Retail Asia 2018 RA September.October 2018 (Online) | Page 12

NEWS FEATURE
Time travel and what beholds
the future of recommerce
Used goods that re-enter the market play a part in the whole
retail ecosystem, especially with the rise of e-commerce and
the increasingly easy access to the Internet. Rohit Bagaria,
founder and chief vision officer of Budli.in (India’s instant online
recommerce portal), shares the role of recommerce, specifically
for pre-owned electronics, and how the sector can learn from
one of its bordering neighbours — China.
G
rowing up, I was a fan of the
Back to the Future movie series
and found the concept of
time travel quite fascinating.
Recently, I had the opportunity to visit
China with a start-up delegation and see
first-hand the evolution of the Chinese
Internet sector. It was as if I had travelled
into the future and seen how widespread
use of technology has become part of day
-to-day lives of one billion people.
From self-service, staffless
supermarkets using facial recognition
and artificial intelligence (AI) to self-
driving mobile vending machines using
facial recognition for payments, I could
see what the future looked like first-
hand.
I saw companies such as Alibaba and
JD.com each do more business in one
day (on the 11.11 Single’s Day shopping
festival) than the entire Indian consumer
e-commerce market in one year. At
approximately US$500-billion market
size, China accounts for almost half of
global consumer e-commerce sales. The
Indian consumer e-commerce sector is
merely at US$20 billion market size.
Recommerce in China
The recommerce (reverse commerce)
sector of used goods, especially electronic
gadgets, is much more advanced than
in India. According to a study by Fung
Global Retail & Tech last year, the
Chinese recommerce market currently
stands at US$60 billion. Recommerce
is bigger than ride-sharing in China,
with some organised players worth over
US$500 million.
Developed markets such as the
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Retail Asia September/October 2018
US and Europe are primarily sourcing
markets, without much demand for
used gadgets. Many of the second-hand
gadgets from western markets get resold
in developing countries. However, there
is a regulatory restriction in importing
used electronics in India. Both China
and India have a huge supply and
demand and thus are self-contained
markets.
The (unorganised) Indian
market
The second-hand goods market in
India, especially used electronics,
is primarily unorganised with no
company having even 1% market share
in this multi-billion-dollar sector. The
churn, especially in smartphones, is
extraordinarily high as these are being
replaced every 15 months. Every
smartphone is expected to go through
three change of hands before reaching
the end of its product life cycle. As per
a Deloitte report, the growth rate of the
used smartphone market is forecasted
to be four to five times higher than the
overall smartphone market.
On one hand, there is a huge
untapped supply of used smartphones
which are getting replaced. On the other,
as India is an extremely value-conscious
market, there is a huge unmet demand
for devices in good condition at lower
price points, from a trusted source, with
quality assurance. Currently, there is no
established brand in India which has
been able to create a mindspace amongst
consumers in this segment.
The secondary transactions primarily
happen through unorganised offline
dealers spread across the country. There is
a huge market in the hinterland, especially
in Tier 2 and 3 cities. Every metro has
a second-hand grey market which deals
with second-hand electronics. Most of
these, are notorious for stolen goods.
Apart from these there are online classified
ad sites which are primarily consumer-
to-consumer (C2C). Few websites are
directly dealing with buying and selling
of used/refurbished devices. E-commerce
marketplaces such as Amazon and Flipkart
are offering exchange options. Some
marketplaces are also offering refurbished
devices for sale. Flipkart has recently
started offering refurbished devices
through a new website. These are still
relatively nascent though.
What is driving recommerce?
The aspirational nature of the Indian
consumer is pushing recommerce.
‘Statusphere’ — the feeling of status
elevation by using a better quality/brand
product or better features at a similar price
point-is what is helping this segment grow.
This is already happening in the used cars
sector where consumers have access to
bigger used car at the same budget as a
brand-new smaller car.
Evolution of technology with new
features and higher specifications ensure
that consumers keep wanting to change
their gadgets often. The vast number of
first-time buyers who are upgrading from
a feature phone to a smartphone find
great value in refurbished smartphones.
Students and technophiles who like to
keep changing their gadgets also find more
bang for the buck by choosing refurbished
over new gadgets.