Electronics Bazaar

Refurbished Franchisee Store

Electronics Bazaar

Refurbished PCsTier 1 Franchisee Store

Refurbishing Facility – Video

(Click below to play)

Source: YouTube

Refurbishing Facility (1/2)State-of-the-art 30K sq. ft. factory established in Nerul, Navi Mumbai

Source: YouTube

Refurbishing Facility (2/2)Refurbishing Process in action

Source: YouTube

Retail Outlet ExperienceOutlets running in Mumbai and Bangalore

Source: Management Data

Business SnapshotElectronics Bazaar – Leading Player in the Refurbished PC Segment

Huge Untapped Market

► Refurbished PCs are thoroughly tested and verified to function as good as new

► $3.1 Billion potential market size by 2023

► Current market size of refurbished PCs - 4 Million Units

► PCs are not used to their full potential hence extending their lifecycle can enable further usage

Product-Market Fit

► Largest organized brand in the refurbished PC market

► Refurbished PCs cost 60% lower than new and are of same or similar quality

► Retail model avoids unnecessary expenses and enables physical interaction with product

► E-waste management and reduction in carbon footprint

Unique Positioning

► Largest Microsoft Authorized Refurbisher

► State-of-the-art refurbishing facility that can churn 30k units

► 1 year replacement warranty with customization services

► Exclusive retail outlets High Margin Business

Expansion Plans

► Open 400+ retail stores – both owned and franchisees by 2023

► Scale up operations to 19 cities

*Run-Rated over Apr 2018 to Oct 2019

$3.1

Bn30K

60% 43x

Source : Microsoft Report

Product PortfolioLaptops and Desktops

Source: EMIS Report, BusinessWire, ET, Zinnov Analysis

► Refurbished PCs are priced at 60% lower than new PCs and function as good as new thus making a strong value

proposition – more and more people are opting for refurbished PCs

► Under EPR, the government mandates manufacturers to responsibly recycle 1/3rd of old PCs

► Small & Medium Enterprises and Education Sector to drive demand

► Directionally, GoI is pushing adoption of refurbished PCs to reduce e-waste, carbon footprint and CapEx

Laptops Desktops

Refurbishment – an underserved market segment of PC industryCustomers plagued by lack of transparency, awareness, limited selection and no quality assurance

Unorganized

markets & lack of

standardization

E-waste Disposal Pure play online

model High IT Capex

Refurbished PC space largely driven by unorganized local

retailers with many lacking the ability to completely transform the

product and give it a complete ‘new’ look and feel backed with warranty and superior services

attached

Online model does not address all customer concerns

As Product is refurbished customers prefer to feel the product and buy, instead of

buying it online

IT is a sizable chuck of any company’s expenditure

20-50 million metric tons of e-waste produced worldwide every

year

Lack of IT asset recovery firms with a proven track record

capable of unlocking remaining value of IT capital assets and/or stipulate with local laws of solid

waste management

Product-Market Fit: Promoting recycling of Surplus IT Assets

Consolidating &

Standardizing

unorganized Market

Gov. Certified

Refurbisher

Omni-Channel

Retail StrategyReducing IT Capex

No.1 brand in refurbished PC space providing access to quality

refurbished products with comprehensive warranty at

affordable prices

Extended Producer’s Responsibility

Issued by Central Pollution Control Board (CPCB)

Consent to Operate

Issued by Maharashtra Pollution Control Board (MPCB)

Capacity to refurbish 30K units per month

Many lack the ability to completely transform the

product and give it a complete ‘new’ look and feel backed

with warranty and superior

Easy to scale & high-touch model addressing customer concerns regarding lack of

transparency, quality assurance, and uncertainty of

a gadget’s authenticity

Budget conscious MSMEs and Start-ups can optimize their IT

investments by opting to purchase refurbished

computers from Microsoft Authorized Refurbisher-

availing savings on hardware & genuine software licenses

Refurbishing Market Trend in Consumer ElectronicsThe refurbished category is growing 4x on a Y-o-Y basis

Popular Refurbished Product Categories

Refurbished smart phone volume grew by 25% in

2017 crossing 12 million units

Cons. Electronics & Computer dominate

Electronic segment

Source: BusinessLine - April 30, 2018; The Economic Times - May 23, 2018; Deloitte Report – Feb, 2019

Growth in business activityAspirational Purchase at

affordable prices

Improving awareness among

millennials

Ecosystem of service providers Organized sellers strengthen

supply

Certification process,

Warranty & Packaging

Drivers

PC Market OverviewPCs comprise of desktops and laptops and form a $10 Bn Market in India

Global IT Hardware Market

$295 BnBy Value

(2018)

Indian Refurbished PC Market

$850 MnTotal Market Size (Value) in

2018

4 Mn(Units)

2018 Market Size

30% p.a.

