Flipkart Follows Amazon, to Sell Refurbished Phones
NEW PLAN Co to sell them both online & offline; move prompted by high rate of handset returns, absence of pricing advantage post GST
Kolkata: Flipkart plans to start selling refurbished smartphones by Diwali, following the footsteps of US rival Amazon in India, prompted by the high rate of handset returns and the absence of a pricing advantage with the introduction of the goods and services tax (GST), two senior industry executives said.
Flipkart-certified refurbished models will be sold on the online marketplace and offline retail stores, for which discussions have been held with distributors. Flipkart will use its logistics arm Ekart for deliveries.
“Even though Flipkart has of late tightened return norms on mobile phones and allows replacement only in case of a defect, it is already saddled with lot of return inventory,” said one of the executives who held talks with Flipkart for offline distribution. “There are also handsets with minor problems which are replaced. The company plans to get them checked and certified to look and work like new and sell them as Flipkart-certified refurbished handsets. There will be limited warranty as well on such products.”
Three categories of refurbished phones will be offered, priced at 60-75% of their original value, the other executive said. “The refurbished market in India is mostly unorganised and Flipkart wants to build it,” he said.
Flipkart declined to comment on the matter.
The company plans to sell popular brands such as Lenovo, Motorola, Samsung’s ‘On Series,’ Panasonic, Micromax and Sony Xperia. Amazon began offline distribution of smartphones earlier this year and also started selling certified refurnished handsets. It currently sells Coolpad smartphones and plans to expand it to other models of brands such as Samsung and Motorola.
Industry executives said Amazon and Flipkart are entering offline sales to offer a wider distribution platform to handset vendors, including several new Chinese companies. In addition, GST on smartphones has been set at a uniform 12%, replacing varying rates of value added tax (VAT) levied by states. Online retailers can no longer buy devices in low-VAT states and sell them in the rest of the country, passing on the gains to customers through discounts.
“The online marketplaces will have to open newer channels for sales. The online market contribution to total smartphone sales, too, has stagnated at around 30% and hence future growth for Flipkart and Amazon in this category will come from offline sales and venturing into newer areas like refurbished handsets,” one of the executives said.