Opportunities and Challenges in Indian BitCoin Space – Thoughts by Early Adopters

There has been a lot of buzz around Bitcoins of late with the new-age currency gradually gaining popularity across the world. For those who haven’t heard of this new-age currency, a Bitcoin is an all-digital, cryptographically-made currency. Bitcoins are generated or “mined” by computers that solve complicated mathematical problems and algorithms on the Bitcoin network. The work and the complexity of the puzzles decide the value and the availability of Bitcoins in the network. The entire Bitcoin network or ecosystem is made up of miners, exchanges, speculators, consumers and merchants.

A few pioneers and early adopters of the Bitcoin trend in India have been doing some interesting work. This is what they had to say about the opportunities that have opened up to start-ups and entrepreneurs, the challenges that they face and the future of Bitcoins in India.

Opportunities

Mahin Gupta, CTO BuySellBitco.in

Mahin Gupta, CTO of Ahmedabad-based BuySellBitco.in, India’s first and most trusted Bitcoin trading platform says – “It is a very new market at the moment and an emerging one too. There are some awesome markets and business opportunities waiting, the major ones being exchange operations, payment processors, wallet services, money transfers and micro payments. On top of that we can see that if Bitcoin gains traction, services around computer and wallet security, hardware designed for Bitcoin wallets (both computers and other hand-held devices), Bitcoin education or awareness programs, business consultancy can be sectors where one can expect good opportunities.”

Sumit Ghosh Founder & CEO Zuckup Payments

Sumit Ghosh is the CEO and Founder of Zuckup Payments Pvt Ltd, a Bhilai-based company that has developed a mobile wallet for Bitcoins and also India’s real time Bitcoin exchange, bitcoinex.in that facilitates the buying and selling of Bitcoins, which would be operational from January 2014. When asked about the employment opportunities and opportunities for start-ups in the Bitcoin space, this is what he had to say – “Considering Bitcoin is the new age digital currency, it will create its own ecosystem that will require geeks/hackers, programmers and entrepreneurs to extend it into the global economy. Bitcoin will change the way we transact on the web and mobiles today, specially with regard to micro payments. Payment or monetary systems that are in use today are not designed for the present day internet. The Bitcoin system though has been thoughtfully designed for the internet age. I foresee a lot of entrepreneurs setting up online Bitcoin exchanges, Bitcoin Mining companies (hardware and software), Bitcoin-based payment processing companies like Bitpay, Mobile Apps for Bitcoin transactions, Bitcoin mining farms, market places to buy/sell Bitcoins (such as Unocoin and BuySellBitco.in). There is immense potential in this space and things are just shaping up. I am sure as more and more Indian entrepreneurs jump into the fray, we will see a lot many innovative ideas popping up. Bitcoin transactions will be replacing cross border bank wires completely. Things like Western Union and MoneyGram will be things of the past. People will just send you Bitcoins which you could cash at your nearest exchange after adhering to the KYC norms – all automated and online.” According to him the E-commerce sector stands to benefit tremendously as payments made via Bitcoins involve zero-transaction fees.

Benson Samuel, Chief at coinsecure.in

The burgeoning opportunities opening up in the Bitcoin field is best summarized by Benson Samuel, a Bangalore-based Developer and Consultant for Bitcoin and founder of coinsecure.in who says – “It would be easier to answer the kind of opportunities that are not available in the Bitcoin space in India rather than the ones that are available.” His wife has caught on the Bitcoin bug too and is in the process of incorporating a company that would be engaged in service offerings in the Bitcoin space. Gupta says that online payments, remittances and micro payments will see a dramatic change as Bitcoins gains popularity. He says that – “These sectors can hugely benefit by using the unique properties of Bitcoin. The issue though is that most of these sectors are highly regulated and have a huge entry barrier with regard to licensing and registration norms, so I doubt a small start-up without adequate backing and funding can change lot of things in these sectors.” He adds, “The big players need the assurance of the regulators to start something in the Bitcoin space. We should not forget the fact that mobile adoption in India is huge and it gives a person the basic instrument to store and use Bitcoins easily. I am sure that one day we will see people paying via Bitcoin or some other version of cryptographically-made currency while shopping online in India.”

