The first major policy decision taken by Flipkart after passing into the hands of Walmart is to start a separate trading platform, going by the name '2GUD', to sell refurbished goods. To start with, the focus would be on electronic goods such as laptops, smart phones, among other things.
As a callow youth when I set out to buy my first car, a knowledgeable person by no means a wiseacre cautioned me against buying a second-hand car. His advice was not to buy anything second-hand except books. I heeded his advice with my first car but defied it when I went for a bigger one a few years later. It was from Maruti True Value.
The price for the model was within my reach but its brand new version was not. Hence I went for the so-called refurbished car. I paid dearly. The car gave all sorts of trouble soon enough and there was no warranty. The dealer washed his hands off at the very beginning by saying for an eight year old second hand car, there was no warranty.
To be sure, '2GUD' promises a limited warranty. But will that be a sufficient gravitas for the upwardly mobile and aspirational Indians? It is not as if there is no market for seconds or used goods in India. Olx and Quikr are online platforms used both by buyers and sellers of used goods and properties. But their role is only to bring the seller and buyer together. It leaves them to hammer out the nitty-gritty themselves.
Indeed they are not kept in the loop by both the happy and disgruntled users though the platforms urge them to do so. 2GUD however says it would be more hands on. It would sell the used goods, electronic items to start with on the back of limited warranty to gain trust of the customers who cannot afford the new products.
Surprisingly, it has not revealed how it is going to source the used items. Unless it buys used goods on a large scale, how would it sell them after refurbishing? Will it import them from advanced countries like the USA where condemned cell phones are deposited into a bin kept at strategic points by their manufacturers?
Prices of electronic items have been registering a progressive and steady fall thanks both to competition and refinement in technology through value engineering. Chinese brands take pride in positioning themselves as the cheapest thanks obviously to their formidable reverse engineering skills.
Japan humbled the US auto giants through reverse engineering. It remains to be seen if the upwardly mobile aspirational Indians are going to buy 2GUD refurbished goods. They might if the price differential between the brand new gizmo and the refurbished one is substantial.
But then what is substantial for a car may not be so for a smart phone. To wit, if a sedan is priced Rs 8 lakh but its refurbished version is available just for Rs 4 lakh, the difference is substantial. However if a new smart phone priced Rs 10,000 is available in the refurbished market for Rs 5,000 the difference is not substantial though in percentage terms in both the cases the differential is 50 percent
Flipkart is incidentally entering an uncharted territory --- employing engineers and technicians to refurbish used goods. When company service centers are at their wit’s end sometimes fathoming what the problem is with a malfunctioning gizmo, one wonders if the technicians at 2GUD would be in a position to restore the used items emanating from diverse stables to their unused status.
Brute force software enables hackers to unlock any software but is there brute force software to diagnose the defects in a used item emanating from diverse manufacturing units? Hitherto, e-commerce portals haven’t soiled their hands except while packing and unpacking. Servicing to refurbish is indeed going to take them into uncharted territories.
One then wonders if 2GUD is just a euphemism for selling factory seconds under the guise of used goods.
(The author is a senior columnist and tweets @smurlidharan)
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Updated Date: Aug 23, 2018 11:17:00 IST