Flipkart's 2GUD promises refurbished products at 'great prices'; execution key to tapping cost-conscious shoppers, say experts

What do most people do when they upgrade their phones or buy a new laptop? They sell the old via platforms for refurbished goods. The most-sold items online in the refurbished category are smartphones, laptops, headphones, watches, small appliances and Kindle e-readers, to name a few.

The refurbished goods market in India will be worth an estimated $20 billion in the next five to six years.

Smartphones, the most popular product in the refurbished category, saw volumes grow by close to 25 percent in 2017. It crossed 12 million units in India, according to Counterpoint research’s report -  Technology Market Research.

The global market for refurbished smartphones grew 13 percent year-on-year in 2017, reaching close to 140 million units. By comparison, the global new smartphone market grew a scant three percent last year, thus being outpaced by refurbished ‘second-life’ smartphones, according to the latest data from Counterpoint’s Refurbished Smartphone Tracker.

Flipkart logo. Reuters image.

Flipkart logo. Reuters

India's refurbished goods marketplace houses some established and well-known names like Shopclues, OLX, Quikr, among a host of others. Besides, with social media gaining much currency, several Facebook and WhatsApp groups too act as a channel for those interested in selling or buying refurbished goods. It is in this growing market that Flipkart has rolled out its platform for refurbished goods -- 2GUD.

“We will keep evolving and bringing newer formats, categories and features which cater to the needs of our value-conscious middle India," Flipkart CEO Kalyan Krishnamurthy said, adding that all eBay.in sellers and customers will be migrated to the new platform.

"The new platform has a different value proposition compared to Flipkart, and will cater to a different target audience. We are committed to investing in this independent brand," he pointed out.

But will Flipkart be able to cash-in on its brand name and succeed?

There are early movers in this space. Think Quikr, OLX, GreenDust, Reboot, Togofogo, Overcart, Shopclues and Amazon.

According to a survey by Quikr, people who prefer pre-owned goods are chasing better pricing, easy availability, doorstep service and a short-term requirement. The majority of people who lean towards this segment are in the 20-29 age group and about 54 percent of those polled said they prefer refurbished goods for better pricing and easy availability of products.

Amazon promises fast shipping

Amazon which rolled out its ‘Amazon Renewed’ programme last year, has found customer demand across categories including smartphones, laptops, headphones, watches, small appliances and Kindle e-readers to name a few.

Vivek Somareddy, Director- Seller Services at Amazon told Firstpost, the refurbished goods category is growing 300 percent y-o-y with over 70 percent of all orders coming from cities like Kanchipuram, Secunderabad and Surat to name a few. This category has become a ‘go to destination’ for Indian customers who aspire to buy high quality aspirational products at more affordable prices, he said.

“Certified refurbished products are worked upon by the original manufacturers or professional refurbishers in adherence to our product quality policy. Customers purchasing products through Amazon Renewed get high quality, like-new products at a competitive price – in fact, they can save up to 50 percent while purchasing a refurbished product vs the purchase of a new product,” Somareddy added.

Amazon, however, has a strict policy. "We have a very strict policy regarding quality and under this program, only selected sellers who maintain a high quality and performance bar are allowed to offer certified refurbished products on Amazon.in.

"The refurbishment process for this category typically includes a full diagnostic test performed through industry standard applications, replacement of any defective or damaged parts, a thorough cleaning and data wiping process, and finally the repackaging in a brand-new box. The products come with a minimum of six months warranty offered by the brand or the seller of the product and are available for free and fast shipping with Amazon’s Fulfilled by Amazon (FBA) shipping service."

Re-New eyes 16 million customers

ShopClues runs Re-New Gadgets for refurbished goods. Re-New clocked Rs 4.5 crore in sales from refurbished and unboxed electronic devices alone, including laptops, smartphones, and tablets, for the month of July. It is looking to double GMV growth with a 16 million customer target in 2018.

“ShopClues had long identified the massive opportunity around the refurbished category; specially the renewed smartphones segment, which according to industry estimates, is set to grow by over 27 percent in 2019. We have almost doubled our customer base from eight million to 16 million within two years and our success has given us confidence to offer more than 400 stock selling units from different brands in the smartphone category.

"Also, soon ShopClues will be launching a full assortment of laptops and TVs from HP, Dell, Apple, Asus, Lenovo, LG, Sony and Samsung for its customers,” said Radhika Aggarwal, co-founder & Chief Business Officer, ShopClues.com

There is a need for more players in the refurbished goods market in India, as there is a market for used products that can be recycled and upcycled, said Devangshu Dutta, Founder-Chief Executive, Third Eyesight.

When people move cities, countries, there are a number of products that are used for a short time and have not lived their full life-cycle, and refurbished goods players come to their aid. However, he said, it is all about peer-to-peer trust.

“If the platform stands by some kind of a guarantee, it will improve that transaction and increase the number of transactions. Else, it does not matter who is doing it. Just because Flipkart is a known name, it won’t find it easy navigating this space,” Dutta added.

The Flipkart advantage

The post-purchase warranty of three to twelve months for each product would be serviced through an extensive network of service centres across India, said Flipkart's Krishnamurthy. "Additionally, users will always be assured of convenience in payments and logistics," he added.

Flipkart 2GUD

Flipkart’s new move toward refurbished goods is a good experiment on its part, said sector specialists. Indian consumers want to own good products but a large number of them have low purchasing power. Beyond the pre-owned two-wheeler and four-wheeler market, there aren’t many platforms which cater to this need. At best, single brand players remain an exchange platform, they said.

But the challenge for Flipkart is to ensure quality. “Customers want goods to perform and will need after-sales services, as original equipment manufacturers won't be able to provide warranties with the product out of the warranty period. And with products being refurbished, no manufacturer can provide guarantees. Flipkart has the advantage, with technology and logistics. 2GUD is a good opportunity but execution will be the key [to the platform's success],” said Arvind K Singhal, CMD, Technopak.


Updated Date: Aug 24, 2018 19:28 PM

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