Startups, SMEs, are buying refurbished devices to meet demand amid chip shortage

Startups and small- and medium-sized businesses (SMBs) in India are turning to refurbished device suppliers to buy laptops and smartphones required for business operations. 

Delhi-based Cashify has seen demand for laptops grow five-fold in 2021, while demand for smartphones has more than doubled in the last 12 months, especially from smaller companies with 30 to 40 employees. “In laptops, 65-70% of the demand came from the business side,” said Mandeep Manocha, co-founder and chief executive officer of Cashify.

“In the past, all these companies used to buy new smartphones or use device farms of Amazon Web Services (AWS) or other such services. Now they get a refurbished device at 30-40% discount, a very significant portion of our SMB demand is actually coming for smartphones, especially on the testing side,” added Manocha. 

According to Kolkata-based HyperXchange, the overall refurbished electronics market in India is growing at a compounded annual growth rate (CAGR) of 80%. The growing interest in refurbished laptops and smartphones from small businesses and startups will further drive growth in this segment. For HyperXchange, though, individual buyers are still its primary customers. However, the company has seen demand from both corporate and consumer segments grow “at an unprecedented pace”. 

An increasing number of SMEs and startups have started using refurbished products, especially under leasing and rental programs, according to Dipanjan Purkayastha, co-founder and chief executive officer of HyperXchange. He added that about 31% of SMEs and startups among its customers are focused on buying or renting refurbished laptops, while 68% want desktop computers. On the other hand, 88% of the consumer segment was focused on buying mobile phones.

Purkayastha, though, admitted his company is primarily a consumer-focused brand and corporate business accounts for less than 5% of its revenue. 

According to Glen Cardoza, senior research analyst at Counterpoint Research, the demand can vary from company to company. 

“Older companies in the refurbished space are more likely to have tie-ups with bigger companies and have the distribution networks for B2B deals, as compared to a newer company. We are seeing more commercial buyers looking for refurbished devices. The refurbished market has good supply as many more people trade in old devices now,” he said.

Cardoza has a point. Structured refurbishing businesses with an online presence, and doorstep pick-up options have led more people to trade in their devices now. Unlike the new devices market, where the supply of several devices was disrupted due to the global chip shortage, refurbished suppliers were able to procure and supply devices to both individuals and businesses.

Experts also pointed out that the demand for refurbished devices is no longer coming only from metro cities, which shows a change in perception towards the use of refurbished devices for work. Manocha has seen a lot of demand come from cities like Bhopal, Mangalore and Indore. His company also ensures that data of all the devices are completely wiped using certified erasure tools before they are sold.

The buying preferences for smaller businesses has also worked in favour of refurbished suppliers. Unlike large companies that are also fussy about brands, smaller businesses typically buy products with certain specifications regardless of the brand.

To meet the growing demand for PCs in India, refurbished suppliers like Cashify are planning to step up their procurement efforts for laptops. Analysts said the PC market in the country is still under-served, with only about 12% of the total addressable market having access to PCs.

“We are now putting resources behind increasing our laptop refurb capability and moving to a larger refurb centre in the next four to five months. We expect that up to 25% of our business in the next 12 to 24 months will be driven by refurbished IT devices,” said Manocha.