Apple items on any given day.
Considering that China’s wealthy younger generation remains enthusiastic about the latest Apple product releases, Li’s community appears set to grow as increasing numbers of fanboys seek an outlet where they can sell off their aging iPhones, iPads, iWatches, and Macbooks to make way for Apple’s latest and greatest. “Listings and sales have grown tremendously since the debut of the community, when only a few thousand people participated,” said Li, who confirmed there is typically a surge in listings prior to every Apple product launch.
It isn’t just used Apple merchandise that is selling well online. As China’s middle class continues to grow older and more affluent, they’re replacing and upgrading personal possessions purchased during their salad days—creating a market for a wide range of pre-owned consumer goods. According to CBNData, a Shanghai-based data analysis agency, the country’s total used-goods trade including online sales is expected reach RMB 400 billion ($61.6 billion) this year.
Alibaba’s Taobao Marketplace jumped on this trend several years ago when it launched an online used-goods marketplace, rebranding it in 2014 to coincide with the release of an upgraded “digital flea market” app called Xianyu (literally translated as Idle Fish, but which the app-maker is calling Sharing Fish in English). Today, the mobile app has more than 100 million registered users; the value of transactions on the platform grew 15-fold from January 2015 through March 2016, according to Taobao.
The Xianyu app allows smartphone users looking for used goods to dicker online with sellers, while sellers can easily upload photos, audio and video to promote their wares. The app has its own credit rating system, buyers are protected from fraud by e-payments provider Alipay’s escrow mechanism, and Taobao’s customer service team is available to help the confused and disgruntled.
But what really sets Xianyu apart is its positioning not as a garden-variety m-commerce app but as a social network. To increase user engagement, Xianyu developers last year unveiled virtual communities on the app, tapping into the China consumers’ well-documented zeal for mixing online shopping with social interaction.
Called “fish ponds,” these communities are often populated by members who share a particular interest, such as photography enthusiasts and Li’s Apple fanboys. Through Xianyu they exchange information and ideas about their hobbies as well as swap related merchandise. Some members operate permanent virtual stores within the communities, hence the likening of Xianyu to a digital flea market where people gather to socialize and sell stuff to each other.
Xianyu “reminds me of my experience in other online communities, in social media and bulletin board systems, which I like a lot,” said Li, who voluntarily spends a few hours every day managing product listings, arbitrating buyer-seller disputes and answering questions raised by community participants, such as how much their iPhone is worth and how to fix their broken Macs. “I get a sense of achievement by being a leader recognized by others,” said Li, a former Apple engineer.
Fish ponds (the app hosts more than 125,000 of them) also revolve around physical neighborhoods, such as a group based in Beijing’s Tiantongyuan district that hosts some 34,000 participants. There are fish ponds for companies, colleges—and other, odder, commonalities, such as people who like to dress up in Han Dynasty style clothing. There’s even a fish pond named “say goodbye to the ex” that offers jilted boyfriends and girlfriends a quick way to unload gifts given to them by ex-lovers.
Now that these digital flea markets have become entrenched in cyberspace, Xianyu developers are migrating them back into the real world by staging actual, physical flea markets.
“We want to expand our business from online to offline,” explained Wang Yang, a manager for Xianyu. Since last year, Xianyu has hosted about 20 offline flea-market fairs in cities including Shanghai, Hangzhou, Nanjing, Kunming and Wuhan.
Pan Yang, a community leader in Kunming who works for a property management company, has helped organize six such fairs, each attracting 35 to 40 street vendors selling items such as potted plants and handicrafts.
Pan says the fairs help bring people together. “The relationship between people has been destroyed in modern society,” he said. “People who live next door don’t know each other. Relationships between people can be built and reinforced through Xianyu … it’s a very natural process to move from offline to online, and then return offline again.”
Xianyu managers say they have similar lofty goals. They have plans to invest RMB 100 million ($15.4 million) to develop new communities and host 1,000 offline fairs in 100 cities next year.
“The idea is to promote the sharing economy, recycling and a thrifty life,” said Wang, the Xianyu manager. “Also, some of the products such as vehicles and home appliances can only be traded after being inspected in person.” No reason you can’t bond with your new neighbor while you’re selling him your old bicycle.