Challenges

Rajesh Kumar S A, Head of Engineering at Streamoid Technologies

Considering that the adoption of Bitcoin is still in its infancy in India, there are bound to be a few challenges that entrepreneurs are likely to face. According to Rajesh Kumar S A, Head of Engineering at Streamoid Technologies, a two-time Yahoo! Hack winner and an early adopter of Bitcoin, some of the political and legal aspects prevalent in India are few of the main challenges that start-ups and entrepreneurs face. He says that if Indian regulators come up with a clearly-defined policy with regard to Bitcoins, many more technology companies would come forward to build products and services around the Bitcoin ecosystem given the availability of technical talent who have the understanding and skills needed to adopt virtual currencies.

Gupta thinks that the biggest challenges are with the regulation framework and says – “Since Bitcoin can affect mainly the financial aspects of the society, I do not see a lot of political challenges, but yes the regulators will have to think about its implications before they create guidelines for its usage. The most challenging part would be technical I guess, as it is a very unique concept and a bit too technical. It is sometimes too difficult to understand the whole concept. On top of it storing and using Bitcoins as of now requires you to follow strict security practices, else you may lose your Bitcoins.”

Ghosh who was a speaker at the recent Global Bitcoin Conference held in Bangalore had the opportunity to interact with a few bankers and RBI officials says that at the moment the RBI and other regulatory authorities are adopting a wait and watch approach before formulating a policy to govern the Bitcoin space.  He hopes that the Indian government, in the near future, understands the Bitcoin ecosystem and its potential to create new jobs in addition to bringing in a lot of investment to Indian shores which would go on to make the country the Bitcoin destination of the world.

Samuel is of the opinion that one of the pressing needs that has to be addressed in India is the setting up of a fluid exchange and goes on to say that INRBTC.com is coming close to delivering something solid on those lines.

Vishnu Y, Founder INRBTC.com

Vishnu Y, Founder of INRBTC.com, an online trading platform based out of Hyderabad that facilitates the buying and selling of Bitcoins in Indian rupees says that as of now Bitcoin holders are limited to techies in Bangalore, Hyderabad and Mumbai but are slowly expanding to the other parts of India.

The heightened interest around Bitcoins has also caught the fancy of Gaurav Burman of the Dabur family who recently invested in itBit, a Singapore-based Bitcoin exchange who plans to bring the platform to India over a period of time. He believes that a credible Bitcoin exchange platform that facilitates conversions into other major countries of the world in both a secure and transparent way will fuel the wider adoption of the currency as a preferred payment medium.

Undoubtedly the Bitcoin space is bursting with exciting developments and opportunities that have the potential to redefine the way online payments are done. According to Samuel, this new form of currency is akin to decentralized technologies such as the Internet or Linux that are not reliant on any kind of brick-and-mortar infrastructure in order to propagate and spread. However the challenging bit is explaining to the regulators that this is a technology that cannot be shut down or banned. The skepticism that exists in some of the entrepreneurs that the government would ban Bitcoins which could impact their businesses need to be addressed in the right manner to assuage any doubts and fears in the minds of the budding entrepreneurs who wish to make a mark for themselves in the Bitcoin space. He strongly feels that it is only a matter of time before the widespread adoption of Bitcoins in the online world.

Gupta’s company is working in this direction by developing a platform for both online merchants and physical stores to accept Bitcoin as a payment mode. As a parting thought, he says that a majority of Bitcoin users in India are speculators and investors and as such individuals who wish to trade in Bitcoins should be careful and only invest money that they can afford to lose. Rajesh believes that even though it is in a nascent stage, the Bitcoin ecosystem needs products and services that would make it easy to be integrated in e-commerce portals along with making it more customer friendly. He is also optimistic about the opportunities opening up in the areas of Bitcoin mining and the setting up of mining pools in India.

