How The Business Of Refurbished Phones Works

Even as the usage of smartphones in India grows, there is a strong market for used and refurbished phones. There are companies that have set up pipelines to collect used phones, refurbish them and put them back on the market.

Gurgaon-based Cashify is one such company that deals in refurbished phones. Their recent survey found that the sales of 5G models rose from 13% in H1 2023 to 17% in H1 2024. Refurbished phone sales increased 109% from January 2024 to H1 2024.

Mandeep Manocha, co-founder of the company, told The Core Report, “Essentially, our business caters to people’s aspirational needs — people who buy a refurbished or used smartphone, people who do not have the money to buy a new product, but who are very, very aspirational. And that's what we have seen as a trend trickling down at all the stores that we run.”

This highlights a growing awareness and acceptance of refurbished mobile phones among a certain section of consumers.

The survey found that 63% of respondents have a used phone sitting unused at home. Moreover, 60% of people have at least one phone at home that needs repair, but they choose to buy a new one due to the high repair cost.

“That's where companies like ours, we're putting effort and energy into educating the people. That's a valuable resource, which is lying there,” Manocha said.

In the interview Manocha also spoke in detail about how each device is collected and examined, who the Cashify customer is and why using a refurbished phone is good for the planet and the customer’s pocket.

Edited excerpts:

I want to pick up on a recent report you put out, which reflects on consumer behaviour in the last year. There are several interesting insights, for example, two in every five Android users want to switch to an iPhone. What more can you tell us?

We've seen a very interesting premiumisation trend over the last couple of years. When I speak to my counterparts in the new smartphone sales industry, Apple has moved from less than 2% market share to now about 5% market share. We are seeing the same trend in the refurbished segment.

Essentially, our business caters to people’s aspirational needs — people who buy a refurbished or used smartphone, people who do not have the money to buy a new product, but who are very, very aspirational. And that's what we have seen as a trend trickling down at all the stores that we run.

It's very interesting that a youngster between the ages of 18 to 26, people in college, or those who are in their first jobs, they either want the latest phone or say, if the latest iPhone is 16, they're happy to have a 12 or a 13 because it improves their social capital in front of their friends. So I'm seeing that trend. There have been interesting cases of people with first-time jobs with a salary of Rs 30,000, but with an aspiration to buy a Rs 30,000 phone.

We are able to fulfil this need through some aspect of affordability, which comes with six months or nine months of financing. But overall, I'm seeing premiumisation as a trend setting in this industry. And it's not just iPhones. Demand is also getting generated in high-end Samsung Galaxy phones, OnePlus devices and so on.

That's a demand side to which I'll come back. Tell us about the supply side. If people are able to get their hands on an iPhone 12, that means someone is selling them. What's the frequency there like? I'm sure the behaviour is quite different in such cases.

I've seen the behaviour change quite a bit. If you remember the times when Nokia was the leader, people used to hang on to their phones for four or five years because the phone was such that you didn't need to change it.

But we saw the refresh cycle come to 12 months to 15 months. Today, the refresh cycle has actually gone up to about 18 to 24 months. Because the phones are getting more and more sturdy, the quality is good and they're getting more expensive.

People are hanging on to them for a slightly longer timeframe. There’s another interesting fact — not all phones come back into the circular economy. Our estimate says that about 80% of the phones actually go in people's drawers and cupboards.

Only 20% of people actually end up changing their phone. It could be either when you're buying a new phone, you hand over your old product, or, you know, you're pulling out the old phone from your drawer, selling and getting cash. But 80% of it's still lying in people's drawers.

That's where companies like ours, we're putting effort and energy into educating the people. That's a valuable resource, which is lying there. One, it's money. Second, it's the resource of this planet. Ultimately, if that does not come back into the mainstream economy, either through extending life and making it available to somebody else, or recycling it, that valuable resource is lying in your house.

Tell us about how you manage the throughput and the logistics of this. Let's say a phone that you have to pick up from Bengaluru versus Noida versus Kolkata.

As a customer, you could be anywhere, you come on to our app, we give you a price and if you like the price, we will come to your doorstep. Now, in about 100 cities, we have our own feet on the street. We have riders who are trained in evaluating a phone at the doorstep.

They will run a diagnostic tool on your phone and ensure that whatever you have told while getting the price is correct. They'll do a physical inspection, we're also deploying a box, wherein you just put the phone inside the box, and it'll do a 360 degree imaging of the phone and tell you where are the scratches, dents, etc. So everything is very, very objective.

Once that happens, and you as a customer are okay with the price, we pick it up and bring all the phones to our central facility in Noida. This is a facility spread over 80,000 square feet where we test every phone, grade them, and then refurbish them. They're then sold to an end consumer, either through our online platform, or about 180 stores that we operate.

Is that seasonal or is that a continuous cycle of sales?

There is some bit of seasonality in this. Typically the quarter just after Diwali is when our procurement cycle peaks. This is because people buy new products during this time of the year. But this is the only cyclicity we see in terms of more and more phones coming in. The other cyclicity we see is whenever a new phone is launched. Over a period of five days before and after we see a peak.

Otherwise, we procure about 1,50,000 phones a month. Over the last two years, we've seen about 20-30% growth year on year. Now we are in a stable state. I think this business is growing pretty solidly from where we are today.

You're saying that, including the cost of picking up that phone, putting it in that box, running it, training those people, bringing it back, delivering it out again, either through your own platform or through your stores, the 180 stores that you talked about, this is still a profitable business?

Yes, there's still a profitable business. I can give you a macro view of this. If I buy a phone from Mr. A and sell it to Mr. B directly, there is about a 25-30% margin available. This is the gross margin. Now our business has multiple verticals. We sell to distributors as well.

We sell to people who retail. So the margin is redistributed amongst each other, but ultimately it's 25-30% which is available. Even after doing all the hard work of picking it up, preparing it and putting a warranty, it's still a profitable business. As a company, we are profitable now.

What would you tell someone who you want to convince to buy a used phone?

I think it's a sustainable choice. And more so, it will help you, your outflow of money would be lower. Refurbished, good quality refurbished phones are available with at least a six-month or 12-month warranty.

They are properly checked and tested, and they are cheaper by at least 30%. So you can do good for the environment as well as save money. So I think it's a great proposition for you.