Online used goods trading platform Zhuanzhuan, which is controlled by New York-listed Chinese online classifieds marketplace, has merged with second-hand mobile phone trading service Zhaoliangji.com to create a business worth up to $1.8 billion.
“Zhaoliangji is a platform specialized in used phone trading, while Zhuanzhuan operates as a comprehensive second-hand e-commerce website,” said Huang Wei, CEO of Zhuanzhuan, in a WeChat post on Wednesday. “The merger will enable us to further consolidate our position as the top company in the [Chinese] second-hand mobile phone trading market, as well as to become a leading player in the general second-hand B2C business and the online C2B field.”
The cooperation comes as the worldwide shipments of used smartphones, inclusive of both officially refurbished and used smartphones, is estimated to have reached a total of 206.7 million units in 2019, up 17.6 per cent from the 175.8 million units shipped in 2018, according to an International Data Corporation (IDC) report.
The global used smartphone shipments are expected to reach 332.9 million units in 2023 with a compound annual growth rate (CAGR) of 13.6 per cent from 2018 to 2023 amid an uptick in demand for used smartphones that offer considerable savings compared with new models.
Zhaoliangji, founded in October 2015 and operated by Shenzhen Wanshifu Technology Co Ltd, operates as a B2C e-commerce website for users to sell and purchase second-hand mobile phones, as well as other computing, communication, and consumer (3C)-related products. The company has served 67 million users as of December 2019, shows its website.
After the deal, Zhaoliangji will continue to expand its business in the Chinese B2C second-hand 3C industry. It will become an affiliate of Zhuanzhuan, while the company CEO Wen Yanjie will serve as the vice president of Zhuanzhuan, according to the post.
It has completed three funding rounds between 2017 and 2018 from Chinese investors including new economy-focused fund Plum Ventures, Beijing-based angel investment firm Cyanhill Capital, and state-backed Qianhai Fund of Funds, among others. Its largest funding round was a Series A+ round at 70.33 million yuan ($9.92 million) in February 2018.
These investors will not exit from their investments in Zhaoliangji after the merger, instead, their shares will be transferred into equity interests in Zhuanzhuan.
Beijing-based Zhuanzhuan, created in November 2015, garnered $300 million in a Series B round from investors including Chinese social and gaming giant Tencent and its parent company 58.com in September 2019. In April 2017, it closed $200 million in a Series A round from Tencent, which granted the startup access to Tencent’s social media and e-commerce resources.
The company launched an online brand called “Caihuoxia” last November to provide used goods trading services for merchants and corporate clients. Zhaoliangji also invested in the brand in December 2019.