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

The Economic Times - - Companies: Pursuit Of Profit - Wri­tankar.Mukher­jee @times­group.com

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.

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