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The Startup Scene in India

(This article is the first part of a three-part series on The Startup Scene in India.)

Earlier this year, Bowei Gai and Benjamin Joffe came out with the India Startup Report – as a part of their World Startup Report initiative. The full report can be viewed here:

Some key takeaways from the report are enlisted below:

1. India vs. China:

India is following an entirely different growth path from China when it comes to startups and technology; in some areas, it’s unlikely that it will ever catch up with China, while in other areas, e.g. in tablet and smartphone usage, it could very well overtake China’s growth in the near future.

2. Key Players:

A few, big startup successes in India are highlighted, including Flipkart (E-Commerce, valued at $800M),Inmobi (Mobile Ads, valued at $1B), Snapdeal (E-Commerce, valued at $200M), and Myntra (E-Commerce/Fashion, valued at $100M).

3. People, Media, and Events:

Emphasis is given to a list of popular angels, incubators and accelerators, including The Startup Centreand The Morpheus, and Angel Groups/VCs, including 500 Startups and Sequoia Capital, among others. Also included is a list of prominent media, e.g. YourStory.in, StartupDigest, conferences, e.g.TechSparks, NASSCOM, meetups and events, e.g. Startup Weekend, In50Hours.

4. Competition:

“India is not simply emerging, it has emerged.” – Barrack Obama

India has a fast-growing, young ecosystem, with relatively limited number of startups. The risk-averse culture in India leads to less competition than in US or China. Competition is primarily focused on the E-Commerce sector, and Angels/VCs rarely compete for deals, leading to lower startup valuations. This lack of overall competition hurts the startup ecosystem in terms of quality, valuations, and market-building.

5. Surprises:

Many Internet companies are solving big infrastructure issues, e.g. Flipkart is building its own shipment and cash-on-delivery solutions to solve issues with poor logistics and payment infrastructures; redBusprovides software/devices to bus companies to build missing ticket infrastructure. On the other hand, trust in online stores remains an issue, so E-Commerce companies are effectively participating in market-building. Usually high interest rates which leads investors to put more money in real estates, gold investments and traditional cash-flow businesses. Some other issues include, fewer returnee rate, “India time” (whereby poor infrastructure and chronic traffic issues mean that meetings and events often start very late), slow decisions due to committee mentality, but despite difficult conditions, people seem content and optimistic in general.

6. High Social Risk:

Startup founders might have trouble getting married due to the risk factor associated with startups. So, to convince someone to join your startup, you will likely end up having to convince their entire family. Traditional entrepreneurs continue to grow in numbers, however – they are mostly small-business owners and risk-averse, sticking to traditional cash-flow businesses and family-run businesses. Due to the traditional cash-flow mindset, startups that can monetize quickly are favored by both entrepreneurs and investors.

7. Talent:

There are plenty of engineers, but few specialized experts, i.e. senior developers, designers, marketers, product managers. Engineers go on to pursue further management studies for a better paycheck. IITforms the core talent of engineers in India, but it’s definitely possible to hire talent from other school with good internship programs, like BITS. Job sites are useless in this regard – sticking with recruiters or your own network is recommended.

8. Policies:

“In China, things happen because of the government. In India, things happen in spite of it.” – Mukund Mohan

India has strict rules against foreign multi-brand retailers, e.g. Walmart, BestBuy, and major foreign investments in the same are forbidden; this is likely to change soon as the laws continue to evolve, however. Startups seeking capital from Indian investors tend to incorporate in India, while the ones seeking foreign investments tend to incorporate offshore, e.g. in Delaware or Singapore. The new startup tax, whereby angel investments are taxed at 30% (for any amounts that exceed accounting laws of a fair valuation), are causing unnecessary annoyance to startups and investors, but will not deter the continued investments in India.

