Photo/Shetuwang

June 5 (NBD) -- Chinese e-commerce giant JD.com (NASDAQ:JD) announced Monday the plan to merge its Paipai Secondhand (Paipai) business into Aihuishou, an online secondhand consumer electronics trading platform.

Additionally, JD.com will invest 20 million U.S. dollars in cash in exchange for a non-controlling interest in Aihuishou.

When reached by National Business Daily (NBD), JD.com said that Paipai and Aihuishou have been in deep cooperation for years. The two sides are complementary in that Paipai has a comprehensive platform of selling and collecting secondhand goods and Aihuishou is professional in the vertical market of consumer electronics. Therefore, the merger will build a comprehensive trading platform for secondhand goods of all categories, JD.com added.

NBD noticed that after the merger, JD.com will become the biggest strategic shareholder of Aihuishou, and Paipai's general manager Wang Yongliang was named partner and co-president of Aihuishou.

Founded in 2010, Aihuishou to date has secured five rounds of financing and JD.com became an investor of the secondhand marketplace as early as 2015. After that, the e-commerce behemoth took part in every funding round of Aihuishou, which laid the foundation for their further partnership.

JD.com acquired C2C marketplace Paipai in 2014 from Tencent. After a brief shutdown in 2016, Paipai was relaunched in 2017 to focus on secondhand sales.

Up till now, Paipai has established secondhand commodity testing centers in 7 cities including Beijing, Shanghai and Guangzhou, authorized 13 third-party goods testing institutions in 9 cities and set up 6 laboratories for goods spot check and evaluation.

Tang Xin, independent IT analyst, said to NBD that as the secondhand market grew rapidly in the past two years, many e-commerce firms were making corresponding deployment. Best-selling goods on the secondhand market are mobile phones, an area which Aihuishou focuses on, Tang noted.

China's secondhand goods market, where the top two players are Alibaba's Xianyu and Zhuanzhuan of classified listings site 58.com, is expected to hit a trading volume of 1 trillion yuan in 2020. It remains to be observed whether JD.com can give full play to the strengths of Paipai and Aihuishou to grab more market share. 

When consumption reaches to a certain level, customers are more used to secondhand goods, hence rising secondhand transactions, said Wang Yingying, senior investment manager with Ether Capital, in a prior interview with NBD.

Email: gaohan@nbd.com.cn