The pre-owned smartphone market (2016) has been estimated to be around $14 billion globally and around $1.4 billion in India. Yibeal, incubated by IIM-Calcutta Innovation Park, built a platform to certify and facilitate the sales of pre-owned phones that faced three major issues of trust, inconvenience and price with first time buyers. Satanik Roy, Chief Product Officer and co-founder of Yibeal, explains about the online to offline model, the growing demand for pre-owned phones in India and about his rapid business scaling model that will create a network of micro-entrepreneurs under the brand Yibeal.
Yibeal’s O2O working model
We decided to retain the classic online discovery model– for broader and more efficient reach. We moved the meeting point offline to a safe, neutral location; and added home pickup and delivery as premium options. We built a standardized, super-fast and easily scalable process to evaluate and certify pre-owned phones. We created industry-first warranty and insurance products for Yibeal certified phones. We partnered with leading brands to incentivize the seller to buy a new phone, once he sells his old one on Yibeal.
Geographic reach of Yibeal
Yibeal has adopted Franchise model of growth for rapid scaling, creating a network of regional micro-entrepreneurs under its brand. Yibeal is scaling to over 100 regions including Metro-Cities, Semi-Urban and Rural India over next 6 months of its targeted scaling period.
What prompted the entry into the second hand smart phone unorganized market?
As new phones are being launched at a faster pace and data getting less expensive, demand for pre-owned phones has skyrocketed. However, the second-hand mobile marketplace is fragmented – and transactions via online classifieds can be difficult/unsafe.
Yibeal stands for trust, convenience and price
We recognized pre-owned mobiles as one of the fastest growing CE markets. Mobile phones constitute 22%, the highest share amongst ‘for-sale’ listings in Classifieds.
Inspite of this, we found the following problems in the current structure:
• Trust deficit – The second-hand mobile marketplace is underserved plus fragmented – and transactions via online classifieds can be difficult and unsafe
• Inconvenience – At the same time, we saw declining sales across the board for brick-&-mortar mobile stores as they lost the new phones business to online retailers
• Price sensitivity – Established phone brands were suffering, as consumers opted to buy cheaper new phones to offset the cost of a shrinking purchase cycle
We saw an opportunity to solve all three big issues, by bringing them together!
How do we compete with other online platforms that deal with sales of used phones
Most methods of buying pre-owned phones today has significant trust deficit. Yibeal:
1. Lets buyers discover sellers online, and then transact offline at local Yibeal centers or direct-to-home
2. Provides warranty coverage
3. Brands phone retailers’ under a franchisee ecosystem– faster/stickier growth on variable cost mode
Unlike typical online classifieds that depend on ad revenue, Yibeal earns from:
a) Processing fees on every transaction
b) Margin on warranty
c) Commissions on new phones sold
d) Premium charges
Revenue model of Yibeal
Yibeal has the following revenue models:
• Advertisements and App installs
• Transaction fees
• Margin on warranty/ insurance
• Premium for home delivery
• Sales commission from new phone sales
• Yibeal center franchise
Acceptance of used phones in the non-metro cities
Digital and Cashless Economy is a new way of life after demonetization. Yibeal is making it possible in sub-urban/rural places to own durable Premium Feature Phone at the price of a cheap Chinese phone which are available in local markets. Yibeal has made the possibility to realize and feel quality service of the valuable technology with certified warranty for peace of mind.
Demand from Tier II and rural areas for smart phones
Satanik: According to the latest report from IDC, 25 major tier 2 and 3 cities currently make up around 21.3 percent of the Indian pre-owned (second-hand) smartphone market. The “Monthly City Level Smartphone Tracker” report stated that most of the demand in smaller cities is for 3G models, but with increasing 4G smartphone portfolio across all brands. The latest Ericsson Consumer Lab report states that with availability of high feature smartphone at budgeted prices offered by pre-owned players, the adoption of mobile internet within the lower socioeconomic segment has increased over the last two years, from 38 percent in 2013 to 45 percent in 2015.
What is the range at which people are comfortable spending on used smart phones
Satanik: According to a report published by Statista, people in India are comfortable to spend between Rs. 2500-3500 for feature smart-phones and between Rs. 8000-10000 for high end Premium phones.
Yibeal team has the right mix of domain knowledge, experience, network, tech know-how and creativity.
Dipanjan Purkayastha –15 years’ across US/India in Strategy/M&A/BD. Scaledtech businesses from scratch to hundreds of millions of dollars. Angel Investor, on the Board of several startups.
Asish Chakraborty –6 years’ tech management in top global Tech MNCs. Enterprise Content Management specialist. Multiple project implementations using various SDLC processes like SCRUM and Agile
Satanik Roy – Adept at coding, design, writing and growth-hacking startups. Former Founder and CEO, Appolysus – Tech Adviser at Maptags Inc. and Voyageur Magazine – Vice President at Rotaract Club of Calcutta Metro City – Mechanical Engineering Undergrad – Author of ‘The Classic Retreat of Anarchy‘
Dwijo Chatterjee– Over 25 years of experience in Finance, Accounting, Compliance Management and Corporate Strategy – Experience across a wide spectrum of industry verticals with diverse business activities in manufacturing and service sector, including start-ups
Funding Yibeal has been incubated by IIM-Calcutta Innovation Park and has received Technology Funding from Microsoft through their BizSpark initiative utilizing for Product scale and Franchise Growth.