9. Opportunities:

India has missed the PC revolution, but will it catch up in the phone/tablet revolution? Organized retails only accounts for 7-8% of the total retail market; what remains to be seen is how and when the retail market will change, and who will change it. The country’s infrastructure needs quite some work; India is open to privatizing some of this infrastructure -can a startup come into the picture in this regard? 70% of the current population still lives under $2 a day; would innovations affect and improve the quality of life for these people?

10. Advice:

• For Local Entrepreneurs – Stay in India for potential unfulfilled opportunities; there’s no need to reinvent the wheel. Try getting into an incubator/accelerator to avoid a lot of mistakes that early startups make – also, easier to find mentors and funding this way. If you have to come to the US, many US startups have Indian co-founders – reach out to them for help and guidance.
• For Foreign Entrepreneurs - Many Indian startup successes will come from returnees/foreigners – this opportunity won’t last long, however, so come soon if you have to. Be bold and tackle the big business opportunities there are, and find an Indian co-founder who can guide you through the complicated business and social pathways.
• For Foreign Angels – It’s safe to invest in India for exploratory purposes; need to have realistic expectations for your investment, however. IPOs are virtually non-existent, and most local angels aim for series B exits or small acquisitions. Co-invest with reputable, already established organizations, and let the local investment groups complete your due diligence.
• For Foreign Companies - India is an easier market to break into than China; talent is cheap and regulations are good. Online companies like Google, Facebook and Twitter, can easily win, whereas companies relying on offline infrastructure, e.g. eBay and Amazon, are gradually getting overtaken by local competitors. Patience is key – business in India progresses slower than usual due to the poor infrastructure, slower pace of life, and a general lack of motivation.

So, what are some of the main challenges that are currently being faced by India’s startup ecosystem, and what can we do to improve things? Watch this space for our take on this, and more – in the next two parts of our three-part series on The Startup Scene in India.

In the first part of our series, we covered the India Startup Report released earlier this year – and included some key takeaways from the report.

What’s the current state of affairs in the Indian startup ecosystem?

There have been indications that the startup scene in India has improved much in the past few years, thanks to some innovative new startups that have come up, the rise in new startup accelerators and incubators, and increased VC/angel investors’ interest. However, it still doesn’t amount to much compared to the rest of the startup hubs, according to a study released by Startup Genome and Telefonica Digital – which took a data-oriented approach to compare and list the top 20 startup hubs across the globe. Bangalore was the only city which was included in the Top 20, but fell from an earlier position of 9th  in April last year, to 19th -  barely making it to the list.

The report remained optimistic about the state of affairs in India, however:

“India could well be one of the toughest countries in the world for a startup to flourish. Although it is one of the world’s fastest growing economies, India ranks 140th in the world in nominal GDP per capita. However, being one of the biggest markets on earth provides a foundation for a prospering startup scene.”

The report noted a few other things:

• Bangalore startups are 24% more likely to monetize compared to Silicon Valley startups.
• The level of education among entrepreneurs in both of the cities is the same.
• The hiring capacity of Bangalore startups is at par with that in the Silicon Valley.
• 56% of Bangalore startups are working towards building a great product, while 30% are motivated by trying to change the world.
• Low rate of technology adoption: most startups in Bangalore still rely on PHP and Java, instead of Next Gen frameworks like Ruby and Python.
• There was 74% less funding raised in Bangalore, compared to Silicon Valley.
• Bangalore startups are 67% more likely to dabble in smaller markets compared to startups in Silicon Valley.

In a 2012 YourStory research survey, “State of the Start Up“, it was found that in India, 34.78% of companies felt that Bangalore was the place to start a business, with Mumbai coming in second at 20.90%. Bangalore is deemed to be the “Tech Capital” of India, and so this comes as no surprise, since the city alone accounted for 35% of India’s 1 million IT professionals.

