Refurbished is a booming industry, and leading e-commerce platforms like Flipkart and Amazon are selling them. They are priced lower than new devices, but warranties also back them. The trend that started with refurbished phones and tablets has expanded to several other products, including home electronics and personal computers. This is why the country's market size of refurbished products is close to $8 billion, and consumers do not hesitate to get their hands on refurbished products.
This article discusses why the market for refurbished products has emerged significantly in the past few years and is expected to surpass the $11 billion mark soon (only the electronics segment). In contrast, the sector has tremendous demand for other household and office products.
Impact of the COVID-19 pandemic
The impact of the COVID-19 pandemic on stimulating the overall demand for refurbished goods is tremendous. It can be summarized into cost considerations, increased demand, logistics gaps, increased digitalization, and improved e-waste management.
India is one of the largest adopters of digital technology, with almost 74 percent of the businesses agreeing that digitalization has helped improve the processes during the pandemic. Since working from home is a new norm, employees are no longer dependent on gadgets and devices offered by employers. There was an increase of 30 percent in demand for refurbished mobile phones in 2020. The cost-conscious Indian consumers were unwilling to spend too much on buying new products, increasing the demand for refurbished products.
There were logistics and supply chain gaps due to disruptions in the production and supply of microchips that also caused the demand for refurbished products to increase. Additionally, refurbishing electronic products can help address India's significant waste management issue, as 95% of electronic waste is not recycled in the country.
Improved service and spare part quality for refurbished products: The emergence of an organized sector
A simple search on the leading e-commerce brands will provide options for a refurbished device that looks brand new. Such refurbished devices have been categorized in a new vertical added to the business model of such leading e-commerce brands.
Sellers offer refurbished products only after a thorough health checkup of the devices and provide the best-in-class after-sales services to consumers, including warranties, functional service-center, dedicated CRM support. A seller-backed warranty ranges from 90 days to a year on such products. Hence, the consumer gets the cost-benefit and brand assurance while dealing with such products.
Refurbished products’ sales and purchases have emerged as a new and organized sector. The companies working in the sector can source inputs and materials from different parts of the world due to their supply chain and logistics capabilities, thereby further enhancing the level of customer support.
Summing up
The emergence of a refurbished market can be primarily attributed to various factors, including greater digital adoption forced by the pandemic, the better quality of products, preferences of customers, the role of brands, and most importantly, the kind of services offered. Gradually, the refurbished products are becoming a valued choice, if not a preferred one. Majority of consumers no longer consider them as 'used' or 'second-hand' products, whose performance was inconsistent. Why? Because the products are more reliable and sold to the customers only after proper checks and quality assurance.
(Soumitra Gupta, CEO, Xtracover-one-stop solution for E2E Life Cycle. Views are personal)
