Ponhu Luxury, a sourcing platform for second-hand luxury goods, announced that it has raised RMB 175 million in Series B round of financing, led by INCE Capital.
Steven Hu（胡斌）, founding partner of INCE Capital, said that, "We see the potential of Ponhu for three reasons: first, market. The future lies in the second-hand economy. Yet the market is large but very fragmented, which leaves huge room for upgrading. Second, Ma Cheng and Song Bo have made it very clear to me that the C2B2C model is a healthy and profitable model at this stage, and that the successful repurchase rate of to-C is low, which proves to be a less ideal model for now. Third, the team. Knowing each other for a long time, we are a team that is good at saving and making money and is always ready to fight. We have been through various traps and pitfalls, which turned out to be very precious experience in the Internet industry. "
Below is coverage from 36Kr
Author: Meng Yue
Founded in 2015, Ponhu Luxury initially entered the second-hand luxury goods market adopting a C2B2C model, mainly providing consignment services to close deals between buyers and sellers. Later, it strengthens its front-end control of goods through focus on recycling and joint-business system, and has now turned to the to-B sales, which is a model similar to “Aihuishou”, a platform for secondhand items trading.
During the five years since its establishment, Ponhu has been through three crucial moments of development.
1. Recycling Business
After more than a year of operation, the team found that a simple to-C model did not work well since its supply capacity was rather limited. Therefore in early 2017, the team started their recycling business with a to-B model. It also launched the "Ponhu Appraisal" app receiving 80,000 to 100,000 appraisal service orders per month that can effectively absorb a certain percentage of product selling from consumers and small business via Ponhu. In 2017 alone, about RMB 100 million worth of goods were recycled through Ponhu.
In addition, Ponhu has also successively been aligned with the credit system of Xianyu, JD.com, and Zhuanzhuan, to address the sales needs of consumers on these platforms.
2. Development of Brick-and-Mortar Stores and Partnership with Shops
At the end of 2017, Ponhu began to set up brick-and-mortar stores, hoping to facilitate the circulation of goods. At present, Ponhu has 4 self-operated stores, and more than 50 franchise and joint-operated stores.
All offline stores can get access to the "Ponhu Cloud Store" system where all products from self-collection and joint-operated shops will be incorporated, making sure the inventory information is accessible to all stores so that goods can be sold across the platform. And this has provided Ponhu with a pool of diversified products. There are currently over 40,000 SKUs in the "Cloud Store" system, of which about 15,000 are self-operated goods.
3. Shifting to to-B Sales
In order to obtain more stable and efficient sales, Ponhu decided to shift its sales focus from the consumers end to the business end in May 2020, and began to systematically supply other second-hand luxury platforms and small and medium distributors. It also exported goods to the United States and Japan, partnering with platforms such as RealReal, REBAG, etc.
At present, 70% of Ponhu’s sales comes from businesses, of which proportion will continue to expand as time goes by. After refocusing on the business end, the duration of sales of the platform has also been controlled within 30 days, which was greatly shortened.
Ma Cheng, founder of Ponhu, believes that Ponhu’s advantage lies in the front-end control of the goods. The team gradually improved the platform's authentication and appraisal system through the accessibility to a large amount of collected data. At present, the recycling and appraisal team has more than 150 people, the number of which will be doubled this year. Ponhu’s CEO Song Bo told 36 Kr that the turnover rate of second-hand luxury goods is relatively low, so the supply chain must be the core. There must be a circulating supply of stock in the industry, which is why Ponhu must take control of the goods.
Song believes that China's pre-owned luxury goods market is still highly fragmented, where various platforms are yet to be able to compete with each other. Joint efforts are required to change how consumers perceive the second-hand luxury goods, transforming more and more consumers who purchase entry lux or from lower-tiered market to become buyers of second-hand luxury goods.
It is reported that Ponhu's revenue in 2019 was about RMB 600 million, and GMV exceeds RMB 1 billion.