TECHINASIA recently came out with a few interesting statistics about the startup scene in India:

• An average of about 970 technology-product entities gets started every year in India, and only about 380 incorporate the entity as a corporation.
• The mortality rate of these entities is quite high, with over 60% pivoting or going dormant within 12 to 18 months.
• 61 percent of startups are focused on business oriented offerings – and about 39% are geared towards consumer applications such as mobile apps, social networks and e-commerce, among others.
• In 2006, there were about 43 active venture investors investing in about 73 companies each year; now there are over 80 angel investor networks, seed funds, accelerators and early stage funds, and over 153 companies get some form of institutional funding each year.
• There are three main challenges that the Indian startup ecosystem faces: the paucity of exits, the lack of a sophisticated angel investor and mentor network, and the inherent risk-averse nature of the Indian middle class.

Challenges being faced by startups in India today:

1. Talent: In India, very few are ready to give up the comfort and security provided by their cushy jobs to become entrepreneurs. Hence, it becomes difficult for startups to attract and retain quality talent – since people generally do not want to quit their jobs at larger companies to go and work for a startup.
2. Education: India is still lacking in a proper startup ecosystem to take full advantage of the opportunities up for grabs today. Other than a limited number of top business schools in the country, most educational institutions fail to provide the necessary support and resources for their students to indulge in free-form thinking, and take up entrepreneurship.
3. Funding: Lack of funding is one of the major issues being faced by startups in India today. Add to that the lack of government support, in terms of policy approvals, bureaucratic red-tape, and slow decisions by committee mentality – this poses a big challenge for Indian startups.
4. Vision: Most Indian startups lack the long-term vision and leadership to sustain and grow their business over the long run; too much emphasis is given on quick monetary returns instead of innovation – a situation that is not helped by the VCs/angel investors for these startups, either.
5. Infrastructure: The infrastructure in India leaves much to be desired – poorly planned roads, inefficient logistics, quality of Internet service, issues when it comes to water and electricity, among others, all contribute adversely to the startup ecosystem in India today.
6. Compensation: Indian startups, compared to their peers in other startup hubs, are generally reluctant in paying their employees in terms of industry standards; they usually blame the economy/recession as a part of these “cost-cutting measures”, while on the other hand, the employees are overworked and underappreciated. This results in substandard performance by the employees, and in turn, the company as a whole.
7. Mentorship: The startup ecosystem in India faces a serious dearth of good mentoring and a support system – India does not have a large pool of successful entrepreneurs who have built successful companies from scratch, and are willing to mentor the next generation of entrepreneurs. A lot of entrepreneurs are looking for good mentors – as opposed to funding.
   In the first and the second part of the series, we discussed some of the key points from the India Startup Report published earlier this year, the current state of affairs in India’s startup ecosystem, and the main challenges being faced by startups and entrepreneurs in India today.
   Here’s a very insightful infographic by Nasscom, created for their 10,000 Startups program, which sums up the startup ecosystem in India:
8. 
   
   
   
   
   The future looks bright.
   The startup ecosystem in India has come a long way in the past five years. The economy is booming, dozens of startups are coming up in every field, be it Internet, engineering, retail/E-Commerce, manufacturing, among others. Several companies, e.g. Infosys and Wipro, have taken the initiative in starting up incubators as well as VC/private equity funds. In addition, initiatives such as the National Entrepreneurship Network (NEN) and IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE) seek to foster innovation – through incubation, investment and training.
   It is still very nascent compared to Silicon Valley, and continues to have “considerable friction” attached to it; however, the situation has matured to a great extent. The change has begun; we have seen an incremental rise in startups, entrepreneurs, accelerators and incubators, and VCs/angel investors in the startup scene, over the past few years. It’s expected that opportunities in the web and mobile market will take off significantly over the next decade – a paradigm shift of sorts, from Indian startups trying to clone the US market, to morphing into an entirely separate entity on their own.
   The diversity of our ecosystem is something we all can take pride on; from young entrepreneurs fresh out of college, to retired executives. The anatomy of a typical entrepreneur is a middle-aged male, with a technology background, focusing on building a product that’s largely concentrated towards the Indian masses. The exceptions, however, are the ones that truly stand out – the ones with long-term vision and maturity to guide and sustain their businesses over an extended period of time.
   The support ecosystem for entrepreneurs in India is growing at an exponential rate as well. Be it the idea stage, the prototype stage, the product ready stage, or the growth stage – there are several events and organizations that are contributing to the growth of the startup ecosystem in a big way:
   
