---
title: "The sustainable answer to second-hand growth in the post-State Subsidies era"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/33203807.md"
description: "Source: Dong Ge's E-commerce Analysis Author: Li Chengdong, Jin Shan The second-hand industry is breaking through the ceiling. As we enter 2025, many are concerned whether the support from State Subsidies is coming to an end, and whether the entire consumer electronics industry, especially the second-hand trade, will return to a state of slow growth and tough business. The quarterly report provides a different answer from ATRenew Inc. On August 20th, before the U.S. market opened, ATRenew Inc. $ATRenew(RERE.US) released its earnings announcement. The financial report shows that in Q2 2025, ATRenew's total revenue reached 4.99 billion yuan..."
datetime: "2025-08-21T09:52:03.000Z"
locales:
  - [en](https://longbridge.com/en/topics/33203807.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/33203807.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/33203807.md)
author: "[东哥解读电商](https://longbridge.com/en/profiles/2290632.md)"
---

# The sustainable answer to second-hand growth in the post-State Subsidies era

Source: Dongge's E-commerce Insights

Authors: Li Chengdong, Jin Shan

The second-hand industry is breaking through its ceiling.

Entering 2025, many are concerned whether the support from State Subsidies is coming to an end, and whether the entire consumer electronics industry, especially the second-hand trade, will return to a state of slow growth and tough business.**The quarterly report reveals that AtRenew has provided a different answer.**

On August 20, before the U.S. market opened, AtRenew Group (NYSE stock code: RERE) released its earnings announcement. The financial report shows that**in Q2 2025, AtRenew's total revenue reached 4.99 billion yuan, a year-on-year increase of 32.2%, far exceeding the company's own guidance upper limit of 27.4%.**

Profit performance also continued to grow steadily, indicating that revenue was not achieved through excessive investment. Non-GAAP adjusted net profit was 99.91 million yuan, a year-on-year increase of 24.1%.

How should we view AtRenew's performance? What is the driving force behind this round of growth, and is it sustainable in the long term? How has AtRenew achieved rapid growth in a slow-moving industry?

In recent years, the second-hand industry has become one of the few sectors that not only aligns with policy direction but also maintains high growth. Behind the prosperity, the once-quiet industry is witnessing a new wave of investment.

**Following the launch of the "second-hand smartphone supermarket" by AtRenew's B2B platform Paijitang in Shenzhen's Huaqiangbei, which combines warehousing and sales, Zhuanzhuan opened a second-hand luxury storage store in Beijing, Xianyu launched its first circular store, and another company, Shanhui Technology, recently made its third attempt at a Hong Kong IPO. How will AtRenew maintain its competitive edge?**

A company that has formed a closed-loop, full-chain industry is more likely to win this protracted battle.

**Revenue growth of 32%, profit growth of 24%, reaching new highs**

After delivering its best-ever quarterly report in Q4 last year, AtRenew's performance in Q2 this year hit another record high. Revenue growth reached 32%, faster than the growth rate when State Subsidies were first implemented. In Q2, the total volume of second-hand goods traded on the platform reached 10.3 million orders, a year-on-year increase of 22.6%. Objectively, part of the reason is also the low base from the same period last year when State Subsidies were not in effect.

Specifically, total revenue was 4.99 billion yuan. Among this, the 1P business remains the core driver, with product sales revenue reaching 4.56 billion yuan, a year-on-year increase of 34.0%. The high growth is mainly attributed to AtRenew's store expansion and trade-in scenarios.

The 3P business is also becoming a growth engine. Service revenue reached 430 million yuan, a year-on-year increase of 15.4%. The growth of multi-category business is the primary factor.

**The thriving second-hand trade has also led to the dilution of total costs and expenses as transaction volumes increase.** Overall, the growth is healthy and even lower than the business growth rate.**Although the industry as a whole is characterized by low frequency and low margins, some economies of scale are beginning to emerge.** Total operating costs and expenses were 4.92 billion yuan, a year-on-year increase of 29.6%.

Product costs were 3.96 billion yuan, a year-on-year increase of 32.3%. Fulfillment expenses were 410 million yuan, a year-on-year increase of 26.0%. The increase is mainly due to higher personnel and logistics costs resulting from increased recycling and trading activities. Sales and marketing expenses were 410 million yuan, a year-on-year increase of 14.9%. General and administrative expenses were 77.5 million yuan, a year-on-year increase of 6.9%. Technology and content expenses were 62.5 million yuan, a year-on-year increase of 25.5%.

Ultimately, operating profit reached 91.1 million yuan, turning a profit loss into a gain, compared to an operating loss of 5.6 million yuan in the same period of 2024. Non-GAAP adjusted operating profit was 120 million yuan, a year-on-year increase of 28.9%.

