Refabd makes settling in a new city cheaper, sells used products at 50-70% discount on MRP

This Bengaluru-based startup sells used appliances and furniture with free delivery and six-month warranty. It follows an inventory-based model and owns all the products before selling, which, according to its founders, gives a better margin. 

For newcomers in a city, setting up a house often turns out be an expensive affair. When three software engineers — Durai Gowardhan, Rahul Varma and Vineeth Kumar — arrived in Delhi to prepare for civil services exams, the basic products needed for their rented house cost around Rs 1 lakh. Spending such an amount for a one-time setup was not a feasible option and the trio started to dwell upon similar problems faced by the short-term residents of a city.

The prospect of purchasing used household appliances, not more than four years old, and refurbishing and selling the same online with a six-month warranty, appealed to them. That’s how Refabd was born.

Started in June 2016, Refabd initially dealt with the purchase and sale of washing machines and refrigerators, but within a year, it extended its cover to televisions, furniture, laptops, and other household items.

“In just a span of six months since inception, Refabd clocked a turnover of Rs 70 lakh and has already received the first round of funding,” says Vineeth.

 Buying and selling platform

Refabd has a website where interested sellers can log on and upload information on the product offered for sale with their contact details. This is followed by a physical inspection of the product by a technician, negotiation of the price, and the final purchase. Sellers are invariably those leaving the city or wanting to upgrade their product.

The second source for the company’s purchase are the e-commerce platforms, primarily for the ‘unboxed’ items that have suffered small damages during shipping and been returned by the clients. Since these items cannot be resold by the manufacturer, Refabd buys them directly from the online marketing companies. The damage is then rectified and the product is sold to customers at a marked down price.

The delivery is free and the used appliances and furniture are sold with a six-month warranty. Generally, the products offered by Refabd are priced anywhere between 50 to 70 percent of the MRP. It follows an inventory-based model and owns all the products before selling. This gives a better margin as well, compared to inventory-less commission-based model.

Quality control

The founders raised capital from their savings and borrowed money from friends and family. Since marketing was a challenge initially, focusing on digital marketing and word-of-mouth publicity helped them a lot. Eventually, the requirement of seed fund came in and they raised money from Autus Developers in the first quarter of 2017.

The money has been utilised to expand their category from appliances to furniture, and scale the operation. Today, Refabd has around 17 categories of products which include appliances like refrigerator, washing machine, television, split AC, and living room, bedroom, and kitchen furniture.

“Refabd has a quality control (QC) department which performs detailed QC of all products. Thereafter, we sell and generate a QC report and give a QC score for all products. The QC score gives the people a hint about the quality of the product. Real images of the products are taken from Refabd’s warehouse. The selling price is set based on the MRP of the product to allow the customers see the margin they get and the money they save,” says Vineeth.

He further stated that Refabd gets an average of 2,500 unique visitors per day. All products are priced between 30 to 65 percent of the selling price of new products on other ecommerce platforms. On all the products, the six-month warranty covers manufacturing and material defects.

 Capital inflow

This year, June and July have generated a monthly average of more than Rs 20 lakh. Vineeth claimed that the margin they get is 40 to 70 percent.

Refabd operates in Bengaluru with 22 employees including contract employees and interns. In the coming months, they want to expand to NCR, Hyderabad, Chennai and Pune and expect a pan-India revenue of more than $5 million in FY18.

Over the past few years, the ecommerce sector has grown rapidly in India and the need for both forward and reverse logistics has increased. There are a few startups doing well in the refurbished goods market in India. Reboot, a Gurgaon-based startup sells refurbished electronic goods. JustLikeNew.in, an ecommerce platform, picks up damaged smartphones, repairs them, and delivers them back to users. It also sells refurbished electronic goods. Bengaluru-based Blubirch offers complete solution in reverse logistics. It has secured $2 million in angel funding from Chicago Capital ventures, Sanjay Mehta, and others. Also, there is Overcart that provides returns management and liquidation services to major ecommerce companies, manufacturers, and retailers.

Website: Rebafd