   Startup ecosystems are shaped up by both external as well as internal factors. Internally, the startups in India face the same issues as anywhere else – getting traction, managing growth, and so on; however, externally, factors including regulations, bureaucratic red-tape, infrastructure, legal frameworks, funding, etc., continue to be some of the major challenges faced by these startups. While this does take a toll on the ecosystem in India, we need to figure out ways to work around them, since we do not have any immediate control over these factors.
   At the ground level, we need more awareness about the entrepreneurial success stories in India; more focus on the lessons learnt from both successes and failures. We need to be able to capitalize on the huge potential of talents and resources available in India, so that more people would be able to access the accelerated learning and the challenge of problem-solving that startups provide, instead of just concentrating on getting their monthly paychecks.
   The Indian startup ecosystem – while still taking its early steps – is certainly evolving in a big way.Aspirations are running high; people from all walks of life are choosing to stray away from the well-trodden path to jump into entrepreneurship; innovative, world-class products and services are being developed on a regular basis. We still have a long way to go with respect to our ecosystem, but the future looks bright, indeed.
   
   
   
   

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Recommerce – Opportunities, Challenges and Startups in India

Samsung launches Galaxy Note 3!

Lenovo launches IdeaPad Flex 15!

With technology advancing rapidly in line with Moore’s law and giants like Samsung, Dell, Lenovo, HTS etc., churning out gadgets at a frenzied pace, it comes as no surprise that you would want to flaunt the latest gizmo that has hit the market. But what do you do with the present cellphone or laptop that you own? One, you could either pass it on to your kid brother or sister, but chances are slim that they would want to own an obsolete gadget; Two, you could place an ad on one of the many online classified ad sites like Quikr, Sulekha or OLX and hope to find a buyer who is genuine, is willing to pay the right price and finds you at the earliest so that you can rush to the market to buy your dream gadget; Three, you could just leave your cellphone or laptop in a drawer and lock it away.

There is a fourth option now however that you could explore and is guaranteed to get you the best price for the gadget that you plan to sell – you approach one of the Recommerce companies in India such as YNew or Budli.in who would evaluate it and give you the best price almost immediately.

Recommerce? What is Recommerce?

Wikipedia defines Recommerce or reverse commerce as the recovery of products over electronic systems, such as the Internet, or through physical distribution channels.

Rohit Bagaria, Founder & CVO, Budli.in

According to Rohit Bagaria, Founder & CVO of Budli.in, a Kolkata-based Recommerce company – “The Recommerce model is an evolution and extension of the e-commerce Model. In e-commerce, the user pays the seller and the seller ships the product to him. In Recommerce, the seller ships the product and gets paid for it.” He goes onto add that, “Recommerce is all set to explode and have an enormous impact in India. It is environment friendly, and will allow access of technologically advanced devices to a wider section of the society.”

In a nutshell, Recommerce refers to a practice in which those who have bought products can “sell back” obsolete or otherwise unwanted products in exchange of cash or a different product.

Why Recommerce?

Dashradh Ram Nutakki and Mitesh Majithia founded YNew, India’s first Recommerce venture promoted by Sloyd Ventures Pvt. Ltd., based out of Hyderabad in April 2013.

Dashradh Ram Nutakki, Founder, YNew

Nutakki says – “There has been a positive trend in the Recommerce space in the last few years. If you look at the automobile industry, the Recommerce of used automobiles is being done in an organized manner. However, such an organized setup is absent in the Recommerce of consumer electronic gadgets. YNew aptly fills this gap to provide the benefits of organized processes to the end consumer.

