Cashify in India

Cashify does not want to repeat this mistake. Apart from online channels, it has also developed its own sourcing. Sellers can go to Cashify’s website, enter their phone details, and order a home pick-up. The collecting agent checks the phone through a Cashify app, and if it matches the credentials entered on the site, money is instantly transferred to the seller.

The company also runs 33 kiosks at malls and metro stations across India, which serve as a means of collection as well as branding. At one such kiosk at New Delhi’s Hauz Khas metro station, The Ken encountered a man selling his phone—an old Samsung Galaxy J2.

The Rs 2,000 ($28) Cashify offered for it is a good deal, he reckons. “I tried [selling the phone] at a few mobile shops, but nobody was giving me more than Rs 1,000($14),” he says. The Hauz Khas metro kiosk is Cashify’s best outlet, supplying over 600 phones a month, according to Manocha.

The company has also augmented its offline sourcing by tying up with large-format retail stores such as Croma and Vijay Sales. On the manufacturer side, Cashify has partnerships with the likes of Xiaomi, Oppo, Vivo, and Apple to source devices they get through trade-ins.

Weak link

While most of Cashify’s sourcing takes place online, demand is largely met through offline aggregators and distributors. These then sell it to mobile phone retailers outside of large cities. Demand, though, remains the weak link in Cashify’s model, according to multiple industry experts The Ken spoke with. While the company chose to focus on supply in its initial years, it started getting active on the demand side only a year ago.

Cashify is not as deeply entrenched on the demand side as its nearest competitor, Yaantra, the experts added. Yaantra’s co-founder Jayant Jha claims that the company works with 34,000 retail partners—small mobile phone store owners in tier-2 and tier-3 towns. In contrast, Cashify says that it has 600 active buyers and distributors on its platform.

According to experts, Yaantra is also stronger than Cashify in the refurbished phones space—phones that undergo some sort of repair before selling. Refurbished devices contribute to less than 10% of Cashify’s sales. Instead, a large part of the company’s sales are bulk sales to distributors—these are phones that are sold without any refurbishing. Cashify has one refurbishment centre currently, which can churn 50,000 devices in a month.

As for Yaantra, Jha says that his company’s entire business revolves around refurbished phones. It has two refurbishment centres, in New Delhi and Bengaluru. The company sells about 65,000-70,000 devices in a month, as per Jha. “We want to build trust in the market, which will happen when the quality of products is better,” he says. “By adding value through refurbishing, we extend the life of these devices. And if the product is good, it also becomes easy for my retailer to sell it.”

The founder of a now-defunct rival company agrees with Jha. In case of a bulk sale without refurbishment, since the devices are untouched, one can never be sure of quality, the founder says. “So, even if a distributor is buying, say, 50,000 devices, if he’s not able to sell them, he’s unlikely to return.” This is why there is a lot of churn in the bulk sale business, even though the topline numbers may look impressive, say experts.

Large distributors would also always like to negotiate for better prices, given that they are doing higher volumes, further hurting Cashify’s margins.

Offline over online

Unsurprisingly then, Cashify wants to build a direct sales channel—both online and offline. However, while it does a small percentage of its overall sales through its own portal as well as e-commerce sites, selling online is a gamble. The company takes a beating on online sales, where returns can be as high as 50%. That’s why Cashify and Yaantra do not see the internet as an effective sales medium.

Offline, though, is a different matter—one Manocha is unabashedly bullish on. He sees offline stores as a way to cut the middle layer and reach consumers directly. Cashify’s nine stores—all company-owned—offer buying and selling of used devices, accessories, and phone repairs, allowing it to earn through these ancillary services.