$3.1 BnTotal Market Size (Value) in

2023

14.85 Mn(Units)

2023 Market Size

Indian PC Market

Source: Microsoft Report, BusinessWire, ET, Zinnov Analysis

$10.4 Bn2018

$13 Bn2023

CAGR ~ 6%

Market Drivers for Refurbished PC MarketAwareness is a major factor driving the Refurbished PCs Market growth

Rental vs

Upfront

Payment

Value for Money

Product

Stringent

Quality Test

Better

Customer

Experience

CSR Activities by

large corporatesHigher Margins

• Replacement warranty enhances attractiveness

• Rental PCs, nearly 30% of the overall Refurbished PC market are

driving sales of refurbished PCs

• EMI facility also offered

• Retailer margin on refurbished PCs ranges from

15-25%, higher than their margin on new PCs

• High profit margins encourages push for

refurbished PCs

• Warranty being offered to customers

• Electronics Bazaar selling Refurbished PCs with 1 year

replacement warranty

• Customers can get product for 60% lower price of new

with comparable quality

• Refurbished PCs are as good as new

• Several corporates have been donating refurbished

PCs to NGOs/ Educational institutes from their CSR

budget

• Corporates either procure directly from refurbishers or

via beneficiary entities

• Electronics Bazaar follows stringent 21-step refurbishing

process, providing good quality refurbished PCs to

customers

• E-Commerce players like Amazon are helping improve the

awareness of refurbished PCs

Source: Zinnov Analysis

Market GeographyShare of top Indian cities in refurbished PC Market

Low

High

Po

pu

lati

on

(in

Mn

)

HighLow Internet Users (in Mn)

Number ‘X’ indicates City-wise rank based on number of Refurbished PCs Sold (Sell-through)

Delhi NCR

Bangalore

1Hyderabad

4

ChennaiAhmedabad

Pune

Kolkata

8

Surat

Lucknow

Coimbatore

Jaipur

Mumbai

106

7

3

12

5

4

1

8

9

2

11

X

West

East

South

North

Source: Zinnov Analysis

Regulatory EnablersGovernment Policies promoting usage of refurbished computer systems

Transforming India into a digitally empowered and knowledge economy will require a plethora

of hardware systems and the government is promoting used or refurbished systems for the

same

Build a strong eco-system for nurturing ‘innovation’ and ‘exponential start-ups’ shall encourage

growth of Small and Medium Enterprises which are crucial customers of refurbished computer

hardware and peripherals. We are seeing trends of Start-ups buying Refurbish laptops over new

laptops in our outlets.

The Ministry of Commerce and Industry has permitted import of refurbished and second hand

electronic items subject to registration with the Bureau of International Standards and

compliance with labelling requirements and these items can be refurbished and re-exported to

international markets

State governments being encouraged to adopt the Public Procurement Order 2017 for the

procurement of electronic products along with leveraging Government e-Marketplace (GeM) to

expand the market for domestically manufactured electronic products

Preferential

Market Access

Removing Import

Restrictions

Start-up India

Digital India

Source: EY Analysis

Case Study: Micro CenterLeading refurbished computer retailer in the US

25 Large Stores(high volume) operational in major

markets across the US

Since 1979, Micro Center has served over 22M customers till date across USA, with a turnover ~ $3 Bn (FY19)

30,000+ itemsIn stock at their high volume retail

stores

Omni-Channel PresenceFacility to order online also available

apart from retail outlets

Sales Associates1Micro Center hires computer and electronics enthusiasts and provides them continuous

continuous training to ensure that customers receive an outstanding constative sales

constative sales experience

A large fully-staffed counter area where customers can bring computers for one-on-one technical

one-on-one technical support, quick upgrades and other personalized help sessions

Unique Store Features

Micro Center

Knowledge Bar 2

75%Environmental Damage done by a

PC occurs during its production

1.35 mt tonnesCarbon Dioxide emission being

released can be saved by the

reuse of a single PC base unit and

screen

20xReusing PC is 20x more effective

at saving energy than recycling

materials for re-manufacturing

Environmental ImpactRefurbishing a PC extends its life thereby reducing burden on the environment

Source: PureIT Dell, BBC

150 kgCarbon Footprint Produced while manufacturing a new laptop

E-WasteRefurbished PCs can resolve environmental hazards posed by dumping of e-waste

Computer refurbishment is the most environmentally sound form of computer recycling and a valuable source of IT equipment made available at

low cost

These would have ended up in landfills otherwise creating 20-50 million metric tons of e-waste worldwide every year

