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So visiting market for all your furniture needs just got easier. air filled chair in indiaAs the tide of previously-owned goods hitting the market grows, more and more ecommerce platforms are offering such goods alongside new products. For seven years since it launched operations, Greendust was content being a reverse logistics company. It simply picked up returned shipments for ecommerce clients such as Amazon, eBay and Flipkart. But that changed recently. The Delhi-based company is now preparing to sell second-hand items such as cars, electronics and white goods. It will also offer warranties for these items before shipments. Greendust's business model is a little different from other platforms such as Quikr and OLX, which enable consumer-to-consumer (C2C) transactions, helping connect people and companies that trade in used goods. Hitendra Chaturvedi, founder, Greendust, has a simple answer to why the company made the leap into a new business.

Used goods, he says, is a bigger market than new goods. This is true, at least in two important segments — automobiles and mobile phones. For every 100 new cars sold, 120 used cars are sold and for every 100 new two-wheeler buyers there are 150 used two-wheeler buyers. Second-hand mobile phones see more than new ones because of the huge price difference. And by all accounts, the used goods market is huge. Indian households will dispose off used goods worth Rs 115,000 crore in 2015, up from Rs 80,000 crore in 2014 and Rs 60,000 crore in 2011, according to a study by industry grouping Assocham. Another study about previously owned goods by OLX done across 16 cities revealed that urban households are sitting on goods as diverse as a sofa and cars and worth Rs 56,000 crore they no longer need. As the tide of previously-owned goods hitting the market grows, more and more ecommerce platforms are offering such goods alongside brand new products. In July, online marketplace Snapdeal started Shopo, a platform where small businesses and individuals can set up a store to sell used or new goods.

About 20,000 small businesses and mom-and-pop outlets operating from homes have already set up storefronts on Shopo. "It's a zero commission marketplace. Anyone can set up shop and it will support single product use case as well," says Sandeep Komaravelly, senior vice-president, Shopo. In August, eBay India, started offering 'eBay Choices', a platform for refurbished products. Only about 10% of what is sold on eBay in India is used and refurbished goods, but the marketplace expects this to double in a year. "It's about giving buyers choices. They can check out a new, used and refurbished product, compare prices and decide which to buy," says Latif Nathani, vicepresident and managing director, eBay India. According to Sandeep Aggarwal, founder, ShopClues, an online marketplace, and Droom, an automobiles platform, global retail is $12 trillion and out of this 5-7%, or about $650 billion, is the size of the secondary market. "It's a natural marketplace evolution to enable people buy and sell used goods online."

Actually, used goods have never looked so good for businesses. Earlier this month, ShopClues started the 'unboxed' phone category on its platform. These are items returned to sellers and later resold on the platform. Nathani estimates that up to 15% of items shipped by ecommerce companies are returned within one month of purchase. These enter the refurbished market. Goods that are retained by a consumer for longer, like say, a car in a user's possession for five years, form the second hand or used products market. Used and refurbished goods end up giving more choice to consumers — both in terms of price and variety — and ecommerce companies extra business. For example, on ShopClues, a new One Plus One smartphone retails for Rs 21,998 and a returned one, resold for Rs 15,999. A brand new Xiaomi Mi4i costs Rs 12,999 and a returned one Rs 9,799. "We offer a liquidity platform for used goods," says Amarjit Batra, CEO, OLX South Asia. Chaturvedi, who has been doing reverse logistics for companies like Flipkart, Jabong, Paytm, Snapdeal, Amazon and eBay, says the return rate, or number of items returned by customers, for ecommerce companies is 20% that is, for every 100, 20 items are returned.

"By 2020, ecommerce will be $120 billion and we will have returns worth $24 billion." New products are sold on marketplaces either at maximum retail price or at a discount. Either way, they eat into dealer margins. A new smartphone, for example, sealed in a box gives a dealer a 3-5% margin. The same phone, returned and unboxed, gives a margin of 7-8% while a used and refurbished one could fetch 9-10% margin. "In old products there is more room for margins," says Chaturvedi, adding that Greendust will collect revenues of $300 million by the end of this fiscal. But it is not mobile phones that form the biggest secondary market. It is automobiles, thanks to their costlier price tag. Even the volumes of cars sold are not piffling. Aggarwal of Droom, which started in November 2014, says, "we do 1,000 used vehicles transactions a month". These staggering numbers explain why there are more than half-a-dozen startups such as CarDekho, CarWale and CarTrade that offer online classifieds to transaction platform for used vehicles.

Venture investors including Tiger Global, Kinnevik and Steadview Capital have put in about $700 million in refurbished and used goods startups. "Auto and white goods are the strongest categories and then follow electronics, furniture and home stuff. We have 2.5 billion page view a month, 45% are for cars," says Batra of OLX. OLX has tied up with Mahindra Auto to inspect used cars. Bigger Bang for Buck The rush to sell used products also stems from the fact that margins are better. For example, "margins for new cars are 4-6%, for used cars 8-12% and for refurbished, 16-18%. Organised used car dealers (like Carnation, Mahindra First Choice etc) make 18%. Marketplaces can do better than that," says Aggarwal. Eventually, it's a win-win for both buyers and sellers — buyers get a product, albeit previously owned, at many times cheaper than market prices and sellers get better margins. , a BMW 7 Series (730 Ld) 2010 model that has run 40,000 km costs Rs 38 lakh compared with a new model that is priced between Rs 92 lakh and Rs 1.9 crore.