E-commerce major Flipkart is planning to get into sales of refurbished smartphones by this Diwali as it explores options to manage the high return rates of handsets and to cover the price advantage it lost with the arrival of the Goods and Services Tax, according to a report in the Economic Times (ET).
The company plans to sell Flipkart-certified refurbished mobile phones on its platform as well as through offline outlets, ET reported.
Citing an executive involved in discussions with Flipkart for offline distribution, the report said the motive for the move is to clear its increasing return inventory in the smartphone segment. The firm plans to sell three categories of refurbished phones priced in the range of 60-75 percent of their original value.
"There are also handsets with minor problems which are replaced. The company plans to get them checked and certified to look and work like new and sell them as Flipkart-certified refurbished handsets. There will be limited warranty as well on such products," the executive told ET.
The report said that Flipkart will retail popular brands such as Lenovo, Motorola, Samsung's 'On Series,' Panasonic, Micromax and Sony Xperia.
The e-commerce firm will use its logistics arm Ekart for deliveries. The company has already initiated discussions with distributors for its offline tie-ups.
Amazon began offline distribution of smartphones earlier this year and also started selling certified refurnished handsets. It currently sells Coolpad smartphones and plans to expand it to other models of brands such as Samsung and Motorola.
Industry executives were quoted in the report as saying that Amazon and Flipkart are entering offline sales to offer a wider distribution platform to handset vendors, including several new Chinese companies. In addition, GST on smartphones has been set at a uniform 12 percent, replacing varying rates of value-added tax levied by states.
Online retailers can no longer buy devices in low-VAT states and sell them in the rest of the country, passing on the gains to customers through discounts, the ET report noted.