Buying a refurbished product with substantial discount and with nearly brand new standard is a great choice, but learn before what exactly are refurbished goods, how to choose & check them and most important from where to buy.
Business dynamics is rapidly changing today, whether they are specialty products, luxury goods or daily consumer goods–the ways they are sold and purchased are undergoing rapid metamorphosis. The latest growing craze in the market is refurbished factory seconds-products, including electronics, IT products, telecom gadgets and others. India is a rising market power with vast untapped potential and the refurbished market here has a great potential for the coming years and decades.
People in general have a misconception that all refurbished products (also known as refurbs) are used or secondhand goods. Refurbished goods not necessarily mean used ones, but they could be the products kept on display or used in demos and hence the package-box is opened. Once packaged is opened, it cannot be counted as brand new good and hence has to be labeled as refurbished.
Most of use heard about refurbished goods, but how many of us really understand what are they? Let us study the refurbished goods and their market in depth.
In some people’s minds, refurbished goods are faulty products hastily pushed on to the next consumer. But in many cases refurbished electronics such as computers, TVs, stereos, mobile devices, etc. are a great steal that cost much less and last nearly as long as their brand-new counterparts. But the key to buying value-for-money refurbished electronics is knowing the right places where they are available and doing a bit of detective work on shopping.
So exactly what is a refurbished product?
Lots of items fall under the ‘refurbished’ umbrella. For example, sometimes a customer returns a product for a refund without even opening the box or using the item at all. There’s nothing wrong with it, but the item can’t be sold as new and has to be offered as a refurbished product.
And sometimes electronic goods, IT hardware products, TVs, phones, etc are returned to original equipment manufacturers (OEMs) for minor defects and damages. The companies dispose some of them in sales as seconds-goods, but majority get lapped up by refurbished goods companies who, after removing the defects, sell them. And customer usually gets huge discounts of 30-40% on these products.
Some reasons why products get labeled as refurbished
Opened box: Opened box can mean anything. Technically, there should be no issue: the item is ‘new,’ but only the box or package was simply opened.
Demo units: Demonstration units used at trade shows, retail stores and product reviewers may be repackaged as refurbished items.
Shipping or exterior damage: Minor scratches or dents to the product during shipment would force a retailer to return it to the manufacturer and the manufacturer put it on the refurbish checkout lane.
Production defects: If minor defects are found, the manufacturers might repair the returned defective units and sell them or send them to retailers as refurbished units.
To get an insight, we asked three key players in the refurbishing space in India: Alex Souter, MD, Overcart.com; Hitendra Chaturvedi, Founder & CEO, GreenDust Pvt Ltd; and Rahul Chowdhury, CEO and Co-Founder of Reboot.
GreenDust, a brand of RLC, offers high quality, genuine, branded products at highly discounted prices backed by their world class warranty and after-sales-service. GreenDust’s buyers are continuously on the lookout for factory seconds, surplus, demo, damaged packaging, discontinued and overproduced items. GreenDust negotiates the best prices on such products and passes on the savings to the customers.
These items go through rigorous 50-point quality inspection process and only then get GreenDust seal of approval. GreenDust gives its customers an opportunity to conveniently shop for bargains through its dedicated online and offline channels, while offering manufacturers, distributors and other retailers an alternative, organized sales channel.
Most importantly, GreenDust allows manufacturers and retailers to comply with e-waste regulations and become in true sense a ‘green’ company by supporting the 5Rs – Reduce, Repair, Reuse, Recycle and Resell.
Overcart is one of India’s first liquidation services provider and works with the leading ecommerce companies and manufacturers. Through Overcart.com portal, the company provides excess, unboxed, and refurbished stock directly to end-users and helps its client-companies realize better value for their unsold inventory. A comprehensive quality check process and a proprietary QC technology helps the company ensure a high level of trust among its loyal fan-base. The company also provides inventory-management, warehousing and fulfillment services to its client-companies as part of its liquidation service.
