Flipkart gets serious about the pre-owned market, sees a new opportunity parallel to e-commerce

For Menon, the biggest barrier in the mind of an average consumer before buying a used smartphone is the quality of the product. He and his team want to change the stigma associated with buying a pre-owned smartphone. “We don’t think that needs to be the case,” Menon tells indianexpress.com. “Once we start increasing the supply of high-quality refurbished phones, making them almost as good as new, packaging them well, giving them a year of warranty, that cycle of consumers using it saying they are happy with the used phone and driving that virality will actually drive more and more people to buy refurbished phones as a first choice and not necessarily as a compromise the way it is today.”

Flipkart’s interest in this growing, yet fragmented and intensely competitive, mobile phone resale market is well-timed as a growing share of Indian consumers are looking to buy used phones as prices of new phones are going up because of multiple factors. The second-hand smartphone segment isn’t new, but its popularity is surging. Others want to trade in their existing smartphones, hoping to get a good deal, giving them extra cash in the hand to purchase a more advanced model. The second-hand smartphone market in India is expected to reach $4.6 billion in 2025, according to a joint report by mobile devices industry body ICEA and research firm IDC.

India’s pre-owned smartphone resale market has historically been offline through local phone dealers. (Image Source: Flipkart)

The booming pre-owned smartphone market is an opportunity for Flipkart, Menon says. Walmart-owned Flipkart made its entry into the re-commerce space —the sale of pre-owned goods — by acquiring electronics firm Yaantra, a specialist in repairing and selling refurbished tech products, last year.

Menon reminds us that Flipkart receives used phones from consumers when they buy a new smartphone on its platform under its exchange programme. This approach would create a more seamless customer experience, because consumers can exchange an old device, without any middlemen, he adds.

Once Flipkart receives a used phone, the device then goes to Yaantra’s Noida factory, gets repaired and goes through multiple quality checks before it is evaluated using technology. It is then ready to be sold to new consumers.

Unlike the traditional style of selling used phones, which Menon calls “broken”, Flipkart is making it more convenient and accessible to own a pre-owned smartphone with far greater authentication and improved experience through deep data insights. “It [pre-owned] becomes a new phone, gets repackaged, and then sold to the retail market for a different set of consumers who might want to come and buy that refurbished phone with a one-year warranty,” he explains.

But owning its inventory also means that Flipkart has access to a lot of data about second-hand smartphones. As a result, it has more detailed information about supply and demand than other players who only gather data from their own users.

For the longest time, the biggest hurdle in front of consumers, whether they exchange their old device for a new device or want to buy a refurbished phone, is the effort to go to a nearby store and start negotiating with a dealer to get the best price in exchange for an old device. Menon wants to simplify how the exchange programme on its platform works. What Flipkart is doing is that when users sign up for the exchange programme, they get the new phone delivered to their doorsteps but they also get to keep the old device for 10 days so that they can conveniently transfer the data to the new smartphone.

Menon is convinced this will not cannibalise sales of new smartphones. “It’s almost a parallel business to the e-commerce business,” he says. In theory, if more consumers feel comfortable buying pre-owned smartphones, more of these phones will circulate on the market. This is better for the environment.

Menon says he and his team ensure they address the pain points of both consumers: the one who comes to Flipkart hoping to return an old phone and get a new one and the other looking to buy a pre-owned smartphone. “Both are very different sets of consumers with different pain points,” he says. “We are trying to solve both the pain points using technology, efficiency, quality and convenience.”

In the past year or so, Menon says Flipkart has demonstrated how they can help “standardise” the resell smartphone market through an online channel. The next step for Menon and Flipkart is to scale up the business. Flipkart’s refurbishment factory in Noida run by Yaantra has now the capacity to refurbish 200,000 units a month. But Flipkart is already looking beyond the pre-owned smartphone market. It recently introduced an exchange programme for air conditioners, allowing consumers to exchange old ACs and get a new one from Flipkart.