Secondly, the performance of the primary commerce in consumer electronic devices is highly encouraging. The last 5 years or so have witnessed a huge growth in the sales of new gadgets and the upward potential in the market is colossal. Recommerce in an industry is possible if the primary commerce is strong. Hence, Recommerce in the consumer electronic devices space is bound to grow exponentially in the coming years.

About 50.5 million new gadgets are expected to have been sold in India in 2013. This translates to a market value of US$ 17.3 billion or Rs.952.5 billion. Of this, 0.72 million used smartphones are expected to have been sold in 2013, translating to US$105 million – which is huge.

Finally, the changing consumer demographics are doing their bit in driving Recommerce in lifestyle gadgets. Increasing household incomes and brand awareness are prompting people to purchase the latest gadgets from reputed brands, and as such more and more used gadgets are increasingly reaching the Recommerce market. Every better valued consumer trend will stay for the longer term and this current trend is here to stay for the next decade or two.”

Bagaria feels that, “There is immense potential for Recommerce in India. There is an unfulfilled need in the market which Budli.in is addressing. A large number of people have used gadgets. As technology penetration increases, this need is going to explode in the near future. The options to sell these gadgets in a fast, simple and convenient way and obtaining a fair value for them is limited. The user experience while using Online Classified Ads sites is at best YMMV (Your Mileage May Vary) – the seller does not know after listing his device when it will sell, at what price, authenticity and genuineness of the buyer, price haggling etc. People require a convenient, fast and simple way to sell their used gadgets which many times is just lying around losing value.”

Challenges in Recommerce in India

Like all new concepts, Recommerce too is bound to hit a few stumbling blocks before it is set to take off in India. When asked about the specific challenges that they face in India, this is what Nutakki and Bagaria have to say.

Nutakki lists out the three primary challenges that could hamper the growth of Recommerce in India -

Technology Obsolescence – Technology obsolescence and shorter product life cycles of gadgets can pose a greater challenge as Recommerce can happen only when there is an element of aspiration to own products at an affordable price but are not obsolete.

Supply Liquidity – It is always a challenge to assure a consistent supply liquidity across geographies (without which Recommerce cannot happen).

Logistics Costs – Increasing logistics costs can play a role in discouraging Recommerce companies to cater to tier-2 and tier-3 markets, as the margins in this industry are usually thin. Inflated logistics costs will eat into the margins and discourage the industry players to carry on Recommerce.

Bagaria too feels that logistics is one of the biggest challenges. He adds, “since it is a new concept – creating awareness, establishing trust and credibility are some of the other challenges that the Recommerce industry in India faces.” However, he is optimistic when he goes on to say, “these challenges are similar to what was faced by the e-commerce sector when it started off in India some years back. Today it has become widely accepted.”

On founding YNew, Nutakki says, “YNew is the first mover in this space and every first mover is bound to face certain challenges. The biggest challenge is to find good talent in a virtually non-existent industry. The difficulty in finding skilled or trained resources will remain till this industry gains credibility and some limelight.

Another challenge is that in spite of having good potential and greater consumer awareness, there is still a stigma against used products that is prevalent among the masses. While our efforts towards removing this stigma are yielding results, it may take some more time to eradicate it.

Other challenges include a lack of regulatory framework, absence of a business ecosystem, price sensitive consumer behavior, and a highly fragmented market.”

Opportunities and Future of Recommerce in India

Both Nutakki and Bagaria are very optimistic about the future of the Recommerce industry in India. Nutakki is of the opinion that, “going forward, Recommerce in consumer electronic devices in India will witness a steep growth curve. The industry is set to grow at a CAGR of more than 35% between 2012 and 2016.” Echoing a similar sentiment is Bagaria when he says, “there is no organized industry in India for used gadgets yet even though the market size is huge. Recommerce has immense potential to organize this unorganized sector. ”

Talking about the employment opportunities that Recommerce opens up, Bagaria says that, “it is going to bring numerous employment opportunities in India in the areas of Marketing, Technical Inspection, Customer Service, Logistics, etc.” Nutakki is of the opinion that, “Recommerce draws many similarities from the retail and e-Commerce domains. Hence the skill sets required to work in this industry will be an amalgamation of these two domains.”

