Used-goods market catches up in India, Gurgaon-based GoZunk picks mobiles
Flaunting a snazzy mobile phone has become a fashion statement today. The only thing that stops people from upgrading their smartphones more often is the price factor. Many resort to marketplace classified sites but get entangled in warranty woes.
Two college mates Mohit Bansal and Anubhav Adlakha launched GoZunk.com in September 2015 to sell used mobiles with a three-month warranty and a 15-day return option. The startup refurbishes old mobiles it buys from the market and end users. The three-month warranty covers all standard aspects like the original manufacturer warranty.
People can visit Gozunk.com when they want to buy or sell a used phone to schedule a pick-up. Payments are made at the time of the pick-up.
The startup has built a strong network of more than 50 offline vendors from Tier II and III cities, including Allahabad, Jalandhar, Ludhiana, and Jaipur. These brick-and-mortar mobile stores buy used phones and sell it to the end customers depending upon the demand.
Anubhav, 35, says, “We typically acquire those phones to fulfil our customer orders which come online. This offline network works seamlessly with our online channel. All mobiles procured online are sold in the offline channel after seven days of procurement if the same is not sold online within that period. This is to ensure minimum inventory levels. The offline network works as a sourcing channel for old mobiles as well as a point-of-sale for us.”
Serial entrepreneurship
Mohit's entrepreneurial journey started in 2005 when he quit his job and launched www.learninghour.com, an online tutoring portal for students in the US, UK, and Middle East.
In April 2007, Educomp Solutions acquired the company but Mohit, 36, continued to play a leadership role in the new venture as MD.
Mohit made a successful exit from Learninghour in Feb 2014 and joined www.adda52.com (India’s first real money poker site) as Chief Operating Officer and Entrepreneur-In-Residence.
Mohit and Anubhav, friends for more than 15 years, did their graduation at Indore University. Mohit is a management graduate and an MBA from IIM Ahmedabad, whereas Anubhav is a computer science graduate and an actuarial science post graduate from Narsee Monjee Institute of Management Studies, Mumbai.
Anubhav has worked for large investments firms like HSBC, Merrill Lynch, and Morgan Stanley in India and Hong Kong. His entrepreneurial journey started in 2013, when he quit his banking job and joined an HR consulting startup as a co-founder and helped expand their business. At the same time, he worked on GoalSketch.com, a personal career management startup, where people could get an actionable roadmap to build their career. The startup shut down earlier this year.
When asked why his startup shut down, Anubhav says,
To be technically correct, the site is still up and running and we are trying to find an acquirer in the B2B space. Firstly, it took us way too longer to develop the product than it should have. Secondly, people in India are still more focussed on getting a job rather than developing their careers. Finally, lack of experience when it comes to managing the expense to revenue ratio led to the closure of operations.
Anubhav says his failures have taught him:
- Never to give up and never to mix emotions with business.
- One should be passionate and result oriented.
- One should not drag to the finish line.
- There is no harm in falling. But the thrill is to get up, look back as to why you fell, and then get going again.
- To make as many mistakes as possible but learn from them and make new ones. If one is not making mistakes, then one is not learning!
Scaling up
The duo invested Rs 20 lakh as seed money in Gozunk.com. Getting skilled technical workforce with deep understanding of mobile phones was not an easy task, the founders admit. Building the network of offline vendors in Tier-II and III cities also took some effort, they say.
Gozunk.com has, so far, sold mobiles at no-profit-no-loss, as it has the policy of not keeping inventory for too long. Within 45 days of its launch, it has bought around 90 mobile phones and sold the same. The startup is growing at a rate 200 per cent month-on-month.
According to Anubhav, the margins could be between five and 100 per cent. He cites a typical transaction: if they sell an old iPhone 4 in a Tier II or III city, the margin will be 100 per cent and if they sell an iPhone 6 in Delhi, the margin would be around six to eight per cent. On an average, the startup makes a margin of 15 to 20 per cent.
Within two months of its operation, the startup claims to have touched Rs five lakh in revenue and expects to reach Rs 20-25 lakh in the next fiscal year.
Growth will continue
Following are the projections Gozunk has: by March 2016, the startup intends to sell around 500 phones and 5,000 phones by March 2017. It aims to become the leading player and the benchmark in second-hand verified mobile goods market.
The team comprises nine employees: two technical professionals, one designer, four sales persons, and the co-founders.
It has covered eight to nine cities and hopes to cover 100 more in the next two years and also launch its app soon to expand into electronics like TV, AC, refrigerators, and more.
YourStory’s take
Though Gozunk claims to stand out in the overcrowded online classified markets with warranty period as its USP, it will be a challenge to take on biggies like Quikr and OLX which hold 60 per cent of the entire market.
Around 30 million consumers and small businesses across 940 cities use Quikr to sell, buy, rent, or find products and services in a variety of categories such as electronics and household goods, real estate, cars, bikes, jobs, and services.
According to a Deutsche Bank report, the size of India’s online classifieds industry was at Rs 1,800 crore in 2013 and is expected to grow to Rs 4,500 crore by 2018, exhibiting a CAGR of 20 per cent. Recently, OLX 2014-15 survey, CRUST, revealed that Rs 56,200-crore worth of used goods lie idle in just 16 cities, creating a huge opportunity for the online classified market.
On competition, Mohit says,
Other online classified players are just marketplaces looking to connect buyers with sellers. They do not offer any warranty, nor any verification of the product being sold. We are a one-of-a-kind ‘verified’ place for buying and selling mobile phones. We guarantee assured buying and selling with warranty of second hand/refurbished mobiles. We have successfully crossed the stage of proof of concept.