Why Flipkart, Amazon Are Wooing India's Refurbished Phone Market
The refurbished mobile phone market in India is huge but mostly unorganized. Now, online commerce majors such as Flipkart and Amazon are looking to capitalize on this booming segment. While the latter has already set up a dedicated store for selling of used and refurbished products, the latest buzz is that Flipkart is gearing up to sell refurbished smartphones as part of a move aimed at managing high return rates of handsets.
As per reports, Flipkart’s entry into smartphone recommerce comes after the company lost its price advantage post the introduction of GST. Nonetheless, this Diwali, Flipkart-certified refurbished smartphones will be sold on the online marketplace and offline outlets. According to a report in Economic Times, the company is looking to team up with distributors for offline sale. Flipkart’s in-house logistics arm Ekart will be handling deliveries.
The report quoted a senior executive who informed that Flipkart, already saddled with lot of return inventory, plans to get them checked and certified to sell them as Flipkart-certified refurbished handsets. The refurbished phones will likely be sold at around 60%-75% of the original value. The company is planning to sell smartphones from popular brands like Lenovo, Panasonic, Motorola, Sony Xperia, Micromax, and Samsung.
Flipkart’s biggest competitor Amazon is also capitalizing on the country’s growing refurbished commerce market, by setting up a dedicated store for selling refurbished products of renowned brands such as Lenovo, Samsung, OnePlus, Xiaomi, Motorola, and Apple. [Read the full report here]
The refurbished market in India is not a newfangled concept. It has existed in the country for years now, operating as an underrated market in an unorganized fashion. The market now pegged at $15 billion, is twice the size of the e-commerce market in the country and will continue to exist.
Read more: What GST Means For Online Fashion Retailers
Not only in India, globally too refurbished phone market is likely to grow bigger in the coming years. According to New York research firm Persistence Market Research (PMR) its about to record a high single-digit compound annual growth rate (CAGR) by 2025. PMR’s latest report found the market for refurbished and used cell phones expanding by 8.9 per cent CAGR through 2017-2025 and global sales of used and refurbished mobile phones in 2017 account for revenues worth US$19.7 billion and is expected to reach US$40 billion by the end of 2025.
Experts believe, there are a couple of factors for this growth worldwide. Some of manufacturers are adopting green initiatives and implementing recycling and reusing policies. For example, RLC (Reverse Logistics Company) owned GreenDust.com, is a site that sells refurbished goods at discounted prices. Moreover, it also offers discontinued or overproduced branded products.
According to the company, Indian consumers are very budget conscious, and don’t want to compromise on quality either. To meet these requirements, RLC makes sure that every product it sell goes through a thorough quality control process. The company also provides an option for buyers to opt for extended warranty. It claims that this initiative isn’t only beneficial to consumers, but will also help the manufacturers keep up with the e-waste regulations. All this has given customers a choice in the market to look at a used smartphone especially considering prices hover around a mid-point compared to new.
On the other hand, there is still a tangible lack of consumer trust in refurbished and used mobile phones. Uncertainty about the quality of such devices is thus hampering the growth of the worldwide market. There is limited warranty as well on such products.
Analysts opine that the online marketplaces will have to open newer channels for sales. In India, as the online market contribution to total smartphone sales has stagnated at around 30 percent and hence future growth for Flipkart and Amazon in this category will come from offline sales and venturing into newer areas like refurbished handsets. At the same time, the growing number of privately sold phones will stir up competition in the take-back market and drive communications services providers and refurbishers to engage in more aggressive marketing campaigns and new incentives.
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