Advice to entrepreneurs who wish to foray into the Recommerce space

For those wishing to setup a business in the Recommerce space in India, Nutakki has this to say – “Given the nascent stage of the Recommerce industry, many things need to fall in place before one can reap maximum benefits out of it. Added to this is the fragmented nature and absence of an ecosystem to support a business environment that is conducive to the industry players. This implies there are many entry barriers that one has to consider. Hence, it is in your best interest to study and analyze the industry top-to-bottom before taking the plunge.”

“As is the case when creating something new, it is an interesting, exciting, challenging space in India with immense potential,” says Bagaria.

Pioneers in the Recommerce space in India

YNew

YNew was founded by Ram Nutakki (36) and Mitesh Majithia (41) in April 2013. Ram graduated from Bangalore University and has completed his PG in Management from Siva Sivani Institute of Management, Hyderabad. Mitesh is a mechanical engineer and has completed the OPM (Owner/President Management) Program from Harvard Business School.

YNew currently offers two services:

1) Consignment and Sale of used lifestyle gadgets: Through this service, YNew offers a convenient platform to sell and buy used lifestyle gadgets including smartphones, tablets, laptops, desktops and flat panel televisions. YNew offers value to both buyers and sellers by providing convenience, value for money, and a hassle-free experience. The consignment of products includes their testing, certifying, fixing an Ask Price for the product and selling it to aspiring buyers.

Value Proposition for Buyers -

• Unmatched shopping experience to facilitate informed purchase
• Choice of reputed brands and variants at multiple price points
• Tested and Certified Products
• Transparent product rating and pricing
• 1 month of free service warranty
• Extended service warranty at an affordable price
• Free home delivery

Value Proposition for Sellers -

• Showcase to unlimited buyers
• Added trust and credibility due to certification of products
• Better “Ask Price” based on transparent product rating
• Refurbishment services
• Convenience of free product pickup
• Success-based transaction fee

2) Repairs & Troubleshooting of Smartphones/Tablets, Laptops/Desktops: Servicing of gadgets is currently available only for smartphones and PCs. YNew caters to both home and office users through in-store repairs or on-call services within a store’s territory. All repairs and services are carried out by qualified engineers and the range of servicing includes repairing small gadgets to infrastructural and networking setup in small business enterprises.

YNew was recognized as a first-mover in the Indian Recommerce space and was listed in the “5 Unmissable Asian Consumer Trends For 2014” by US-based consumer market research consulting firm trendwatching.com.

In addition to the individual buyers, YNew lays emphasis on the Startups, SMEs, and NGOs. Such enterprises depend on Recommerce for the benefits like lesser capital expenditure and value of money.

YNew is looking to roll out 50 YNew stores by 2016 across India and clocking a turn-over of Rs.100 crores to gain the market leadership position in recommerce. YNew’s expansion will be solely through a franchising model.

Budli.in

Budli.in was founded by Rohit Bagaria (35), a Post Graduate from UC Berkeley, California, in June 2013. Budli (meaning ‘Exchange’ in Hindi) allows users across India to value and sell their used gadgets like Smartphones, Tablets, Laptops, iPods, instantly and directly to the company. An instant online price quote, free shipment pickup from most parts of India and prompt direct payment to the seller is provided.

There is also an option to monetize the gadget and donate the proceeds to a charity on the seller’s behalf.

Budli.in offers a consistent, curated, controlled selling experience to anyone who wishes to sell their high end gadgets across India. Their USP is

• Speed
• Convenience
• Value
• Transparency
• Risk Free
• Simplicity and
• Environment-friendly

In the near future, the company plans to start online sales of ‘Budli Certified PreOwned’ gadgets which will allow users across India to buy high end gadgets, duly inspected, at very affordable prices.

Budli.in was selected as one of the top startups from India to take part in the Dublin Web Summit, 2013.

Featured image credit: samsungtomorrow

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