With the increasing costs of acquiring new smartphones and other devices, many entrepreneurs are seeing an opportunity in the refurbished gadgets business. But while most of these new ventures have been online, Hyderabad-based Dasaradh Ram Nutakki has his hopes set on an offline model. With the first YNew store in Hyderabad, Nutakki thinks he is at the start of what will be a very successful franchise model.
While the first store set up under the Sloyd banner is six months old, Nutakki says there will be nine such stores by the end of this year - four in Hyderabad and five in Bangalore. "The idea is to have 50 stores across India by 2016," says Nutakki, who likes to call his a made-for-franchise model. "I want to blend the concept of start-ups and franchising to do something different. Every YNew franchisee will be a start-up and we will create the ecosystem to make them profitable," he added in a telephone interaction from Hyderabad.Nutakki likes to call YNew a "re-commerce business model".
"If someone has a phone or a laptop to sell, he or she can hand over the product to us. We put the device through a 360-degree test after which we assign a price. The product is then put up on the display shelf. The seller is paid only if the product is bought by someone," he says. Since the second-hand phone market is full of stolen devices, Nutakki has thought of a unique way to stop unscrupulous elements from using his shop. "We pay the seller only through a bank transaction and that puts off most criminals. Plus, EMIE numbers of the phones are checked on the stolen mobile registry and kept on for 48 hours before sale," he adds.
Since April, the only YNew shop has seen 600 footfalls a month and sold goods worth Rs 15 lakh. "About half of these are smartphones, 40 per cent are computers and the rest televisions," he says. YNew charges a nominal transaction and service charge for all sales, ranging from five per cent for anything above Rs 20,000 to 12 per cent for devices priced between Rs 5,000 and Rs 10,000. The company does not deal in phones cheaper than Rs 5,000 and also has reservations about certain brands. Plus, customers within a 4km range have the option of availing repair services. Nutakki's Sloyd group wants to create a franchise conglomerate by slowly venturing into other sectors where such models will work. "In the US there are at least 300 sectors that have franchise models. We have just a fraction of that number here," he says, adding that he has started taking franchisee applications. "I do not want to stereotype the kind of people who can apply. Frankly, anyone with an entrepreneurial spirit can adopt this," he adds. The big opportunity, according to Nutakki, is the fact that smartphones have the highest replace and upgrade frequency. "The automobile sector has already institutionalised this model. But in gadgets it has to be a local model as the logistical costs can be too much," he says.