12.5%Percentage of e-waste being recycled currently

Warmed up e-waste releases toxic chemicals into the air damaging the

atmosphere

E-waste thrown in landfills causes toxic materials to seep into

groundwater affecting both sea and land animals

Refurbished Device JourneyEach device undergoes a stringent process before it reaches the end user

Screening of Products (Asset Verification Test)

Pre-repair check:

• Inspection

• Assessment

• Grading

21-Step Refurbishing Process making the product

as good as new

Post-Repair Quality Checks: Burn Test and Final QC

Packaged EB Certified PCs sold with 1 year

replacement warranty

Source: Management Data

L1 Repairs L2 Repairs L3 RepairsL4 Cosmetics and Refurbish

Refurbish

• Software Reinstallation

• Reset Settings

• Small parts replacement • PCB Chip repair level • Top and back cover changed

changed

• LCD Refurbished

Stages in the Refurbishing Process

Business ModelDistributor Business and Retail Outlets

Procured from:-

Corporates

OEMs

Customer

Franchisee Stores

EB procures used products from various sources through contracts and tenders or partnerships (in the case of OEMs)

Key feature of the new EB exclusive stores: offer the advantages of Online model with

the additional benefit of retail availability to browse, touch and feel the EB

refurbished product

30K sq. feet world-class facility in Mumbai which can

refurbish 30K units per month

GRADE A

REFURBISHING

Microsoft Authorized Refurbisher

Source: Management Data

Own Store

Outlets

Government

City-Wise Outlet Expansion PlanTargeting 430 Stores across 19 Cities by 2023

Ahmedabad

Mumbai

Bengaluru

Hyderabad

Chennai

Delhi, NCR

Indore

Chandigarh

Jaipur Lucknow

Surat

Nashik

Pune

Nagpur

Raipur

Vadodara

Bhopal

Kanpur

Kolkata

Cumulative

StoresMar-20 Mar-21 Mar-22 Mar-23

Metro Cities 50 110 170 170

Tier-1 Cities 9 69 129 249

Total 59 179 299 419

Source: Management Data, EY Analysis

Own & Franchisee Outlets

Only Franchisee Outlets

Kay Kay Overseas – Group OverviewIndustry Veteran with an experience of 25 years in the PC market

KKOC was founded

as a distributor of

computer,

computer parts

and peripherals

Became Samsung’s

largest IT partner in

India

Became HP laptops’

largest partner

1st and largest

distributor of Dell in

India

Compuindia was

founded as an

exclusive partner for

Dell for their online

business

B2B E-Commerce arm

founded

1995 2000 2005 2008 2012 2014

Timeline of operations

2018

Electronics Bazaar

became the biggest

Microsoft Authorized

Refurbisher in India

One Time Cap Ex

Electronics Bazaar

Franchisee

Head INR

Branding & Furniture 7,50,000

Head INR

Civil WorkWhite box with False Ceiling, AC

& Glass Front

5,00,000

Others Franchisee

Inventory INR

35 Pcs 7 Lakhs

Rental Deposit INR

6 Months 2.4 Lakhs

Revenue Ramp Up

2.05

2.62

3.41

4.37

5.73

7.29 7.29

MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7

Revenue (INR Lakhs)

Revenue (INR Lakhs)

Revenue Break Up

Month Laptop Units

Laptop ASP

Desktop Units

Desktop ASP

Total Revenue

1 9 19750 2 13750 205250

2 11 20000 3 14000 262000

3 14 20250 4 14250 340500

4 18 20250 5 14500 437000

5 23 21000 6 15000 573000

6 29 21000 8 15000 729000

7 29 21000 8 15000 729000

Franchisee Outlet P & L

-150

-100

-50

-

50

100

-50

-40

-30

-20

-10

-

10

20

30

40

1 2 3 4 5 6 7 8 9 10

Month of Operation

Net Profits – Tier 1(INR ‘000)

Profits Cumulative Profits

Break Even

Profitable

P&L Break Up

Month RevenueFranchise Margin

(15%)Rent Salary

Electricity & Utilities

P & L

1 205250 30787 40000 30000 5000 -44212

2 262000 39300 40000 30000 5000 -35700

3 340500 51075 40000 30000 5000 -23925

4 437000 65550 40000 30000 5000 -9450

5 573000 85950 40000 30000 5000 10950

6 729000 109350 40000 30000 5000 34350

7 729000 109350 40000 30000 5000 34350

ROI

Year 1 (INR Lakhs) Year 2 (INR Lakhs)

P & L 1.38 3.67*

CapEx (incurred by Frch’ee) 5.00 5.00

ROI 27% 73%

*5% Hike in Rent, Salary & Electricity Utilities Considered

Thank You

Contact

yash.r@electronicsbazaar.com

+91 7977528130/+91 9757407622