Detailed narrative
1P Business Focus and Growth
ATRenew has firmly prioritized its 1P business model, which integrates C2B sourcing, compliant refurbishment, and B2C retail. This strategy has strengthened end-to-end capabilities, driving product revenue up 35.9% year-over-year to RMB 6.19 billion and 1P-C retail revenue growing 92.4% year-over-year. The 1P business achieved a gross profit margin of 15.7%, an improvement from 13.2% in the prior year, primarily due to efficient C2B recycling and a diversified retail channel mix.
Recycling and Fulfillment Expansion
The company capitalized on increased emphasis on trade-in programs by major manufacturers and e-commerce platforms. During the June 18 promotional period, the recycling value of mobile phones and consumer electronics at AHS Recycle increased 57% year-over-year, with door-to-door and in-store recycling orders growing 45% year-over-year. The nationwide door-to-door fulfillment team expanded to nearly 3,000 by the end of June, complementing the 2,117 AHS stores and enhancing sourcing and customer service.
3P Business Dynamics and Strategic Adjustments
Net service revenue decreased 4.2% year-over-year to RMB 410 million, mainly due to increased subsidies for merchants and strategic service fee reductions during promotional campaigns. PJT marketplace continued to expand into fragmented markets, reaching over 2.27 million registered merchants and achieving an 84.4% warehouse inspection penetration rate. Multicategory recycling services maintained over 30% year-over-year growth, while Gold service revenue declined 35% due to price volatility. Paipai consignment business grew 22.4% sequentially.
Overseas Expansion Strategy
ATRenew is advancing its overseas strategy, with export business growing rapidly and hitting HKD 120 million in monthly sales in June. The company launched 'PhoneSquare,' a global B2B marketplace leveraging its domestic PJT success, with plans to build regional capabilities in Dubai and Miami in the second half of the year. PhoneSquare is now available in Hong Kong app stores and aims to expand into Middle Eastern and Southeast Asian markets. The company is also cautiously exploring overseas 2C business under the 'RERE' brand with kiosks and physical stores.
Evolving Store Strategy
The company is making phased store count adjustments by repositioning poorly located stores and closing underperforming ones to solidify operations after rapid expansion. This is part of a new tiered store strategy, upgrading select locations into specialized luxury and sports theme stores, with plans for more rollouts. Management emphasizes disciplined budget allocation and resource reallocation for store-based fulfillment, utilizing flexible workforce solutions to control front-end operating expenses.