Reboot was founded in the year 2012 with the mission to increase PC and mobile devices penetration at par with the developed nations of the world. We visualize being India’s first national provider to offer certified, co-branded, pre-owned, reasonably-priced refurbished hardware (PCs, laptops, desktops, servers and smartphones, etc), backed by a warranty and quality assurance. As agents of change, Reboot’s leadership team is on a mission to ‘Reboot’ & redefine IT, computer and the allied hardware market dynamics and to help bridge the digital divide between different social strata.
How much faulty are refurbished electronics? Is it worth buying refurbished electronics?
According to Alex Souter of Overcart.com, the onus is even higher on the retailer to have high quality products as there is a misconception that refurbished products are faulty or of lower quality. Our return and failure rates – are the same as for new products. If you are looking for a discount – a refurbished product has the same quality as a new one but is significantly cheaper. Hence, it makes a lot of sense to purchase them.
From Overcart every single product goes through rigorous quality testing and comes with 7-day return policy.
Mr Chowdhury of Reboot, says refurbished goods are as good as brand new ones if you buy them from a reputed and national refurbished goods sellers. We use standards that are globally recognized. In fact, Reboot uses a 16-point check for all its refurbished products that include US Military Grade methods to ensure highest standards of product safety. Also all our products are functionally as good as a new product and cosmetically almost as good as new. “Refurbs are certainly worth buying and buying refurbs, in my option, is a highly sensible purchase-decision given today how quickly technology keeps changing and gadgets often become outdated within months. Not just that there is a massive cost-saving up to 50% but it is also a way of saving the national resources, environment and sometimes FOREX which are important for a country like India. In fact, FOREX is the 3rd largest national outflow due to imports of IT hardware and the related things,” adds Mr Chaudhury. “People from every segment of the society (including educational institutions, NGOs, MSMEs and governments), as a consumers, should pay attention to the refurbished goods. Only early adopters who always want new products instantaneously irrespective of price can be made exceptions to this principle. For example, an iPhone fan may buy the new model the minute it is in the market and definitely he will not look for refurbs.”
According to Hitendra Chaturvedi of GreenDust, when a product is returned, the e-commerce companies will immediately refund a customer or give him a replacement but the returned items become orphans with no one using them. E-commerce will ask the vendors to own the returns. And these returned items increase warehousing, handling and transportation besides increasing obsolescence as the products remain unsold (for example an unused mobile phone may lose as much as 30% of its value in 4 months).
Vendors are often so focused on forward supply chain and ignore the costs of reverse logistics. Month-end fire-sales of returned items by e-commerce to the unorganized sector has been fraught with risks including unorganized sector cartelization (different sellers colluding to control prices in unfair ways) and returned items being sold into the brand-new channel adversely impacting customer satisfaction and margins.
The process of handling returns involves several actions
Customer needs to get a refund or replacement soon. The defective product needs to get picked up fast so that customer is happy with the return experience and comes back to buy again. Our research has proven that 80% customers with bad return experience will not buy from the same e-commerce company, while similar number said if the return experience was good, it would build trust about the company and they were very likely to buy again.
Mr Chaturvedi says that the returned products are quickly assessed for reasons of returning and decide whether it should be sent into shelf, sent to vendor, checked for DOA (dead on arrival) to claim warranty, repaired and refurbished or should be sent for scrap. All these decisions need to be taken quickly and with accuracy. If a product is sent back to shelf (meaning sent to e-commerce fulfillment center) it can be sold as new. Vendor terms will dictate which product will be sent back to vendor. OEM terms need to be examined to know if a product can be filed as DOA and if warranty can be claimed. If a product does not fall in any of the above categories, then effort needs to be made to repair it.
Once repaired, direct to consumer channel has to be established to sell it only as a refurbished item and not to sell it as new. This part is very important as this affects the brand image, customer satisfaction and vendor satisfaction. A direct to consumer channel where products are sold as ‘refurbished’ or ‘open box’ will allow clear separation between the two channels and ensure that there is no mixing. Finally, any product that is not economically viable to repair should be scrapped in an environment-friendly manner.
Who takes care of warranty?
“In most cases there is 6-month manufacturer warranty. For example, all Xiaomi products sold through Overcart come with exactly 6-month warranty. When the products are within the manufacturer warranty – then the brand is responsible. We also provide return-policies for customers who face any issues,” says Alex Souter from Overcart.com.
