As smartphones penetrate deeper into the tier II and III cities in India, a host of ingenious Indian entrepreneurs have struck gold and barged into an untapped market worth billions of dollars, feeding on the aspiration of middle and lower income users to own premium gadgets while satiating the sellers’ anxieties of obtaining the right price for their devices.
Welcome to the business of selling refurbished phones. No, not the way it is done from brick and mortar stores, but the smart way startups like Togofogo, Budli, hyperXchange, Cashfiy, Yaantra.com, Instacash, Moswap, Mobiles4sale, Atterobay, Buynsellmobile, Sellyt, among others, are going about it.
Unlike the physical stores, these players have revolutionised the way gadgets are sold by seeking details about the device and then using a software to gauge the ‘health’ of the operating system in it. By analyzing the hardware and the software a price is quoted. If the customer is satisfied, he can ask for a home pickup and get cash in return.
Considered as a USD 45 billion market in India, the sector has been growing further since telecom giant Reliance introduced Jio, its 4G service that made data packs affordable for almost everyone. E-commerce giants have so far been able to tap only 7-8% of this market.
A 2016 report by Deloitte titled, “Used Smartphones: the USD 17 billion market you would have never heard of” states, “…Worth $17 Billion in 2016 and with 50 percent year-on-year in growth, the used smartphone market is forecast to grow four or five times faster than the overall smartphone market…We predict at least 10 percent of premium smartphones purchased new in 2016 will end up having three or more owners before being retired and will still be used actively in 2020 or beyond.”
“The market is currently so huge that right now there is place for all, and no competition has arrived yet,” said Dipanjan Purkayastha, Founder CEO, hyperXchange. Only 12% of customers currently sell their phones online and the number is expected to increase to 30%, he added.
Interestingly Purkayastha conceptualised hyperXchange when he was trying to sell four or five old phones but was not getting a standard quotation. “At offline stores, different people quote a different price, so a person actually does not know how much value the phone holds, so with hyperXchange we have standardized the values and hence it becomes simpler,” Purkayastha explains.
Recently the Gurgaon-based Cashify.in, which allows customers to sell their used phones, laptops and tablets, raised USD 12 Million in Series C funding from Chinese investors.
Its CEO Mandeep Manocha said, “The need to upgrade to better smartphones and laptops is on the rise, and is fuelling Cashify’s growth. Upgrade cycles have now come well under 12 months from the previous 20-month duration.”
Together with buying and selling of smart phones, allowing sellers on their platform is Togofogo, which entered the fray with the idea of making the market organized.
“With refurbished phones, it is the aspirational need of the person that is fulfilled. A person can get something like an iPhone 6, even at Rs 20,000 and with a warranty of a year. We have our own team that goes through these checks, repairs and changes whatever is needed, adds in a charger, and packages with compatible accessories, so it becomes as good as new,” said Saquib Shakil, project manager, Togofogo.
There are 500 registered sellers on Togofogo which also provides offline store owners with a platform to reach online users. Registered under UPR Ecommerce Pvt Ltd, Togofogo uses the QuTrust software to check phones. The company has been operational since 2015 when payment gateways first became a rage with customers. Togofogo offered the ‘sell your phone’ on their website only 45 days ago and they have already received 15,000 requests from Delhi-NCR area alone.
As the life of a phone is 3.5 years, it is expected that in the coming years in India, 30 percent of the phones in circulation will be refurbished ones.
According to Purkayastha, the profit margins in the refurbished market is 2-3 times more than in the new phones market.
In last two years, the company went from 15 devices a month to 15 devices an hour.
“While the majority of the selling of premium smart phones was from top cities like Delhi, Bangalore, Mumbai etc, while tier II and III cities were the buyers, that trend is also changing. In top cities too there are drivers, watchmen and other people in middle income jobs, who aspire premium devices. This has paved the way for a demand of used phones in these cities too,” said Purkayastha.
Exciting though it may sound, it’s not an entirely smooth ride for the players. Sourcing the gadgets remains the biggest problem with bulk buying bringing in both good and bad phones.
However it is the introduction of technology--the automated evaluation of the phones’ software and hardware--that has made the process faster and more profitable.
Currently the process of buying and selling is not entirely online and the players in this new game have to adopt a blend of both offline and online modes to thrive in the arena.