Customer to customer (C2C) secondhand business in Korea is growing rapidly and, excluding real estate, is estimated at USD 19 billion annually. As the market is expanding and secondhand business is shifting from the web to apps, secondhand transaction apps are competing and collaborating with each other more and more.
Quicket, backed by Naver and Kakao, is currently South Korea’s preeminent secondhand business giant. It owns a community-powered shopping app called Bungaejangter, as well as Sellit, a secondhand selling and buying concierge service that it acquired in a merger this past September.
Tech giants in China are also showing interest in secondhand business. This past April, Tencent invested USD 2 billion in 58 Tong Cheng, the developer of Zhuan Zhuan, a secondhand goods transaction platform. Xian Yu, an app for transactions of used goods, developed by Alibaba, is the sixth largest secondhand business app in China, according to data from May 2017.
As stated above, the secondhand transaction business is already very competitive, and the startup Daangn Market (which means “near you” or “carrot”) is growing its business by targeting a niche market. Daangn Market’s main rule is that only users within 6km can buy and sell goods from and to each other. We had a chance to meet and chat with the two founders of Daangn Market, Jaehyun Kim and Yonghyun Kim.
Platum: Where did the idea for this business come from?
Daangn Market: We worked at Naver and Kakao before starting this project. Like at other companies, there was a board at our office, and colleagues sold and bought things to and from each other very actively. That is where the idea came from, and we began to test the idea with large IT companies in Pangyo, an area regarded as the Silicon Valley in Korea.
Platum: How did you test the service?
Daangn Market: At first, we acquired 2,000 users each week only in Pangyo. People could only sign in with their work email address. After verifying the email address and whether they actually worked for certain companies, they were allowed to join in secondhand goods transactions. However, in Korea, there are not many areas with a lot of IT companies other than Pangyo, so we had trouble expanding. After a period of trial and error, we allowed people to engage in transaction based on their location rather than employer.
Platum: What is the user gender ratio?
Daangn Market: Currently 75% of our users are female, and the other 25% are male. There are more people in their thirties and forties than twenties.
Platum: Secondhand goods transactions are very popular among mothers in Korea. Do you see “mom cafes” as your competitors?
Daangn Market: They just have a similar target user base to us, which does not necessarily make them competitors. We do not see any competitors yet. The user base of other secondhand goods transaction services, including Bungaejangter, is mainly made up of people who are between ten and twenty years old. As stated before, our main users are generally thirty to forty-year-olds who usually have kids.
Platum: Do you usually create region-based spaces like you did with the Pangyo?
Daangn Market: Yes. We break down the secondhand goods transaction process into three steps. Users can only engage in transactions with other users who live within 6km. Goods that are posted further than 6km are not searchable. Also, If 350 people request to open a space for their city, we manually open one, so many towns and cities can use our service.
Platum: Can you increase your revenue if you do not limit the distance? What is the main reason for the 6km limit?
Daangn Market: We originally started with the idea that Daangn Market could revitalize the second hand goods market for people located close to one another. If it is not distance-limited, the service would not meet our original criteria, and it would not matter that we could potentially make more money. Our ultimate service will be very focused on regional business. Naver and Kakao are the main big players in the advertisement markets, but the region-based business market still has no clear winners. As a method to tackle this market, I came up with this business: secondhand goods transactions. Segregating the areas and limiting the distances are the key features of our service.
Platum: How does your data look?
Daangn Market: The total amount of sales went up eight times, putting the number at USD 4 million. DAU is 120,000 and MAU is 400,000, these both increased up tenfold. The average amount of time people spend on our app is 18 minutes and 46 seconds. People usually spend 40 hours on Facebook and 25 minutes on Instagram, so our numbers are not bad.
Platum: Daangn Market claims that users open the app 25 times a month for 18 minutes a day on average. What do you think the reason is?
Daangn Market: 10% of the time, people try to make transactions with people with whom they have already bought things from or sold things to. For instance, if parents with a five-year-old kid buys toys from a parent who has a six-year-old, they will possibly conduct other transactions. This is a pattern that does not exist in other secondhand goods transaction services. Also, Sometimes users do not necessarily need to buy things, but they get on our service to see if there are any decent goods for sale or if people with whom they have completed transactions are selling other things. It is like going to a market near your home, but instead it’s online.
Platum: How are you handling fraudulent goods and transactions?
Daangn Market: We try hard. The core part of what we do is to check fraudulent dealings through machine learning. We are training computers to recognize the common patterns in fraudulent transactions, and this will allow our computers to automatically delete posts that include those fake patterns. The postings with high fraud possibilities are automatically deleted. Alcohol or cigarette-related postings can also be filtered since they are illegal to sell online. Over 100,000 postings are uploaded a week, so it is necessary to comb through all the suspicious transactions. However, 1,000 postings or even 10,000 postings are not difficult to analyze if machine learning programs are well developed. We work efficiently with technology and keep our team small.
Platum: How many people are in your team?
Daangn Market: We are nine total, but we have six developers, so we always make data-driven decisions.
Platum: From where do you want to receive investment in the future.
Daangn Market: We hope our investors understand our business and its direction. As stated before, we aim to build a business related to region-based advertisements and transactions. Currently, Daangn Market is becoming more famous all over in Korea. We plan to expand as a Q&A service that supplies region-based information in the near future. We want our investors to know our capabilities in the fields of region-based advertisements.
Platum: Recently, some startups secondhand goods dealings were acquired by big companies. Do you expect to be acquired?
Daangn Market: We will continue to grow our business. We want to create various services related to region-based business that go beyond secondhand transactions.
Platum: At last, what are the short and long-term goals for Daangn Market.
Daangn Market: Our short term goal is to grow our MAU 10 times more. We currently have 400,000 users. In the long-term, we want to expand our services into different sectors. After building a strong foundation in Korea, we are interested in expanding our business in Southeast Asia and Europe. But first, Korea is our main stage. We will keep going. Please keep your eyes on us.
(Top photo from Baidu Images.)
This article, entitled “Interview: Why secondhand goods transaction app Daangn Market targets short-distance deals”, was written in Korean by Platum, edited by AllTechAsia.