Kolkata-based HyperXchange refurbishes smartphones, laptops, and tablets to sell them through its network of retail stores, bringing transparency to the sector.
As a child, it was common to get hand-me-downs from older siblings and cousins - clothes, books, toys, and even electronics. With rising disposable income, the bid to buy new became big, but acceptance for second-hand refurbished items is growing these days.
Cashing in on this trend, Dipayan Purkayastha, Asish Chakraborty, Satanik Roy, and Dwijo Chatterjee started HyperXchange in February 2016 as a marketplace for premium refurbished products.
“Culturally, Indians have always been fine with reusing products. However, winning people’s trust and providing convenience with respect to using reused electronic products is the tougher task,” Dipanjan says.
But it is a task that HyperXchange seems to have managed to ace. HyperXchange sold 15 cell phone devices in the first week of its launch in 2016. The average device value was around Rs 10,000, and it currently sells around 15 of these devices per hour. It aims to grow this figure to 15 devices per minute in days to come.
The company clocked a revenue of Rs 25 crore for FY2017 and has entered into partnerships with Flipkart and eBay. For FY2018, HyperXchange is targeting a GMV of $280 million and plans to launch retail operations across 100 cities over two years.
Around 95 percent of the the refurbished market – mainly comprising mobile phones – is unorganised and dominated by the grey market. “Now, this market is being taken up by organised players who provide warranty, repairs with genuine parts, and also after-sales services. New-age recommerce companies have helped customers gain confidence in second-hand products,” Dipanjan says.
HyperXchange sources items from ecommerce returns, factory seconds from original equipment manufacturers, and premium used smartphones from people. It uses diagnostic AI (machine learning mostly) to assess products on quality parameters; they are then refurbished using genuine parts.
In an industry first, HyperXchange offers a one-year warranty for each product it sells through its online and offline sales channels. It also offers doorstep delivery and pickup, and strong customer care support. The online-to-offline business model makes it convenient for customers to order online, or walk into one of its stores to purchase refurbished goods. HyperXchange also provides a nine-month buyback option.
The company competes with Green Dust, the largest retailer of refurbished electronic goods in the country.
Dipanjan has 15 years’ of experience and has helped scale a tech businesses from scratch to being worth hundreds of millions of dollars. He is also an angel investor for several startups. Asish Chakraborty has experience in tech management, while Satanik Roy is a coder, UX-UI designer, and writer. He was the founder and CEO of Appolysus, and has authored The Classic Retreat of Anarchy and I Met the Demon. Dwijo Chatterjee has over 25 years of experience in finance, accounting, compliance management, and corporate strategy.
Research firm Counterpoint estimates the global market for refurbished smartphones alone grew 13 percent in 2017, reaching close to 140 million units while the market for new smartphones grew only 3 percent. Deloitte sees the Indian used smartphone market growing at a CAGR of about 32 percent, reaching 46 million units in 2020, and generating a revenue of $4 billion.
HyperXchange’s founding team invested around Rs 1 crore to build the technology for refurbished products. It also raised undisclosed funding ahead of its Series A round, which is expected in a few months.The company is also operational in the US. In August this year, it tied up with university campuses in the US to include gaming consoles in its portfolio.
The primary challenge in the recommerce sector is that it is mostly unorganised. There is lack of transparency, limited selection, no quality assurance or warranty, and no clarity on the genuineness of a gadget.
“Most of these (second-hand electronics markets) are notorious for stolen goods. The fragmented supply chain and reverse logistics have been another hindrance for the growth of this sector,” Dipanjan says.
HyperXchange’s business model
HyperXchange Regional Distributors acquire inventory in bulk through the HX eVal Tech platform, which helps to set the purchase price of products, and define repair needs. The company’s national service network – with in-house and external product experts - refurbishes inventory.
The margins vary. For new phone sales, margins are less than 5 percent, but in case of refurbished ones, they vary between 15 and 25 percent.
The HyperXchange platform runs over 150 checks on a phone within a minute, to set the purchase price and define repair cost. It has a current burn rate of around Rs 40 lakh per month.
According to Gartner, the estimated size of the smartphone market in India is over 300 million devices. Every year the number for recommerce will undoubtedly be a catalyst in bridging this digital divide of 700 million who cannot access smart phones.
Other categories such as laptops and home appliances like LED television sets, refrigerators, and home theatre systems are seeing good demand in the recommerce market. According to industry experts, after smartphones, laptops and desktop computers are the most sought-after items in the refurbished market, followed by LED televisions, headphones, home theatres, watches, and refrigerators.
Over the last three years, a handful of companies have started operations in the refurbished items segment. Most, like Togofogo and HyperXchage, focus on smartphones, tablets and laptops, while others like Greendust and Ebay have various categories ranging from healthcare equipment to kitchen appliances and so on.
HyperXchange, which currently has 10 retail stores across Kolkata, Mumbai, and Pune, is in talks to find partners and open more stores across the country.