Actual net profit was 72.34 million yuan, also turning a loss into a profit, compared to a net loss of 10.67 million yuan in the same period of 2024. Non-GAAP adjusted net profit was 99.91 million yuan, a year-on-year increase of 24.1%.

As of Q2, the group's total cash and cash equivalents, restricted funds, short-term investments, and third-party payment platform account balances amounted to 2.35 billion yuan.

**It can be seen that the low-margin 1P business is bringing stable traffic, while the high-margin 3P business is growing rapidly and increasing profits. Why is AtRenew's performance continuing to surge?**

AtRenew has already made significant moves in the second-hand industry.

**Collective shift to offline: Stores become the industry's sweet spot**

This year, the second-hand industry has collectively focused on offline expansion.

First, AtRenew, which was the earliest to expand offline, opened a large store. It launched the first Paijitang mall in Shenzhen's Huaqiangbei, adopting a model that combines warehousing and sales, with consumer electronics available in stock. In Q2, Zhuanzhuan opened a second-hand luxury storage store in Beijing. Recently, Xianyu also began trial operations of its first circular store in Shenzhen.

It’s worth noting that the industry initially did not favor AtRenew's offline expansion model.**Founder Chen Xuefeng once recalled: "At the time, the traffic model of internet companies was in full swing. For an internet company to open physical stores was considered dirty, exhausting, and foolish, with almost no one approving." Why has the second-hand industry turned its attention to offline?**

**Stores are meant to alleviate traffic anxiety and address trust issues in second-hand transactions.**

Unlike traditional consumption, the second-hand industry is inherently a low-frequency, low-margin business with opacity. Physical stores can enhance consumer trust through services, and the "see it, get it" approach can dispel doubts. Direct sourcing can also reduce repeated reselling in the industry, lowering purchase costs and improving margins.

From opening its first store in 2013 to Q2 2025, AtRenew's total number of stores has reached 2,092, covering 291 cities nationwide.

**However, stores also have disadvantages—they are more costly than pure online models, especially for a low-frequency business like second-hand trade, where this issue can be fatal. Thus, it’s evident that AtRenew is not limiting itself to 3C electronics but is expanding into multi-category businesses.** Second-hand luxury goods, gold, premium liquor, and apparel can reach more consumers.

In Q2, the GMV of multi-category recycling reached 1.87 billion yuan, a year-on-year increase of over 110%, with multi-category revenue growing by nearly 110%. Gold and luxury goods were the main drivers, with gold recycling GMV increasing by 118% year-on-year and luxury goods recycling GMV rising by 63%.

**Most of the GMV growth can be converted into store profits.** Data from Q3 2024 shows that after deducting store and fulfillment expenses, 46% of multi-category recycling revenue contributes to store profits.

**Multi-categories are becoming a second growth curve,** and will continue to drive AtRenew's growth in the future.**Currently, only about half of the stores offer this service. As more stores adopt it, another wave of growth momentum will emerge.** As of Q2, 804 Aihuishou stores had launched this service, including 692 self-operated stores and 112 franchised stores.

Trusted consumer electronics serve as the foundation, providing steady traffic. Relatively frequent multi-category offerings reach more consumers and generate higher margins. AtRenew's offline stores have entered a virtuous cycle.

**Meanwhile, with the rise of instant retail, consumers have become "lazier." Building on its stores, AtRenew is taking another step closer to consumers—second-hand goods can now be picked up or delivered instantly.**

In Q2, the number of self-operated door-to-door delivery teams reached 1,160, with enhanced smart dispatching and fulfillment capabilities. Stores and door-to-door teams handled nearly 90% of orders in tier-1 and tier-2 cities and about 80% in tier-3 and tier-4 cities. Currently, face-to-face delivery orders in county markets account for less than 50%.

Beyond offline, AtRenew also supplements its traffic with online channels. Through its own app and JD.com's trade-in scenarios, AtRenew has gained significant incremental growth online with the help of State Subsidies.

**AtRenew has deployed a combination of strategies to reach consumers at the front end. However, relying solely on traffic is insufficient for sustained growth and could easily be overtaken by competitors. AtRenew has also standardized its back-end quality inspection, providing a foundation of trust for its stores.**

**How are brands and small-to-medium merchants being won over?**

AtRenew is cultivating a national first-choice recycling brand mindset among consumers while also making strides with manufacturers.

**AtRenew has already partnered with brands like Apple, Huawei, Honor, Xiaomi, DJI, and ZTE.** By the end of Q2, the B2B platform Paijitang had over 1.16 million registered and contracted merchants. The B2C consignment business Paipai saw daily in-stock inventory double compared to Q1, with Q2 GMV growing by 128% year-on-year.**Why are both brands and small-to-medium merchants drawn to AtRenew?**

The key lies in quality inspection capabilities.

