In the interiors of Sector 45, Gurugram, 30 kilometres from New Delhi, stands a defunct OYO property. It looks like the poor cousin of the flashy office buildings nearby. On its third floor is a warehouse, where old mobile phones exchanged on platforms like Amazon are kept.
Dozens of mobile phone cartons lie outside the main door of the warehouse, which is manned by a security guard who frisks employees before they enter. Inside, in a small cabin, three technicians are auditing the phones, comparing the specifications and condition of the devices with what sellers have claimed. Inside the main hall, various teams carry out quality checks—like testing the phone cameras and chargers.
In another room, phones that have been through this scrutiny are stored on shelves, stacked like biscuits in a supermarket. As and when orders are placed, the phones are dispatched.
The Gurugram property is just one of six warehouses which belong to Cashify—a leading player in India’s ~$4 billion used smartphone industry. In a space dominated by mobile phone dealers and distributors, Cashify has built its brand around making the buying and selling of used phones easier.
Unlike the unorganised sector, it does not face the problem of price discovery, where the seller wants to sell high and the buyer always wants it cheap. Instead, Cashify’s algorithm determines the value of a used phone based on various criteria, such as age, condition, and warranty coverage.
The company also offers services such as home pickup, and has kiosks at malls and metro stations that serve as drop-off points.
But Cashify wants to be more than a trader in used phones. It aims to be a part of your mobile phone’s life cycle. Users can buy accessories, get their devices repaired, and eventually sell or recycle them via Cashify.
Already, the company sells about 120,000 used phones monthly. This is just a fraction of the close to 2 million second-hand phones that get sold in India every month. Clearly, there’s immense headroom for growth. India is the second-largest smartphone market in the world after China. As per research firm IDC, 152.5 million new phones were sold in India in 2019. As phone features evolve rapidly, consumers are changing phones every 12-14 months, fuelling the second-hand market.
Cashify’s market opportunity puts it in a sweet spot, something that’s attracted venture capitalists (VCs). Together, they have invested $24 million in the platform. This is quite unusual, given that earlier companies in the used smartphone sector such as Just Like New and Surpluss, haven’t been nearly as lucky. The Cashify bet is not just about market potential; it’s also how Cashify has managed to sustain its business over the last five years, even as many of its competitors—such as Overcart, Surpluss and Karma Recycling—went out of business.