Building customer trust in India’s recommerce industry

Quality products from high-end brands are considered a hallmark of status. In India, every individual—even those on a tight budget—aspires to own branded products.

Over the years, the reduced upgrade cycle and motivation to switch to better-quality products at pocket-friendly prices have led to the emergence of the recommerce industry.

The trend was quite popular in the automobile sector, wherein consumers could buy a bigger used car at the same price as a brand-new smaller car. You can now see it in the electronics and smartphones category. And technology has aided this manifold growth observed in the age-old model of reverse commerce in the international and domestic markets. 

As technology evolves rapidly, consumers are on the constant lookout for an upgrade. They want newer electronic models and the latest advanced technological innovations. India is the second-largest and fastest-growing market for second-hand smartphones in the world.

As per a report by IDC and the Indian Cellular and Electronics Association (ICEA), in 2021, around 25 million smartphones were traded in the second-hand market.

Even so, around 70% of people do not sell their old phones mainly because of a trust barrier, lack of platforms that offer optimal value, the inconvenience of selling, and ambiguity associated with data security.

According to a report by Infogence Global Research, India's recommerce market was estimated at $29.54 billion in 2022, expected to grow steadily in the years ahead. The report also said that every smartphone is expected to go through three changes of hands before reaching the end of its product lifecycle.

While the recommerce sector has shown good potential, several challenges refrain from leveraging its potential optimally. 

Roadblocks hindering the growth

For the longest time, the prospect of selling or buying used goods was met with reluctance and apprehension by consumers. This was because the second-hand electronic goods market in India was and continues to be largely unorganised, dominated by small players with unverified credentials. 

The recommerce industry in India is expected to witness a steep growth curve with a CAGR of over 35% this year. As per a Deloitte report, the used smartphone market is expected to grow 4-5X higher than the overall smartphone market in the country.

However, the large number of unorganised players makes it difficult for consumers to identify sellers or buyers they can trust. Their worries are compounded by the lack of transparency in pricing, the absence of a warranty, and no assurance of product quality. Consequently, consumers don’t know whether the products are genuine and trustworthy.

Besides a huge market in Tier II and III cities, every Indian metro has a second-hand grey market that deals with second-hand electronics. However, the fragmented supply chain and reverse logistics have hindered the sector’s growth. The untapped potential of this market is unravelled by the growth of organised retail and ecommerce players entering the space.

Opportunities to scale recommerce with organised players

While technology provides the structure to this market, ecommerce facilitates ease of buying and selling by instilling confidence in the consumer. Organised recommerce players are elevating this experience by eliminating the need to bargain with unorganised players to sell or purchase refurbished products.

The consumer journey is further simplified through multilingual interfaces, assistive shopping features, and affordable payment options. Some retail players have also launched exchange and buyback programmes with standardised grading systems to offer consumers the best value for used products based on their working conditions.

Ecommerce platforms are leveraging their supply chain to add to the ease of selling by free uninstallation services by experts, hassle-free doorstep pickups and a pan-India reach.

The advantage of the C2C, C2B, and C2B2C models is that consumers’ existing confidence in organised ecommerce companies is extended to their recommerce offerings too.

These products’ acceptance is reinforced by benefits, including warranty, discounts, doorstep delivery, product installation and uninstallation, exchange offers, and buyback options.

For instance, customers can their old phones at an attractive value and get the money credited directly to their bank accounts. Besides this, customers can also enjoy the convenience of getting the phone assessed and picked up at their doorstep. 

They also fear data theft and often face a trust barrier while selling old smartphones. To overcome this specific need, major ecommerce players have launched programmes that provide a 10-day exchange window to transfer data safely.

To bolster consumer confidence, organised players ensure professional sanitisation of the old devices, thereby eliminating data leakage. All the processes and functional checks, including Bluetooth, WiFi, camera, GPS, face recognition, screen touch, and other features, are automated, leaving no scope for subjectivity or human error.  

The road ahead

The entry of well-established ecommerce and organised retailers into the second-hand electronics market segment has assuaged many concerns in recent years. These companies have partnerships with competent expert vendors for repairing and refurbishing used phones, assuring quality products.

They also have certified electronic appliance recycling vendors to ensure the safe disposal and recycling of e-waste, thereby supporting a circular economy.

Also, access to refurbished products backed by warranty at an affordable price has a big impact on different sectors. For instance, it can enable access to online education, boost ease of business through UPI, create jobs, and provide small businesses with access to ecommerce.

At a time when prices of new smartphones have shot above Rs 10,000 for decent brand and specs, recommerce provides great room for affordability. The enabling shift from feature phones to smartphones, thereby plays a very crucial part in digitising India.

Focused execution enabled by tech innovations is the key required to unlock the true potential of this market. The technological supremacy commanded by organised players in the ecommerce space confers them with the ability to truly revolutionise the recommerce industry. 

A structured recommerce ecosystem will empower customers who aspire to own refurbished products by making their consumer journey seamless. It will also promote conscious consumerism by encouraging re-sale and responsible disposal of electronics. The potential of the recommerce industry to equally benefit customers, sellers, and the planet can be unleashed through the tech prowess of ecommerce.

(Ashutosh Singh Chandel is the Senior Director Business Unit Head-Recommerce, Flipkart.)