This is the second group discussion in class, created by LU Jiawen, WANG Xintong, ZHAI Tiange, HE Wenwei and TANG Zhichun

1. Case Study - XIAN YU
LU Jiawen, 1155130165 / WANG Xintong, 1155130054
ZHAI Tiange, 1155129810 / HE Wenwei, 1155134442
TANG Zhichun, 1155137042

2. Strengths
- Back by Alibaba/Taobao, huge platform with many
potential customers
- High usability, providing convenient services
- Security (the third party secures the deal process) &
(Credit system-transparent trust/transaction system)
- Branding (logo design, attractive ad., inviting celebrities
to join and enhance impact)
- Value (reuse secondary products)
- Community establishment (“fish ponds”)
Weakness
- Lack credit management
- Copyright issues, eg.pirated books
- Low quality, eg. fake products
- Unguaranteed after-sale services
- Privacy (personal information leakage/harassment)
- Low revenue
Opportunities
- Large market (blue ocean)
- Current economic environment leads to users’ incentive
to sell second-hand products
- The concept of environmental protection is prevalent
- Shared economy
Threats
- Restricted in the local market
- Competitors e.g.zhuanzhuan
- High barrier to attract consumers from vertical fields,
eg. second-hand cars, etc
SWOT Analysis

3. Porter’s Five Forces
1. Threat of New Entrants/Potential Competitors - LOW Pressure
- Time and cost of entry
Requires little time and cost, whereas wins consumers’ trust in the platform.
- Specialist knowledge
No specialist knowledge needed.
- Strong competitors
Xian Yu and Zhuanzhuan take up most of the second-hand market. It’s
difficult for new entrants to occupy market share because it’s difficult for end
users to switch and use another platform.

4. Porter’s Five Forces
2. Threat of Substitute Products - MEDIUM Pressure but increasing
Few substitute products/services/platforms.
Zhuanzhuan (转转)
- Sub-brand of WUBA (58同城)
- Mainly offers services on second-hand smartphones and household products.
- Recent launch of ‘qieke’(切克), targetting the fashion market (sneakers/fashion
brands)
- Reputational setbacks: transaction of Bungarus multicinctus (protected animal at
national level)
- Illegal transaction of commercial documents, and inappropriately high price
Duozhuayu (多抓鱼)
- Second-hand book markets: low price, high quality, repackaged and cleaned books
- Safe & efficient delivery methods → high costs for the company

5. Porter’s Five Forces
3. Threat of New Entrants/Potential Competitors - LOW Pressure
To define buyers on Xianyu:
- from internal perspective: people who purchase goods on the app.
- from external perspective: the app users.
- Buyers can also become suppliers in some cases.
- many enterprises have emerged: Zhuanzhuan, Duozhuayu(books), Guazi
website (second-hand cars), Plum (vintage luxury clothes);
- Zhuanzhuan and Xianyu has formed a duopoly market structure
- higher amount of active users than other counterparts and users are less
likely to switch to other rivals.

7. Porter’s Five Forces
4. The Bargaining Power of Suppliers - LOW Pressure
To define suppliers on Xianyu:
-from internal perspective, suppliers mean people or small companies to sell
goods on the app.
-from external perspective, suppliers mean the Xianyu App, especially the
regulation and organization system within the app.
- a platform offers direct interaction between customers and suppliers.
- lots of potential suppliers providing thousands of products
- many cheaters and uncertified sellers have harmed the trade process, and
Xianyu has improved their regulation system. (still need improvement)

8. Porter’s Five Forces
5. Rivalry Among Existing Firms - MEDIUM Pressure
- Xianyu is dominant, and a relatively stable competitive landscape has been
formed.
- Second-hand idle e-commerce has become a battleground for the giants to
dominate. Without the support of popularity, operational capabilities and
supply chain, it is difficult for entrepreneurs to gain a foothold.
- The second-hand e-commerce market for integrated categories is already in
the Red Sea, but there is still much to be done in the vertical segment, such as
luxury goods, electronic products, books and used cars.

9. The Business Model Canvas

10. Key
Partners
-online banking
services
-app developers
-logistic system -
coopetition with
over 50 recycling
companies a
Key Activities
-commerce
infrastructure
-assist micro-
entrepreneurs
Value Propositions
-a pioneer in the secondhand trading market
-advocate eco-friendly principles
-shared economy and sustainable lifestyle
-offer similar services or goods at lower price
-exchange and convenience
-grow business-adjust to the relationships
between customer and buyers/customers to
customers
Customer
Relationship
-online customer
services
-automated services -
self-services -co-
creation
-long-term
Customer
Segments
-Chinese
buyers
interested in
secondhand
goods and
services
-Chinese
sellers trading
secondhand
goods and
services
→micro
entrepreneurs
Key Resources
-financial resources
-customer databases
-experiences
-human resources
Channels
-XianYu app and
website
-taobao.com
-a premium channel -
social media
-offline campaign
Cost Structure
-cost-driven business
-fixed costs: IT, infrastructure development, human
resource management
-varied costs: operation costs, marketing and sales,
advertising fees
Revenue Streams
-Deposit pool for further investment
-Advertising
-premium for advanced shop features

11. (1) Key Partners:
-online banking services (Alipay & Ant credit pay)
-app developers
-logistic system (resources from Alibaba)
-coopetition with over 50 recycling companies, eg. Huishoubao
(2) Key Activities:
-develop commerce infrastructure
-provide a platform for secondary goods and services transaction
-assist micro-entrepreneurs to make profits
(3) Key Resources:
-financial resources (supported by Alibaba: Alipay, Ant credit Pay)
-customer databases(usage preference, etc)
-the existing need for second-hand-good-transactions
-abundant experiences of online C2C/B2C transactions (Alibaba)
-human resources (operators of Taobao & potentially draws position applications as Alibaba is a well-known
brand in online purchasing)

12. (4) Value Propositions
-a pioneer in the secondhand trading market
-advocate eco-friendly principles that idle goods have values
-shared economy and sustainable lifestyle
(5) Customer Relationships
-online customer services (7-days refunds, service support guarantee)
-automated services - automated alerts of free goods/services for consumers’ information
-self-services on transactions
-co-creation: asks users to rate sellers (sesame credits)
-aiming to cultivate a long-term relationship with customers
-not so costly as Xianyu is supported by Alibaba
(6) Channels
-XianYu app and website
-taobao.com (sometimes taobao.com also recommends users to buy products in XianYu)
-a new premium channel that allows brands to operate their own official stores (C2C-B2C)
-social media (WeChat and Weibo where they post the products)
-offline campaign (subway posters, campus onsite activities)

13. (7) Customer Segments
-Chinese buyers interested in secondhand goods and services
-Chinese sellers trading secondhand goods and services →including micro entrepreneurs
(8) Cost Structure
-cost-driven business
-fixed costs: IT(developing software), infrastructure development, human resource management
-varied costs: operation costs, marketing and sales, advertising fees
(9) Revenue Streams
-Deposit pool for further investment
-advertising
-premium for advanced shop features

14. Eliminate
-solely focus on trading fancy and new
goods
-build up an online shop
Reduce
-emphasis on brands (uniqlo, zara, etc)
-The trouble for finding buyers and sellers
-The time of selling products (only in 30s
and one key resale in taobao)
Raise
-credit assessment: manage credit risks
-pricing suggestion
-direct communication between sellers and
buyers
Create
-exchange platform for secondary goods
and services
-rental services including house renting,
car renting, etc
-an online second-handed community
with similar interests
Blue Ocean Strategy: The Eliminate-Reduce-Raise-Create Grid