Flipkart’s refurbished phone business: Buying and selling of used phones explained

Recently, I got to interact with Mr Adarsh Menon, Senior Vice President and Head of New Businesses at Flipkart about the company’s recommerce program called 'Exchange Now, Handover Later'. In this discussion, he took me through the fascinating world of recommerce, which is the buying and selling of previously-owned new or old products. In this case, we talked, in particular about the recommerce of smartphones.

Here’s how the interview went about:

We started off discussing the why behind the Flipkart Exchange Now Handover Later program.

Could you please explain how the Flipkart Exchange Now Handover Later program works?

I'm very happy to talk to you about what we are doing. We find the recommerce business as a very exciting new space at Flipkart. We have two different customers here. And both have different use cases and different pain points. There is one customer who wants to exchange, and that is a process full of friction. There is one customer who wants to buy a new phone, but is not sure whether the process or the phone that he is going to get is good quality or not.

A hundred percent of our bandwidth, a hundred percent of our effort is going towards understanding these two different cohorts of customers, understanding their pain points and solving them.

So today we refurbish about 50,000-60,000 units a month, and we are scaling that up to two lakh units a month. And that's happening because we are seeing a burgeoning demand. Now, the actual price of your used phone won’t be determined between the two negotiating parties. Rather, it will be done by a diagnostic app.

This app is installed on your old phone. Just by the click of a button, we'll actually run several diagnostic checks to check the quality of the old phone on different parameters and accordingly decide the price.

Multiple quality checks would be involved and the objective of this is to remove human subjectivity and errors. 

Depending on how old the phone is, the diagnosis will run. It will check various things on the phone like the brand, whether the GPS is working, the Bluetooth is working, the camera is working, the touchscreen is working, the front and back cameras are both working, etc. 

How’s the customer benefitting from this diagnostic process?

Right now, imagine without this diagnostic app, determining the right price for a phone is an opaque discussion. Yeah, right. The buyer will always say the value is less and the seller will always say the value is more. 

So, Flipkart Exchange Now Handover Later completely removes that human error process, and replaces it with a technology-led diagnostic process that tells you the value of the old phone. 

Also see, when a consumer buys a new phone and partakes in an exchange process, he doesn’t want to return his old phone on the spot. He wants time. Typically, there could be for two reasons. He wants time to get used to the new phone, and hence he wants to keep his old phone for some more time, almost as a backup. The second is that he wants to transfer data from his old phone, do a factory reset, and he wants to do it at his own convenience.

What we are doing gives the consumers 10 days to take data, backup up, do a factory reset, and get used to the new phone before he finally hands over the old phone. We have access to world-class refurbishment facilities.

Tell us more about refurbishment. What can customers expect from a refurbished smartphone?

We have a refurbishment factory that sits in Noida, run by Yaantra (a recommerce company acquired by Flipkart Group in 2022) that we are now scaling up to tool to 2 lakh units a month. 

What that factory does is it takes in all of the used phones, which then get repaired, refurbished, and repackaged for reselling. 

Customers who come in and buy those used products get a warranty of one year on every used phone we sell.

This gives customers a safety net, that in case the used phone turns bad, in case something goes wrong, they can always go back to the retailer and exercise that warranty that we are giving them. So what we are trying to do here is give consumers access to high-quality used devices through our refurbishment processes and also give them peace of mind in case something goes wrong with the phone. 

Is there any other benefit from your approach?

If you just look at what gets generated in India every year by way of e-waste, that's 40 million tonnes. Half of this is personal electronic items like mobile phones and that's a big number. It can very quickly shoot up if one doesn't keep a tab on it.

So what we want to do by running this business responsibly is also bring that number down. Because we are quite clear that if a phone can be refurbished, we will refurbish it and hence not contribute to e-waste. 

Now, if a phone is actually dead and we get some of those as well, we actually make sure that we take the spare parts out of it and, and regenerate it. This also results in reduced e-waste. So a big benefit to all of this is also how we contribute to the environment. 

Which location or tier of city do you see major demand in?

See, we believe that the value-conscious consumer who wants to buy a refurbished smartphone is present all over the country. That market is huge and across the board. That consumer exists in metros, that consumer exists in the smallest tier-4 sort of city in India. But if I just look at where we predict the growth to come from, we expect the growth to come more from tier-2, tier-3 and tier-4 because that is where I think more and more non-internet users are coming from.

When they want to enter the internet universe, they need an affordable mobile device. And that is where these products will start playing a big role in their lives. We think that we've understood this market well enough. We've taken some time in doing so.

We have a very, very good partner in Yaantra, who's a company that we acquired last year. They understand e-commerce very well and have deep capabilities in refurbishment and diagnostics, and all of that. So we are very optimistic about this industry going forward. We don't have exact numbers that we can share now. But it's a business that we've called out as being a big part of our growth plans going forward.

And by the way, while smartphones is a lead category, we also find other categories like laptops, televisions, air conditioners, refrigerators, and washing machines as good recommerce markets.

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G. S. Vasan

Vasan is a word weaver and tech junkie who is currently geeking out as a news writer at Digit. View Full Profile