Xianyu remains the undisputed leader in the consumer-to-consumer (C2C) second-hand trading market, but the range of alternatives available to users is expanding. The room for it to take things at its own pace is shrinking.
The ever-versatile Xianyu is once again embroiled in a pornography-related controversy. On September 21, the topic "Xianyu involved in pornography" surged to the top of the hot search list. Xianyu swiftly responded by banning nearly 100,000 accounts suspected of traffic diversion, yet the public discussion has not subsided.
This is not the first time the platform has faced such a scandal, but the circumstances are markedly different from before. As of this year, Xianyu has 217 million monthly active users, a year-on-year increase of 19.64%, ranking first in growth among e-commerce apps and once even surpassing Xiaohongshu. Its C2C transaction Gross Merchandise Value (GMV) has exceeded 580 billion yuan, with a market share of 39.8%, firmly holding the top position in the industry.
The troubles do not end there. Sellers complain that free traffic has vanished, with exposure plummeting from tens of thousands to a few hundred. Xiaohongshu has entered the fray with a 0.6% fee, with industry insiders saying it is "crossing the river by feeling the stones" using Xianyu as a guide. Meituan has launched "Miaowa Side Hustle," and Zhuanzhuan is planning a Hong Kong IPO. Xianyu may still be Xianyu, but the capital that once allowed it to rest easy seems to be dwindling.
A Decade Marked by Repeated Scandals
According to a report from Hebei Economic TV, a reporter on Xianyu contacted a grey industry chain that openly priced minors as commodities under the guise of model doorstep photography appointments, doorstep fitness training, and swimming lessons. After private communication, the other party would divert the conversation to WeChat. Once added as a friend, a price list was sent, ranging from massages to "full service." Another account, under the banner of "virgins available to book," openly peddled resources involving transactions with minors. The youngest girl involved was just 14 years old, with a quoted price of 20,000 to 30,000 yuan. Customer service even claimed they could arrange for a "certification" at a top-tier hospital.
On the day the public outcry escalated, Xianyu quickly responded, stating that a special task force had been established. Of the 10违规 items exposed in the report, 6 had already been automatically removed by the system before the report, 3 were handled after the exposé, and 1 was custom anime content that did not violate rules. Xianyu stated that this year alone, it has frozen 98,358 accounts used for pornographic traffic diversion and assisted police in dismantling 15 related criminal gangs.
This is not the first time Xianyu has been involved in such scandals. In 2016, undercover reporters found that same-city chat companion services on Xianyu had explicit price tags. In 2019, People's Daily questioned how second-hand platforms could become convenient channels for pornographic transactions. In 2020, the Cyberspace Administration of China supervised Xianyu's self-inspection, identifying nearly 160,000 potentially harmful products. In 2021, Xianyu, along with 11 other second-hand trading platforms, was collectively summoned for talks by the Jiangsu Provincial Consumer Protection Committee. In 2024, Sichuan Chang'an Net published an article titled "Xianyu Turns into 'Yellow Fish', What Responsibility Should the Platform Bear for Pornography Issues?" In 2025, China Central Television exposed a chain of pornographic transactions conducted through "sign-holding" (jupai) services, involving minors. In June 2026, a reporter from The Paper spent just 8 yuan to purchase photos of minors. Over the past decade, through multiple rounds of exposure, the trajectory remains strikingly similar: media exposes the black industry, the platform bans accounts, issues a public statement, and once public sentiment cools, the black industry resurfaces.
Strictly speaking, limitations in the review mechanism are an objective factor preventing the complete eradication of these problems. Xianyu's customer service explains that product listings primarily rely on machine review, with a review cycle of 6 to 24 hours. Subsequent spot checks are also mainly machine-based, with human intervention mostly handling user appeal cases. The black and grey industries constantly change their coded language, making it difficult for machine recognition to keep pace. Xianyu acknowledged in its statement that the evolution of coded language by these industries is frequent and endless.
From an industry perspective, issues like pornographic coded traffic diversion, off-platform违规 transactions, and online harm to minors are common governance challenges faced by all internet platforms, including WeChat, Taobao, Pinduoduo, JD.com, Douyin, Kuaishou, and Xiaohongshu. They are not unique to Xianyu. Surface-level rectification through account bans and inventory clearing alone is unlikely to achieve a thorough eradication.
However, when applied to Xianyu in its current state, this problem carries a different level of risk than before. Han Xiao, a lawyer at Beijing Kangda Law Firm, stated in an interview with Beijing Time that under the Cybersecurity Law, platforms failing to fulfill their disposal obligations could face fines up to 10 million yuan and may be ordered to suspend relevant business, rectify operations, or even have their websites or applications shut down. A point of reference is Kuaishou, which was previously fined 119.1 million yuan for content violations and ordered to rectify within a specified period.
The Loss of Privilege for Unrestrained Growth
Beneath Xianyu's long-standing lax governance and the persistent failure to curb black and grey industries lies a fundamental reason: the unique positioning logic that Alibaba has given it over the years.
As early as 2020, then-CEO of Xianyu, Chen Lei, clearly defined its role: within the Alibaba system, Xianyu is a "traffic producer, not a consumer." He also stated that Xianyu's transactions were "not aimed at pursuing efficiency" and that it had always been "close to money, but far from making money." According to a report from The Beijing News, Alibaba's expectation for Xianyu at the time was to develop it into a national-level application, with the goal of "user penetration" rather than profitability.
Under this assessment system, platform governance and risk control compliance were never top-priority metrics. To maintain massive UGC activity and lower barriers for user onboarding, Xianyu has long maintained extremely low entry rules: individual sellers require no business license, no deposit, product listing thresholds are very low, initial reviews are lenient, and the cost of violation is almost negligible. This unrestrained model was the core advantage of Xianyu's rapid expansion, but it also became the breeding ground for black and grey industries. Various coded traffic diversion, grey transactions, and违规 content have taken root on the platform, recurring without being fundamentally resolved because, in the past, Xianyu did not pay a commercial price for governance loopholes.
