Refurbished goods, An offshoot e-tail industry – A booming business

refurbished box

E-Tail has become a booming business all over the world. While online retail contributed just about 0.4% of the overall retail market in 2014 (India), it is expected to reach 3 per cent of the total retail at $32 billion by 2020, according to a Technopak study.

This is supported by the mobile internet traffic statistics as well. Mobile data traffic in India is projected to grow 24-fold between 2013 and 2018 at a CAGR of 88 per cent. Clearly, an indication of the way the winds blow.

But as amazing as the ecommerce numbers sound, there is an aspect of e-Tail that we all have not given much thought to. Ever wondered what happens to those products that we order online, maybe try out, and send back to the e-Tailer?

Unlike in physical stores, where the salesmen expect and assist us to take utmost care of their merchandize, anything purchased or ordered online is not looked after that zealously. Especially with the COD option available to us, it sounds like a loss for the e-Tailer; incurring the cost of sending out an order, and the customer may return it, without any payment at all.

So what happens to the returned merchandise? Well, there are companies out there that buy this stuff, remove the minor defects or any signs of damage, and of course, sell them. The refurbished goods industry is an offshoot of the booming e-tail industry.

And there is a whole dedicated industry coming up around this segment. OEM (Original Equipment Manufacturers) like Samsung, LG, Panasonic, Whirlpool, Lenovo, Phillips, Godrej, etc, are all using such companies to dispose off their, what we term, “defective pieces.”

The business model that these companies follow is quite structured- acquiring these goods, servicing/repairing the ones that need it, and categorizing them as refurbished or surplus. Finally, they are sold through completely different channels at great discounts.

Around $ 12-15 billion worth goods are returned to e-Tailers every year in India. With so much stock, the OEMs tend to focus only on maximum sales, thus giving refurbished goods companies a large stock option.

Electronics have been a major winner in this category, due to longer shelf life. But these days, everything from apparel to grocery is being returned. At IntelligenceNODE, we believe that one person’s dissatisfaction can be turned into an opportunity and satisfaction for another.