Every second-hand product is unique, with scratches, accessories, and condition affecting its final price. Turning second-hand products into standardized items is a major challenge.

In the past, traditional stores relied heavily on inspectors' experience. Now, AtRenew has established a fully digital process, with its Dongguan automated operations center capable of fully automated inspections. It uses a centralized digital management system for tasks like transportation, sorting, quality inspection, warehousing, and shipping.

The Matrix 3.0 automated inspection system reduced losses due to inspection errors by 19% annually. AI image and sound wave algorithms automatically assess product appearance and internal quality attributes.

Beyond inspection, AtRenew also facilitates the subsequent circulation of second-hand products. **This is exemplified in the "compliant refurbishment" scenario.**

The second-hand industry is rife with irregularities, including unscrupulous actors using counterfeit parts for refurbishment to profit from price differences. Consumers struggle to identify fake components or internal refurbishment, which can pose safety risks. AtRenew's compliant refurbishment strictly follows guidelines, refurbishing only screens and batteries while disclosing all details to ensure consumer transparency. In Q2, compliant refurbishment accounted for 13.5% of 1P revenue. The "repair-on-demand" service expanded to laptops and smartwatches, with quarterly GMV exceeding 100 million yuan.

**AtRenew is continuously strengthening its supply chain capabilities, and these efforts are now benefiting end consumers.** Compliant refurbishment provides more retail-ready products across AtRenew's channels. In Q2, self-operated "strict selection" revenue grew 63.7% year-on-year, with self-operated product-to-consumer revenue rising to 34.4%, creating more value for consumers.

**Brand participation is increasing.** AtRenew has integrated with Huawei Mall and Xiaomi Mall, gaining market share. Its unique "Apple-for-Apple" trade-in model even offers discounts on certain models directly from manufacturers.

Some B2B merchants trust AtRenew's inspection capabilities. The proportion of Paijitang platform B2B orders inspected before warehousing rose from 62% in Q1 2024 to 73% in Q2 2025.

**The second-hand industry still has many small-to-medium merchants and regions beyond AtRenew's immediate reach. AtRenew needs these merchants to source products, while they need AtRenew's brand credibility and traffic exposure.**

Consignment is a model that meets both needs. The B2C Paipai team handles product and store management, traffic operations, and after-sales services. Under consignment, front-end displays, service standards, product quality, and after-sales are consistent and reliable.

With policy intervention and consumer demand, the second-hand industry is undergoing a major reshuffle, moving toward standardization. AtRenew, having established its own standards, is becoming a disruptor and an early beneficiary.

**The logic behind the boom in a slow-moving business**

The second-hand industry is highly complex, and AtRenew has tailored models for each segment. It has now formed a closed-loop, full-chain ecosystem encompassing C2B (Aihuishou), B2B (Paijitang), B2C (Paipai), and overseas operations (AHS Device).

**In an opaque, capital-intensive industry, a company that builds a closed-loop, full-chain ecosystem—though requiring significant upfront investment—can more easily maintain its lead once brand and scale are established.**

As perceptions shift, second-hand trade is not replacing new product sales but unlocking latent consumer potential.

Consumers are moving beyond marketing hype, realizing that second-hand iPads offer better value, some new luxury bags depreciate quickly, discontinued cameras have unique qualities, and high-value collectibles frequently appear on second-hand platforms...

Younger generations prioritize value over price. Domestic second-hand trade is breaking through traditional ceilings.

**According to third-party data from CIC, China's second-hand 3C recycling penetration rate is in the single digits, compared to over 30% in developed economies. With State Subsidies, AtRenew's growth story has only just begun.**

AtRenew's stock price dipped briefly following the earnings release. This was not due to performance issues but rather profit-taking after a 77% surge over the past three months. Short-term fluctuations do not reflect the company's intrinsic value. Optimistic about future prospects, AtRenew has initiated a three-year shareholder return plan, committing to distribute at least 60% of annual Non-GAAP net profit via dividends, buybacks, or both from 2025 to 2027.

In June, AtRenew released its fifth annual ESG report, setting its first carbon reduction targets—aiming to reduce Scope 1 and 2 greenhouse gas emissions intensity by 35% and Scope 3 by 50% by 2030, using 2024 as the baseline.

ESG efforts will also enhance the international image of Chinese brands, earning more overseas recognition.

As second-hand trade breaks free from countercyclical constraints and penetrates mainstream consumption, industry leader AtRenew is poised for new opportunities.

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