Focused One (DingjiaoOne) Original

Author | Li Mengran

Editor | Wei Jia

On March 11, the parent company of the electronic product recycling platform AiHuiShou, Wanwu Xinsheng, released its Q4 and full-year 2025 performance.

First, the full year: Revenue in 2025 broke through 20 billion yuan for the first time, reaching 21.05 billion yuan, a year-on-year increase of 28.9%; non-GAAP operating profit was 560 million yuan, up 35.5%, and achieved the company’s first comprehensive profit under GAAP standards since listing, reversing previous long-term losses. (Note: non-GAAP figures are adjusted, excluding employee equity incentives, intangible asset amortization, and deferred costs from acquisitions. Compared to GAAP, which more comprehensively reflects profitability, achieving GAAP profit is often seen as a key sign that the company has truly emerged from losses.)

Looking at a longer timeline, this turnaround wasn’t sudden. Since achieving GAAP profit in a single quarter for the first time in Q3 2024, Wanwu Xinsheng’s financial data has gradually improved, with quarterly revenues in 2025 of 4.65 billion yuan, 4.99 billion yuan, 5.15 billion yuan, and 6.25 billion yuan; profits increased from 40 million yuan in Q1 to 130 million yuan in Q4, showing a steady upward trend.

For Wanwu Xinsheng, the “four consecutive profitable quarters” in 2025 is indeed a significant milestone, but does this mean the entire second-hand industry has reached a turning point? The answer may not be so optimistic.

In the past, “low frequency, non-standard, poor reputation” were the three major challenges hanging over the second-hand industry. Although platform-based operations have gradually brought second-hand transactions into the mainstream market, these three major issues have not disappeared with scale expansion.

More notably, external factors played a significant role in this growth cycle: national subsidies and the old-for-new policy stimulated demand for 3C product recycling; short-term opportunities in the gold category contributed additional growth; and JD.com’s stable orders remain a key source of supply and traffic. When policies decline and market opportunities recede, whether this growth can continue remains uncertain.

It may still be premature to say that the second-hand business is “living a good life.”

AiHuiShou’s comeback, how valuable is it?

As the only publicly listed company in the second-hand industry, Wanwu Xinsheng is often seen as a benchmark for industry development. Compared to the “turning losses into profits” result, the market cares more about how this company achieved the turnaround and how substantial the profitability is.

Wanwu Xinsheng currently has four main business lines: AiHuiShou (C2B), PaiJiTang (B2B), PaiPai (B2C), and overseas business AHSDevice. In terms of revenue structure, they mainly consist of product net revenue (1P) and service net revenue (3P), representing entirely different business models:

The 1P business is self-operated, covering the full chain of second-hand 3C device recycling, quality inspection, refurbishment, and resale (C2B2C), earning the margin from “recycling to resale”; the core of the 3P business includes “PaiJiTang” and “PaiPai,” which are platform-matching, appraisal, commission, and technical services—light asset businesses that do not involve direct trading of goods, but provide professional services, earning pure service fees.

Looking at revenue, 1P is the absolute mainstay.

In 2025, Wanwu Xinsheng’s total revenue reached 21.05 billion yuan, with 1P self-operated business revenue at 19.38 billion yuan, accounting for 92.1%, with all four quarters exceeding 90%. The 3P service revenue was 1.67 billion yuan, a 12.4% increase year-over-year, a high-margin auxiliary segment, but only accounting for 7.9%, and has not yet formed a second growth curve comparable to 1P.

From category structure, total transaction volume reached 41.7 million units, up 18.1% year-over-year. 3C consumer electronics remain the main driver, supporting the expansion of 1P. Multi-category recycling achieved breakthroughs (annual GMV of 1.87 billion yuan, over 110% YoY growth), but its proportion in overall revenue remains very low, contributing limitedly to total income.

Secondly, turning losses into profits was another key change in the 2025 financial report.

In 2025, Wanwu Xinsheng’s GAAP net profit was 340 million yuan; non-GAAP net profit was 430 million yuan, up 6.8%. The core logic of profit improvement is that “revenue growth outpaces cost increases.” Total operating costs grew 26.2% YoY, lower than the 28.9% revenue growth; general administrative expenses decreased by 10.4% YoY, showing cost reduction and efficiency gains.

However, the heavy asset model still means cost pressures are hard to fully eliminate. Cost of goods sold for 1P increased by 27.6% YoY, slightly below revenue growth, but the rigid costs from offline stores, automated quality inspection, and heavy asset investments remain. If future revenue growth slows, profit margins will be directly pressured.

Regarding growth drivers, the performance improvement in 2025 was largely driven by external factors.

In the first half, national subsidies and the old-for-new policy, combined with JD.com’s promotions and channel traffic, rapidly increased demand for 3C recycling, with Q1 gross margin reaching the highest of 22.3%. In the second half, rising gold prices triggered a gold recycling boom (annual gold GMV up 118%). Meanwhile, new device launches by phone manufacturers accelerated, stimulating old-for-new demand, with Q3 compliant refurbished product sales revenue increasing over 100% YoY.

At the same time, the company’s internal business structure also changed somewhat. ToC retail share increased from less than 20% to 41.7% in Q4, and the volume of compliant refurbishment and other high-margin businesses improved the profitability quality of 1P.