“From Reboot a customer gets a 1-year replaceable pan India warranty on all our desktop range, 6-month national replaceable warranty on our laptop range and 3-month national warranty on our Mobility device range of products. Of course, we also have special schemes as raas (repair as a service)-refurbishment and sell add-on protection plans, etc. You can walk into any of our stores across the country and get counter replacement or return via the website for a free replacement within the warranty period. All Reboot parts are warranteed unlike some other refurbished product providers,” says Mr Chowdhury of Reboot.
“At GreenDust, we offer 6-month warranty from our side on all the products that are bought from our website or from our connected-retail stores. GreenDust also offers accidental-damage and liquid protection to users. All our warranties are above the warranties offered by OEMs. GreenDust protection plan is free of cost and is applicable for 1 year from the date of purchase,” says Mr Chaturvedi of GreenDust.
What is the market size of refurbished products?
“There are several statistics on refurbished market but many developed nations recognize that the refurbished industry is large and in fact promote it via long-term government initiatives. For example, in the United States, 26 out of 50 states, mandate public schools and government institutions to buy ONLY refurbished products thereby reducing their CAPEX outflow and also equally looking after the environment. It is 25 times more environment-friendly to refurbish a product than scrapping. In India, like the e-commerce, re-commerce via refurbishing is a large and growing business. Just the IT hardware and mobility devices, leaving aside white goods, is a whopping USD 5 Billion market and growing at a VCAGR rate of 25-30% annually. The only issue is there is no national refurbisher of our scale and the entire market is fragmented via unorganized sector and then there are secondhands selling e-commerce websites,” says Mr Chowdhury.
According to Alex Souter, “In the refurbished mobiles only, the market size is expected to reach USD 14 billion by 2017, according to Gartner Research. We put the market size for refurbished phones in India at USD 3 Billion, by 2017.”
Mr Chaturvedi says, “Studies indicate that by 2020, e-commerce in India will be $115 billion and assuming 10%-15% return rate means that over $12-$17 billion in value of products will be returned every year. E-commerce is the fastest growing segment today in India. The current returns rate between 12%-15% is in line with return rates in developed countries. For example, in the US ecommerce return rates are between 10%-15%.
Mr Alex Souter, Managing Director, Overcart.com
Due to the recent surge in the number of smartphones being sold – India is now the second largest smartphone-market in the world with 140 million units – it is inevitable that the refurbished market will grow in the coming years. In addition – the fact that today the Indian customer is very educated about IT gadgets and knows exactly what he or she wants – means that customers are actively sourcing phones at the best price.
Mr Rahul Chowdhury, CEO and Co-Founder of Reboot.
In today’s world, with increase in consumerism and the fast paced technological innovation, managing the old or the so called waste is a growing environmental issue. Along with this is a large scale divide between the technology ‘Have and Have nots.’
Mr Hitendra Chaturvedi, Founder & CEO, GreenDust Pvt Ltd.
We sell refurbished products in all categories IT, mobile, home appliances, consumer electronics, accessories, apparel, furniture, shoes, toys, etc. Our assurance, warranty and support are among the best in this segment.
Check points before buying a Refurbished Product:
Is it a factory-refurbished product?
Is the refurbished unit being sold by a manufacturer’s authorized dealer?
Does the refurbished unit have a warranty?
Does the retailer offer a return policy for the refurbished unit in case you are not completely satisfied with your purchase?
Expect at least 15-days return policy. This is important so that you can inspect the product yourself before a final decision.
Accessories and Other Details: Check that all the chargers, cables, cords, manuals, software, drivers, and other things that come with your product are included in the package. Also check the complete description and specs list for your product and make sure it is the item you are expecting (a simple change in model numbers, for example, might mean you’re looking at a different product).
Although there are some risks when it comes to buying refurbished electronics, there’s no reason to be put off just by the label “reburbished.” Buying refurbished can land you an incredible deal. Just buy it from the manufacturer or reputable dealer and with a long warranty to cover any problems—and enjoy your savings.