Another casualty of festive discounts: Used phones useless amid e-commerce sales
NEW DELHI: Prolonged festive discounts and offers for smartphones on e-commerce majors Amazon and Flipkart dented the refurbished handset market but have given a fillip to second hand product market places such as OLX and InstaCash.
Aggressive offers and discounts on the e-commerce platforms have already severely dented sales at brick-and-mortar stores. And now, it’s the refurbished phone sellers facing the brunt.
Togofogo, an online marketplace for buying and selling refurbished smartphones, is having a tough time so far in the festive quarter (October-December). “New phones are being sold at a 30-35% discount making it difficult for us to sell second-hand phones. Also, the cost of acquisition for a customer during this period becomes much higher for us since e-commerce giants are spending a lot of money in this area,” said Soumitra Gupta, chief executive, Togofogo.
Togofogo saw about 60,000 transactions per month in the July-September quarter, but it is not expecting to scale similar levels in the current quarter. India contributed 13% to the global refurbished market in the July-September quarter recording yearover-year growth of 26%, data from Counterpoint Research showed. As it is, the refurbished market doesn’t do too well in the festive season because people want to buy new phones and huge discounts on online platforms have added to the gloom, added Gupta.
“The discounts offered by e-commerce players are so compelling that people think before buying refurbished phones,” Navkendar Singh, associate research director at IDC India, said. However, OLX, an online marketplace for used products, saw over 1.4 million pre-owned smartphones being listed in September, which the company says is its highest ever.
“Raining discounts have made upgrading to newer phone models extremely attractive this festive season. We see an increased supply of good-quality and fairly new preowned phones. During Diwali, we expect this trend to strengthen even further,” Akanksha Dhamija, head of electronics and mobiles, OLX India, said.
InstaCash, a platform for people to sell old phones, sees business multiplying 2.5 times. Not only has the company seen increased traction on the platform, but the cost of acquisition has gone down significantly. “The business multiplies whenever e-commerce biggies drive the trade in volume. Furthermore, a lot of new smartphones get launched and we see increased inflow of new devices,” said Prateek Goel, CEO, InstaCash.
The company is targeting 75,000 transactions in the October-December quarter and expecting a growth of 60% over the previous quarter driven by festive demand. InstaCash had previously projected that in 2018, as many as 8 crore pre-owned phones would be upgraded, exchanged or sold for cash excluding hand-me-downs to family or friends, or lying-in-drawer devices. Experts added that increased inflow of devices could further pose a challenge for refurbished players in liquidating the stock in the coming months.
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