The Growing Business of Reverse E-Commerce Market

Welcome to the world of a progressively growing “unboxed” or “Refurbished” market.

This now spans product categories ranging from electronics to wearables, home appliances, furniture, apparel, and even footwear. This article aims to focus mainly on the electronics, mobility, and appliances segment.

Apart from a host of specialized sellers who sell via their own platforms, or through offline stores, this seconds market, also called the “Reverse e-commerce market” has generated a good amount of interest from e-commerce giants like Amazon, Back Market, ReBoot, and from product brands like Apple and Samsung. In India, Amazon has branded this as the “Amazon Renewed” range.

Refurbished electronics is the distribution of electronic products previously used, returned to the manufacturer, to buy a new product, or for several other reasons. Refurbished electronic products are generally tested and after warranting proper functioning, are pushed back to the supply chain. The refurbishment process includes sanitization, triage, data wipe, repairs, replacements, reassembly, testing, quality control, cosmetic repairs, packaging, and shipping.

Furthermore, refurbished electronic products are better substitutes to promote the reusability of the product and to reduce e-waste. The refurbished electronics market is developing at a significant rate as the end-user vertical of the market is growing rapidly. Electronics are being offered at inexpensive rates and the urgent need to reduce e-waste being generated is anticipated to boost the growth of the refurbished electronics market.

With a certain segment of customers upgrading their gadgets fairly frequently, an opportunity area now exists across the world to refurbish these products to a new condition and provide a limited period warranty.

As per a general understanding of the trade, in the electronics and mobility segment, the “reverse e-commerce market” could be divided into three broad categories – The Open Box category, The Excess Inventory Stock, and the Refurbished category.

When any buyer has opened the seal of the box before returning the product back to the e-commerce seller, the product is categorized as an open box category.

Excess inventory stocks are invariably boxed products but could be end-of-line or older models. These are down sold by brands or distributors, but with intact warranties.

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It is the unboxed-refurbished category that is beginning to gain a lot of traction. There is a growing number of customers who are open to the idea of buying a refurbished product if they can get a good warranty from a reliable seller. One of the reasons this category is becoming a growing viable proposition is because it is not viable for brands, manufacturers, or distributors to store returned goods or to repair them. It is these products that are sold to refurbished/open box dealers at deep discounts. The refurbished or open-box sellers repair, touch up, repackage these products, and sell them at significantly lower prices.

It has been observed that products like mobiles, wearables, and laptops sell quite well online. Apparel, furniture, footwear, and appliances are generally sold in offline mode.

The market for unboxed-refurbished products has grown rapidly over the past few years. The pandemic has positively impacted the refurbished electronics market. Millions of people have had to work or study from home for the first time. These millions have augmented the demand for information technology hardware, particularly in third-world markets and in the lower segments of society globally. Additionally, the supply chain issues and chip shortage issues are also providing tailwinds to this business. Enterprises are reaching out to providers of refurbished electronics to cater to this demand, which in turn is expected to fuel the growth of the refurbished electronics market.

The key problem for unboxed-refurbished product sellers is the presence of several unorganized players, especially in the offline space. These end up giving a bad name to the entire refurb business.

The Asia Pacific region is anticipated to witness the highest market share in the refurbished electronics market owing to the extensive production capacity and availability of refurbished devices to provide the equipment in secondary markets, which is further boosting the growth of the refurbished electronics market.

North America is expected to witness the highest growth rate in terms of revenue in the refurbished electronics market, due to the rise in government regulations on reducing e-waste. This in turn will help in reducing e-waste and further help companies to pursue business opportunities from old and used products.

The Indian market for unboxed-refurbished goods is growing rapidly. It is believed that brands and organized online players who have got into this segment and are willing to go that extra mile to provide quality service are making better margins than in the sale of new products.

In the GCC and South Asia, what has been observed is that out of the traditional, decades-old distributors, intermediaries, and fulfillment partners of new products of key brands, very few have caught on to this opportunity area. The online aggregators and new startups are taking up this role too.

There is still room, as the space is not too crowded in the organized unboxed-refurbished segment. All it requires is finding a good, reliable, regular supply of returned goods, a down-the-line sale strategy, and backing it up with quality service.

This article is contributed by Niranjan Gidwani – Consultant Director, Member UAE Superbrands Council, Charter Member TIE Dubai

Disclaimer: All views and opinions expressed in The Brew Opinion – our opinion section – are those of the authors and do not necessarily reflect the official policy or position of TheBrew.ae, the company, or any of its members.