Demand for refurbished electronics drives sector to organize

Buyers in India are increasingly turning towards refurbished electronics devices, as global supply constraints affect prices of such products. Factors such as constricted supplies, high demand and the growth of organized sellers in the refurbished electronics space fuelling the industry. While smartphones are the primary growth drivers, other electronics too have seen some demand.

For instance, according to a report published on May 5 by research firm RedSeer, IT services major Tata Consultancy Services sources 100,000 refurbished laptops every year from organized reverse commerce (or recommerce) companies every year. The report also noted that the Indian refurbished electronics market could grow to $11 billion in gross value by March 2026, up from approximately $5 billion in March 2021.

According to Siddharth Surana, engagement manager at Redseer, laptops, televisions and other electronics like headphones, wearables, washing machines and gaming consoles will constitute about $1 billion of this market. “In India, wearables that could contribute to this sector would be the aspirational ones, such as the flagship Fitbits or the Apple Watch,” he added.

The growth has also led businesses in the sector to become more organized. Organized sellers accounted for only 1% of the market and about $20 million in sales in FY16, which grew to 8% and $400 million in sales in FY21. By FY26, organized sellers are expected to outpace the rest of the industry and account for 20% of the market and constitute a $2.2 billion market.

The growth has also driven interest from larger e-commerce players. While Amazon has been selling refurbished products on its platform since 2017, Flipkart also acquired refurbished electronics marketplace Yaantra in January this year to augment that side of its business.

However, Nakul Kumar, co-founder and chief marketing officer (CMO) of Cashify, noted that most of the sector is driven by smartphones right now. Kumar said that 5-6% of Cashify’s business comes from refurbished laptops, which grew due to the pandemic-driven demand for devices last year. Another 2% of Cashify’s market comes from accessories, while smartphones account for 92% of it.

Smartphones account for 90% of the sector, said Redseer’s report. Fuelling this growth are two factors – one, rising new smartphone prices due to the ongoing supply chain crisis, and two, higher profit margins for retailers.

“Factors such as remote work and education, pent-up demand due to markets being closed due to the pandemic, tighter finances and constricted supplies were major reasons why the refurbished market for smartphones saw a sharp growth in 2021, over 2020,” said Glen Cardoza, a senior research analyst at market research firm Counterpoint Research. He added that 2021 saw a rise of nearly 25% year-on-year (YoY) in India’s refurbished smartphone sales. 

Redseer, in its report noted, that while a basic smartphone starts at $90 (approx. Rs 6,800) in India today, a similar used smartphone costs $30 (approx. Rs 2,300). For retailers, new phones have a margin of about 5%, selling used phones could give them up to 8-10%.

A January 2022 report on refurbished smartphones by market research firm International Data Corporation (IDC) and industry body India Cellular and Electronics Association (ICEA) said that 38% of users buying second-hand devices were first-time smartphone users who owned feature phones before. It also added that 78% of refurbished smartphone buyers had a monthly income of less than Rs 30,000.

That said, Counterpoint’s Cardoza also warned that factors that affected the market last year may not be the same this year. He warned that the market’s growth in FY2022 is yet to be gauged.