China, India biggest second-hand phone markets, says Cashify COO
4 min read 09 Mar 2020, 02:08 PM ISTLast year, 140 million smartphones were sold in India and 40-50 million of them were second-hand phonesOrganised refurbished phone market is bigger in the US and Europe
PremiumNEW DELHI: Refurbished phones have become a vital cog in India’s smartphone saga. Consumers get a reasonable amount for their old phones, phone companies get a buyer for handsets with minor damages and consumers with limited budget still get to buy the handset they intended to. Above all, it allows a phone to be used to its full life cycle.
In an interaction with Mint, Nakul Kumar, co-founder and COO of Gurugram- based re-commerce company, Cashify, elaborates on the blurring lines between refurbished and second-hand phones, the company’s offline strategy and why awareness among buyers is important.
Q. What is the difference between a refurbished and a second-hand smartphone for Cashify?
Nakul Kumar: We don't necessarily differentiate between a refurbished market and a second-hand phone market. So if you look at Cashify, all phones we get are graded from A to E, and typically anything between A and D is sold to consumers. It is not necessary that a phone sold as a refurbished model is always that, it can also be a second hand-phone that fulfils certain quality checks and parameters.
Q. How big is India’s refurbished phone market and how does it compare with China and US?
Nakul Kumar: In terms of size, the refurbished phone market is big. Last year, 140 million smartphones were sold in India and around 40-50 million of them were second-hand phones. In terms of sheer size, China and India are the biggest second-hand phone markets, but the organised refurbished phone market is bigger in the US and Europe as they have laws and set systems in place.
Q. Is selling refurbished phones easier now?
Nakul Kumar: It is still very early for that. Currently, we sell to people who are anyway buying second-hand phones. By providing a warranty on a second-hand phone we are giving them a much better option. I think it is all about customer education. Any smartphone has a life of 3 to 5 years and a typical lifecycle change is just 1 year. We are trying to makes sure that any phone should be used for 3 to 4 years before it goes into recycling.
Q. What has been the impact of Amazon and Flipkart’s entry into the refurbished space?
Nakul Kumar: We are hoping that will make it bigger because they would spend money on educating the customer, which still hasn't happened. So again, their focus has also been on how to convert the second hand user into refurbished user. Amazon and Flipkart generate a lot of returns in refurbished products primarily because the customer is not educated. Many end up buying refurbished phones thinking they are buying a new phone at discounted rates. The important thing for us is to get people to move from un-organised trade to organised trade and keep them satisfied with quality deliverables. That will help the ecosystem more than existence of more players.
Q. What is the idea behind the Cashify stores and kiosks?
Nakul Kumar: Earlier the whole idea was to sell online and let customers buying online to also sell them online. Slowly, we realised 60-70% customers are still buying offline and for them experiencing the handset is still important. We started with kiosks where customers could sell old phones. Now we are opening all-in-one stores where customers can buy refurbished phones, sell old phones and even repair their phones.
Q. Why has Cashify stopped paying customers in cash for selling old phones?
Nakul Kumar: When we started, the idea was to give instant cash, but with demonetisation and government’s emphasis on digital payments we decided to go to 0% cash from 99% cash. Also, now consumers are getting comfortable with UPI, wallets and banking apps. For us, it's also about ease of doing things. Managing cash in a distributed system across 1,500 cities where we are present is difficult. We realised that this will not scale and so we decided to focus on digital money distribution.
Q. There have been reports of many counterfeit phones being circulated in market as refurbished phones. How do you deal with them?
Nakul Kumar: Yes, we are getting a fair share of such phones. But we are working with manufactures to solve the problem. So if a get counterfeit phone, I don’t sell it back into the market. I send them to recycler and they are destroyed because it will keep coming back to my system, leading to more losses. It is an even bigger issue for OEMs as it taints their brand image.
Q. What are your expansion plans for this year?
Nakul Kumar: We are planning to scale up from existing 44 to 200 stores and experiment with newer locations. Metro stations have worked well for us and we are present in malls. Now we can try locations like local markets or railway stations. We're also exploring a franchise model as it will help us expand faster. This year, you may see us in one or two territories outside India. In terms of revenue we will hit around ₹500 crore this year. Currently, we are buying 100,000 phones a month, we want to triple the number this year.
Q. What are you doing to make the process of selling a smartphone simpler for users?
Nakul Kumar: We are building tools using image recognition and ML (machine learning) so phones can be graded faster. Our current focus is to purchase a handset with fewer questions. For example, in our at-the-doorstep purchase the current average time taken by customer to sell a phone is 12 minutes. We would like to reduce it to 7 minutes.
