OLD IS GOLD: For India, Refurbished is As Good As New!BY Nitin Abbey | comments ( 0 ) |
Separately, the refurbished products are different from the ones available at OLX and Quikr, where the products are neither repaired nor provided a warranty. The refurbished items list includes factory (seconds) to eCommerce/ retail returns and open box products, aside from only second-hand-and-repaired products.
Opportunity in the space
The refurbished products market is anticipated to reach $12-15 billion in the year 2020. This space, which is largely driven by unorganised local retailers, is getting taken up by organised players slowly and steadily. What separates the two business models is the latter’s ability to completely transform the product and give it a complete ‘new’ look and feel. Many firms today have their firm fingers on this sector and aim at standardising and augmenting the pre-owned electronic devices market.
These players essentially aim at creating a dynamic marketplace where consumer can choose products with warranty and services attached with the help of service providers. Starting from GreenDust, Reboot, Overcart, Togofogo, Surpluss (individual entrants) on one hand and eBay and Amazon (eCommerce portals) on the other, many organised players are tapping into the opportunity.
Soumitra Gupta, CEO, Togofogo said: “At present, our industry is experiencing healthy competition and the existing companies have managed to inculcate interest amongst the buyers to invest into refurbished products as these products are also as good as new.” Togofogo’s Certified Preowned product is backed by superior refurbishment by Aforeserve, extensive quality check certification by Qutrust and one year warranty by Warranty Bazaar.
Saurabh Rai, CEO, Surpluss.in – the only-mobile marketplace for vendors to sell brand refurbished products in addition to overstock and aging inventory – added: “We are talking of at least 10 per cent to 15 per cent of all mobiles sold in the country to be of surplus value proposition. Of these, roughly 4 per cent to 5 per cent can be refurbished. We are talking of close to a billion US dollars’ immediate opportunity in mobiles alone.”
Reboot – a company that has pioneered a frugal Omni-channel market strategy, where in they have been operating through B&M stores, online marketplace and also putting in place a unique assisted Re-commerce platform (soon to be launched – REBO program) – claims that it has less than 2 per cent of returns. Rahul Chowdhury, CEO and Co-founder of Reboot said: “We give a one year replaceable warranty on our PC range, which means if something is wrong with our products, we give a full replacement on the product based on our warranty terms."
Surpluss, on the other hand, has industry standard returns policy for both card and COD payment modes and Togofogo acknowledges all returns by customers in case of any faulty products or mismatch. “We have a transparent there-day return policy. We have negligible return rate, as all our products undergo rigorous testing at our state of art facility infrastructure,” said Gupta of Togofogo.
Challenges in the sector
Like any other industry, the refurbished industry also could not escape the burns of challenges. All the popular sell platforms/ buy-back schemes have created an exchange for used products but with little or no emphasis on condition, warranty or buyer experience which are integral to the refurbished industry.
“For us, consumer experience of a refurbished product not only stands for functional and cosmetically working but we also take into consideration the emotional aspect from the box packing to warranty card to Driver CD... We go all the way into enriching the effort,” added Chowdhury.
For refurbished products, especially PCs, logistics is a massive issue. “The ‘Biker Delivery’ model has evolved due to the sonic pace of online markets but for products in the range of 5 to 15 kg weight bracket it still is very difficult to delivery the goods,” admitted Chowdhury.
Wouldn’t it be perplexing of all challenges to convince consumers who purchase devices based on aesthetics and the most in vogue products? “India is a developing country that houses thousands of vibrant population hailing from affluent families. This population mostly prefers brand new products as it reflects their status in the society,” agreed Gupta. Another challenge Togofogo is facing is that of customisation of refurbished products, which is high on demand but has hairline scope.
Tech and refurbishing centres
Reboot’s Gurgaon facility currently has the capacity of refurbishing about five thousand units monthly and is currently increasing their capacity to 10 thousand products by March. “Our Surat facility can refurbish as many as 1,000 units, and soon we are coming up with a facility in Telangana,” told Chowdhury.
On a larger scale, the real opportunity that lies ahead of us is massive and one that cannot even be fully imagined or explained as market forces play out, Chowdhury added.
“Supported by a team of over 4000 (plus) engineers, technicians and service executives, Aforeserve handles more than 70000 service calls every month, to install, maintain, refurbish and dispose their ICT assets in a cost-effective, efficient and viable manner. Some of our clients are HCL, Lenovo, Micromax and so on,” said Gupta.
Many companies are finding potential in refurbished goods sector in India, which has a $15 billion worth of offline market in the country. With increasing demand of refurbished products, the segment is expected to grow exponentially in the coming years.
The Huge Used Goods Market:
Indian households will dispose off used goods worth Rs 115,000 crore in 2015, up from Rs 80,000 crore in 2014 and Rs 60,000 crore in 2011, according to a study by Assocham.
Another study by OLX done across 16 cities revealed that urban households are resting on goods as diverse as a sofa and cars and worth Rs 56,000 crore they no longer need.
Out of global retail, which is $12 trillion about $650 billion (which is 5-7 per cent) is the size of the used goods market, says a homegrown eCommerce firm.