Remember the estore that gives big discounts and still hopes to make money? It just got $9m

Pleased as plum. Photo credit: Pexels.

Ebay pioneered the asset-light marketplace connecting buyers and sellers. Amazon chose a more managed model with warehousing and logistics. Niche ecommerce company Zefo is taking that Amazon model to another level by managing the buying and selling of used goods end-to-end, including refurbishment, quality checks, and price assessment.

This is aimed at solving the two key pain-points of used goods trading: distrust from buyers and hassles for sellers. With those taken care of, the main attractions of used goods kick in: deep discounts and wide variety. The hunt for bargains can begin without nagging doubts about being swindled. And sellers needn’t worry about dressing up those used but functional goods.

All that is fine in theory, but managing it on the ground poses huge challenges. India’s a big market where consumers love bargains and are moving online in droves. But they can be very suspicious about claims regarding used goods.

If you don’t scale fast, it will be difficult for us or anyone else to crack the mobile phones category.

Zefo appears to have overcome the initial skepticism. Last year in November, when it raised its first funding round, it had around 30,000 consumers in Bangalore. Now, it claims to have served about 150,000 consumers, growing 30 percent month-on-month. It also expanded to Mumbai and Delhi last year.

“When you run a business, the biggest thing is the product-market fit. Will the consumer adopt a solution like yours? I think the sort of growth that we saw over the last one year, that has been the most pleasing aspect,” Zefo’s CEO and co-founder Rohit Ramasubramanian tells Tech in Asia.

Zefo wants to be the online “super store” for used goods, without compromising on its managed process even as it scales up. To do that, it has closed a series B funding round of US$9.2 million from the same set of investors who put in US$6 million last year: Sequoia India, Helion Venture Partners, and Beenext from Japan.

The money is going to come in handy as Zefo zeroes in on the efficiency of its core operational processes like logistics, warehousing, and refurbishments. To understand Zefo’s focus on these, you need to know its business model.

The unboxed sofa I was eyeing in Zefo.

Not the usual classifieds business

Zefo is not your typical used goods marketplace, which operates more or less like the classifieds.

Zefo buys the products from a seller – it could be you getting rid of that LED TV or furniture etailer Urban Ladder selling its factory seconds. It handles the logistics, takes the product into its warehouse, does quality assessment, cleans and disinfects it, and then refurbishes it if required. Only after that lengthy process does Zefo catalog and upload the details and pictures of the product – “including those of defects if any,” Ramasubramanian points out.

If by any chance, the consumer runs into some trouble with the product she bought on Zefo, she would get after Zefo and not the original seller. This is unlike the typical used goods marketplace which does little to assess the quality of listed products. This is what Ramasubramanian cites as the value Zefo brings to the table. And that’s why it’s important for the company to work on making that better and better.

Refurbishing is no mean task