But after 2023, Xianyu lost its privilege of unrestrained growth. In November 2023, at Alibaba's quarterly earnings call, CEO Eddie Wu announced the first batch of strategic innovation businesses. Xianyu, along with 1688, DingTalk, and Quark, were dubbed Alibaba's "Four Little Dragons." Alibaba stated that for these businesses, it would break past positioning restrictions within the group and invest continuously over a 3-5 year cycle. In December of the same year, Xianyu was further upgraded to a first-level business under the Taotian Group, with its head reporting directly to the group's CEO. With a higher status came higher expectations.
After Joe Tsai and Eddie Wu took the helm of Alibaba, they explicitly stated that core businesses need to focus, while non-core businesses must have "self造血" (self-sustaining) capabilities. This means that Xianyu, now elevated to a "strategic business," still needs a clear path to commercial monetization to continue receiving the group's investment. In other words, Xianyu must prove it can make money. Ji Shan, then President of Xianyu, echoed this sentiment. In a 2025 interview, he stated that unlike the past when revenue was not a key performance indicator, 2025 would involve more proactive thinking about how to make money, aiming for growth based on both user scale and revenue.
Consequently, the old logic no longer holds. In September 2024, Xianyu officially ended its decade-long free era by charging all sellers a 0.6% basic software service fee. In April 2025, fees were increased for the mobile phone category. By April 2026, the fee rate for Yu Xiaopu (Fish Shop) sellers was uniformly raised from 0.6% to 1.6%, the single-transaction cap of 60 yuan was removed, and the fee calculation base was expanded to include the full amount including shipping and platform subsidies.
However, while holding 200 million monthly active users, occupying a strategic position, and accelerating commercialization, the platform's risk control and governance mechanisms, which have been in place for years, have not kept pace with the speed of commercialization. The Economic Daily commented: "Fees have increased, but services haven't kept up." After the fee adjustments, the platform's charging level is now close to that of traditional e-commerce, but it has not synchronously upgraded key areas such as product quality inspection and after-sales dispute resolution. Governance loopholes that were once tolerable are no longer just harmless platform blemishes; the compliance costs and operational risks have both been magnified.
Xianyu can no longer afford to be "idle."
Xiaohongshu and Meituan Join the Fray
Xianyu also has new "troubles" to deal with. On social media, users are constantly posting questions about why traffic on Xianyu is decreasing. "A few days ago, my exposure on Xianyu was tens of thousands; today it dropped to a few hundred, and it's not coming back..." users complain about the overnight evaporation of traffic. Some people have had items listed for several days with page views stuck in single digits.
Traffic is disappearing, but not for everyone. Chenghao, a professional seller with nine years of buying and selling experience, told Phoenix Net Technology that the platform's traffic logic has changed to "exposure for money," without evaluating the quality of the product or content itself. To get exposure, one almost has to pay for it. A merchant primarily dealing in digital products revealed that the monthly recharge for "Super Exposure" has increased from 3,000 yuan to 6,000 yuan. "After recharging, monthly sales can reach 500,000 yuan; without recharging, it's only around 100,000 yuan." Chenghao put it bluntly: "Without capital investment in traffic, there is almost no room for survival. Many small and medium-sized sellers who were originally willing to operate long-term are losing confidence. This is a case of bad money driving out good."
"I won't recharge for exposure on the platform. My store's orders have already decreased significantly. Other veteran players and I are currently shifting our focus to other platforms." Many sellers share Chenghao's view. On social media, several Yu Xiaopu sellers have stated they have exited store benefits and returned to the regular seller model. As sentiment escalates, the discussion among sellers has shifted from "whether to close Yu Xiaopu" to "whether to leave Xianyu."
While Xianyu experiences seller turbulence due to commission hikes, Xiaohongshu is quietly promoting its "personal selling" feature, which many sellers view as a potential destination. This feature also charges a 0.6% technical service fee. Users can publish a note and attach a product for sale, requiring no store opening, no deposit, and just a real-name authentication to start trading—an approach industry insiders describe as "crossing the river by feeling the stones" using Xianyu as a guide.
Meituan has also entered the arena for the first time with "Miaowa Side Hustle," covering services such as game companions, workplace tutoring, creative design, emotional companionship, niche interest classes, and life errands. The entry barrier is extremely low; service providers do not need corporate qualifications, business licenses, or deposits, and can list their services after real-name authentication.
Traditional competitors are also accelerating their efforts. Zhuanzhuan has established intelligent quality inspection centers in Beijing, Qingdao, Shenzhen, and Chengdu, and has developed its own "AI Photo Verification" system. Reports indicate it plans to launch a Hong Kong IPO within the next three years and is setting up an international business headquarters in Hong Kong to expand its second-hand trading services overseas. Meanwhile, Aihuishou's parent company, Wanwu Xinsheng, has delivered its best financial report since listing: in 2025, annual revenue reached 21.05 billion yuan with a net profit of 340 million yuan, achieving full profitability under GAAP standards for the first time.
Xianyu remains the absolute leader in the C2C second-hand market, but the choices available outside are growing. Xianyu's attractiveness to sellers is being gradually eroded by its own fee-increase pace. The space for Xianyu to take things slowly is getting increasingly crowded.
Disclaimer: This content is reproduced from a cooperative media outlet and is for informational purposes only. It does not imply endorsement of its views or the accuracy of its description. The article content is for reference only and does not constitute investment advice. Investors operate at their own risk.
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