The Refurbished Market is bigger than one can think of. The refurbished market for consumer electronics is estimated to be $10 billion, and is further expected to grow to a USD 45 billion market in India in the coming days. That’s bigger than many businesses may realize – and it shows no sign of slowing down. Many refurbished products are restored to full manufacturer conditions, boasting the capability to provide consumers with a quality product at an affordable price.
Refurbished smartphones are pre-owned smartphones that are collected, rejuvenated or repaired to be sold again in the market. Only 25% of all pre-owned phones are sold back into the market. Of these, only some are refurbished. The result is that there are many grades of refurbished devices that attract different price points depending on available quantity and demand for a specific model or variant (colour, memory storage, etc.).
The Indian smartphone market, with over 1.17 billion mobile phone users, is one of the biggest markets for mobile phone manufacturing companies. The Second-hand smartphone market in India is slowly get much bigger. At present, companies like Amazon, Cashify, ShopClues and Togofogo dominate the second-hand and refurbished market in India. The refurbished mobile phone segment of Amazon alone has grown by 400 per cent year-on-year.
Unlike the physical stores, these players have revolutionized 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.
The Smartphone market is slowly stagnating in mature countries like US, whereas the refurbished mobile device market is poised for growth and giving the industry new revenue streams to drive. The US economy shows that the used and refurbished mobile device market is on the rise. According to a report, the U.S. used mobile phone market is set to grow from 15 million units in 2015 to over 55 million units in 2020, a nearly 30% compound annual growth rate in line with the smartphone market growth.
While smartphone makers like Xiaomi, OnePlus, Oppo, Vivo etc, are already making a killing by tapping the thriving smartphone market, the demand for refurbished or second-hand smartphones of aspirational brands like Apple and Samsung has increased manifold. Though only 12% of customers currently sell their phones online, but the number is expected to increase to 30%.
Recently, Cashify.in, which allows customers to sell their used phones, laptops and tablets, raised USD 12 Million in Series C funding from Chinese investors.
Together with buying and selling of smartphones, allowing sellers on their platform is Togofogo, which entered the fray with the idea of making the market organized. Togofogo uses the QuTrust software to check phones. As per the company reports, Togofogo offered the ‘sell your phone’ on their website, the same day they have already received 15,000 requests from Delhi-NCR area alone.
Market surveys say that by buying 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.
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. The fact is, the profit margins in the refurbished market is 2-3 times more than in the new phones market.
The rise of the refurbished market presents an opportunity for smart organizations, but can quickly become a challenge and barrier to growth for companies who are unprepared without a strategy in place. The better the experiences that product manufacturers and retailers provide for refurbished goods, the more they will reinforce their brand strength and enhance consumer trust.