Flipkart plans to restructure refurbished biz forward of IPO

The corporate is exploring partnerships with refurbished service suppliers and is trying to sharpen its deal with offline retail channels as a substitute of relying solely on the net mannequin to run this enterprise.

“Flipkart is heading for an IPO (preliminary public provide) and is underneath immense strain to tie free ends. The refurbished enterprise, underneath Jeeves F1, has seen a major dip in income. In consequence, the corporate is planning to maneuver from a B2C (business-to-consumer) to a B2B (business-to-business) mannequin and promote refurbished gadgets by means of offline channels solely,” one of many two individuals stated requesting anonymity.

The particular person stated Flipkart will get smartphones both as product exchanges or buybacks, that are additional offered by way of third-party sellers underneath the refurbished enterprise. Nevertheless, promoting these by means of Flipkart.com “is more and more changing into a problem” as most refurbished gross sales occur offline. “Most refurbished consumers now wish to contact and really feel merchandise earlier than shopping for them,” the particular person stated.

As a lot as 40% of gross sales of refurbished digital merchandise occur offline, stated Faisal Kawoosa, chief analyst and founder at market analysis agency techARC. With second-hand telephones included, the share of offline gross sales is 70-80%, he stated.

“It’s troublesome to promote sure issues on-line, particularly second-hand electronics. Although service suppliers have a number of checks for high quality evaluation, it’s troublesome for consumers to evaluate a product with out seeing or experiencing it. Consumers wish to look at how a lot scratch a smartphone has or how sluggish it’s,” stated Kawoosa.

The home marketplace for refurbished electronics has been rising at a sooner tempo than that of latest merchandise as firms battle a provide crunch amid the worldwide semiconductor chip scarcity whereas costs of digital gadgets rise on account of greater enter prices.

Market researcher Redseer stated in a report in Could that the Indian marketplace for refurbished electronics might hit $11 billion by March 2026. Flipkart must compete with rivals like Cashify, HyperXChange and even Amazon, which runs a refurbished enterprise.

Each Cashify and HyperXChange have giant networks of offline shops. Based on a February report by VCCircle, Cashify owns 90 offline shops and eight franchise shops in India, with plans to open 100-150 extra over the subsequent yr. HyperXChange runs greater than 350 shops, which it plans to broaden to three,500 this monetary yr, the corporate stated in an interview with The Hindu Enterprise Line in Could.

As a part of its technique to develop the refurbished merchandise enterprise, Flipkart acquired this January re-commerce firm Yaantra for an undisclosed quantity.

The second particular person cited above stated the deal will assist Flipkart exploit the startup’s capabilities in repairing digital gadgets. Flipkart’s servicing arm, Jeeves-F1, gives companies like set up, repairs, returns, and refurbishment companies for after-sales wants of manufacturers.

In an electronic mail response to queries, Flipkart confirmed that it’s trying to broaden within the retail section.

“To drive higher synergies, Flipkart Jeeves-F1 shall be leveraging Yaantra’s product capabilities and its current operations and community to scale its refurbishment operations and improve alternatives within the retail section. This new channel will assist provide clients entry to a variety of merchandise that they’ll trade or trade-in,” the corporate stated.

Flipkart didn’t say whether or not the restructuring will have an effect on staff in its refurbishing enterprise, or current sellers of refurbished merchandise on its platform.

The primary particular person stated, nevertheless, that the corporate needs to be absorbing these staff in different companies.

This March, Flipkart appointed former Unilever PLC govt Hemant Badri as its senior vice-president, provide chain. On the time, Badri was slated to go the Ekart-Myntra Provide Chain and Jeeves-F1 companies on the firm, Flipkart group chief govt Kalyan Krishnamurthy, stated in an electronic mail to staff on the time. Ekart is Flipkart’s in-house provide chain arm.