Overall, although Wanwu Xinsheng has optimized its structure, its growth in 2025 still relies on external factors. From national subsidy policies to gold market trends, these variables have cyclical characteristics, and changes in policies or market conditions could impact growth momentum.

Additionally, the company’s business remains highly concentrated, with over 90% of revenue from 1P, heavily dependent on the 3C category. As the smartphone upgrade cycle lengthens, demand for core categories has limited growth potential.

In other words, Wanwu Xinsheng’s profitability is not just a “numbers game”; it is built on scale expansion and efficiency improvements, with some degree of substance, but this profitability also has stage-specific features.

The capital market’s reaction has already given an answer: on the day of the earnings release, Wanwu Xinsheng’s previously rising stock price fell 10.14%, closing at $5.58 per share, with a total market value of $1.227 billion. This contrast perhaps reflects investors’ concerns about its long-term profit stability.

Second-hand market, are good days coming?

Wanwu Xinsheng has reported profitable results—does this mean the industry is entering an explosive growth phase?

In recent years, second-hand trading has indeed developed rapidly. Data shows that in 2024, China’s second-hand e-commerce transaction scale reached 645.02 billion yuan, with 660 million users. A joint report titled “China’s Idle Second-Hand Trading Carbon Reduction Report” indicated that in 2025, the total transaction volume of idle goods in China will surpass 30 trillion yuan. Currently, the main players include Xianyu, representing C2C, and AiHuiShou and Zhuanzhuan, representing C2B2C. However, compared to mature sectors like e-commerce and instant retail, second-hand trading is still in the exploratory stage.

Industry analyst Zhang Shule told Focus One that AiHuiShou’s improved performance does not necessarily mean the second-hand industry is doing well; “the current second-hand track remains a niche vertical, far from full-scale explosion.”

He believes that the industry’s long-standing core issues—non-standardization, low frequency, and poor reputation—have yet to be truly solved.

“Non-standard” refers to the products themselves. Second-hand goods vary greatly in condition, wear, repair history, etc., making it difficult to establish uniform standards like new products.

Even if Wanwu Xinsheng claims to have integrated the full C2B2C chain, Zhang Shule sees limited practical value:

Consumers on both ends of the platform rely heavily on subjective judgments of “newness,” with inconsistent appraisal standards, easily leading to disputes and trust issues; and among upstream “individual sellers,” many are actually B-end merchants, with significant uncertainty around source authenticity and cost stability.

Source / AiHuiShou video screenshot

Ultimately, when standards are hard to quantify, trust issues stemming from reputation problems are difficult to fully resolve—this is almost an intractable “deadlock” in second-hand trading.

“Low frequency” is also constrained by reality. As smartphone chip performance continues to improve and technological iteration slows, users’ upgrade cycles will only lengthen. For platforms focused on 3C devices like AiHuiShou and Zhuanzhuan, this means transaction demand will not be as frequent as daily consumption.

Therefore, leading platforms have been trying to find new breakthroughs over the years.

In terms of standardization, most top platforms adopt a dual approach of “rule-setting + offline implementation.”

On one hand, they have launched proprietary quality inspection and grading standards: AiHuiShou developed a 39-item quality inspection + 36-grade matrix system; Zhuanzhuan established quality inspection centers and stations nationwide; Xianyu partnered with third-party organizations to introduce standardized appraisal procedures—aiming to reduce disputes caused by non-standard goods through quantifiable indicators.

The problem is, these standards are mostly self-developed by each platform, difficult to interoperate, and consumers find it hard to form a unified understanding. Even as quality inspection processes improve, subjective judgments about “newness” remain difficult to fully align.

On the other hand, offline stores have become an important supplement. By the end of 2025, Wanwu Xinsheng had 2,195 offline stores covering 298 cities nationwide. Zhuanzhuan and Xianyu also invested heavily in offline outlets to address the trust gap caused by intangible online transactions, allowing consumers to directly perceive product condition.

However, this approach entails higher costs. Rent, labor, fulfillment costs increase expenses. As the first to deploy offline, Wanwu Xinsheng’s fulfillment costs grew 27.4% YoY in 2025. Even with scale effects reducing cost ratios slightly, substantial ongoing investment is required to maintain the network.

Zhang Shule pointed out that standardization remains a fundamental challenge for the entire second-hand industry and cannot be solved in the short term. For leading platforms, more immediate issues are the lack of innovative business models rather than technology, standards, or trust.

Platforms like AiHuiShou and Zhuanzhuan have long relied heavily on the 3C category, leading to over-concentration. “Breaking out of 3C and exploring new categories will be the core focus for second-hand platforms in the next stage,” Zhang said.

In fact, multi-category expansion has become a common strategy among top platforms: AiHuiShou has expanded into gold and luxury goods; Zhuanzhuan has added books, trendy toys, and maternal & infant products; Xianyu’s model differs, mainly focusing on community C2C, but it has also experimented with C2B recycling, B2C (YuLiGou), and trendy toy sections, gradually covering almost all daily life categories.

But new issues have emerged. For example, some platforms, in expanding into trendy toys, beauty, and apparel, appear to have increased supply, but in reality, many are not truly second-hand goods—some are new items—blurring the platform’s positioning.

Zhang Shule believes that the real industry breakthrough still depends on standardization itself. Future AI may bring new possibilities to this challenge.

Until then, the second-hand industry will continue to oscillate between improving efficiency and building trust.

Image source: Screenshot from AiHuiShou video account.