ISSUE 14 - 31st January 2021
Indian E-Commerce Giant - Flipkart recently came up with a service plan - SmartPack which they are marketing as
'The Smartest Way to buy your Smartphone.'
They have launched this as an add-on service which you can opt-in when you are buying a phone on Flipkart.
Flipkart is collaborating with Tech-Youtubers with a good subscriber base to promote this plan by using a very specific tagline - "Get 100% Money Back on your New Smartphone." Even you might be intrigued to know about it because of the 100% Money-Back glitter. So what is this service plan and what do they offer with it? Let us take a look.
Flipkart - SmartPack
It's a service offered by Flipkart when you buy a new smartphone from them. It is an opt-in service for which you need to pay in monthly amounts which range from ₹1500-₹2000 for 12 or 18 months depending on the plan you select.
The plan comes under 3 options - Bronze, Silver, and Gold. And these 3 plans come under two options as well - a 12-month plan and an 18-month plan depending on the phone. This plan comes with various brands like Samsung, Redmi, Realme, Poco, Motorola, Vivo, and others. One thing to note here is that this plan is only available with mid-range phones with a price range of ₹6500-₹17000 (This ia a different story). Let us, deep-dive, into the plan details.
Under this SmartPack, you need to pay for your phone's original price upfront plus a monthly charge which will be according to your plan & tenure selection. This plan will provide you memberships for popular apps like Hotstar, SonyLIV, Voot, Zee5, Zomato Gold, etc. for the time you pay for this service. At the end of your service tenure, you need to return your phone in 'any working condition' (just the phone should turn on and should show IMEI number) and you will get the amount of your phone in your bank account. The amount will be 100%, 80%, or 50% according to your plan under Gold, Silver, or Bronze respectively. Please note that the amount to be returned is just the original price of the phone and not the additional monthly fees that you pay.
By now it might seem interesting to you but there's a saying that "All that glitters is not gold" and this is just another YOLO or Money Trap that will rob you of your future earnings. So what is the underlying cost that could go unnoticed by a customer? For that, we need to make a cost calculation and a detailed analysis of the plan. Let's go!
Decoding the SmartPack:
For the analysis, we are using the Samsung Galaxy F41 (128 GB) Variant which is available at ₹16,499 on Flipkart. The Smartpack is available at an additional ₹1579/month and the tenure is 18 months. This is a gold pack so it promises a 100% refund at the end of the period. The tab shows that it offers 13 Premium Services in the SmartPack along with this phone but on the Service Page of SmartPack there are many other bonuses promised. We do not know if those other services will be provided actually or not but nevertheless, we are including them in the cost analysis. We have converted the plan prices to 18 months prices for the purpose of the calculation by taking the annual price at the base.
Price of the Mobile:- ₹16,499
Monthly Charges:- ₹1579 * 18 months = ₹28,422
Total Cost = ₹44,921
(You'll end up paying the price of OnePlus for a mid-ranged smartphone.)
Services Offered and their respective cost for 18 Months:
Flipkart Complete Mobile Protection Plan:- ₹1199
Disney+ Hotstar VIP:- ₹599
SonyLIV Premium:- ₹1499
Zee5 Premium:- ₹1499
Voot Select:- ₹599
Zomato Pro:- ₹1200
Gaana+ :- ₹599
CureFit Live:- ₹2999
Practo+ :- ₹3597
DocsApp Gold:- ₹2850
Eros Now:- ₹557
Voot Kids:- ₹749
Medlife Advantage:- Not Available
Eros Now Premium:- ₹557
Tinder+ :- ₹2660*
*Not promised on the product page.
Total Cost:- ₹22,062.
You Paying to Flipkart:- ₹28422
Let's even ignore the difference between the actual cost and the price, let us consider this as a cost of extra coupons and freebies that you might get along with this. But ask yourself -
How many of the listed apps do you use?
Even better question, How many do you know that these apps/services even exist?
Would you pay for them from your pocket if they were not available with this service?
Plus Flipkart is providing these services as a bundle, so you even know that when you purchase something as a combo pack, the actual cost comes down but here you're paying more for the same. It is highly possible that Flipkart is getting these services from the provider at low cost because of the 'economy of scale'.
Now let us talk about the resale value of the phone. Assuming the resale value after 18 months. Better than an assumption, let us pick a phone by Samsung in the same price range which was launched 18 months ago, Samsung M30 which was launched at ₹17990. Looking at the selling price on OLX it is being sold in the range of ₹11000-₹15000.
Let's take the amount at ₹13000.
So, according to this, its resale value is at least 60% of the original price. So, 60% of Galaxy F41 stands at ₹9900 which is what you could get, but Flipkart is giving you ₹16500 - well that is nice. So if we bring the resale difference and adjust it to the difference between the profit (6360-6600) then you are in a surplus of ₹240. So there's nothing more actually that Flipkart is offering here. And only if you actually use all those services then you are actually at no loss. Here there is only loss or no loss. There's no gain here. And if you thought that this is a good deal for you, well!
Now one thing to note here is that this deal is just available for phones between ₹6500 - ₹17000 which categorizes as Mid and Low Ranged Smartphones.
And who buys such phones in this range?
The Middle Class.
And who can you sell the dreams of getting 100% Cashback because who needs it the most?
The Middle Class.
How are they marketing it?
Through YouTube Influencers. By sugarcoating the offer with just one line - 100% Money Back on your New Phone. By showing that you can get 100% of the phone's value even after using it for 18 months by paying just a little amount and that too for the services. It is the tendency of most people to check reviews of the phones that they are planning to buy and YouTube is the current place to check the reviews of tech equipment. And what if your favorite Tech Youtuber markets it? Of course, you will consider buying it. So is the case here.
Selling a Dream!
It is so easy to sell the middle class a nice dream because they are the people who try to save each rupee in any manner they can. So they get wooed by such offers and purchase it because their favorite Youtubers are marketing it.
The offer might be good, it might be bad but the way they are marketing it is unjustified - in a scamful manner, because it shows only the brighter side. And also if the phone needs to be in any working condition at the time of returning it, then why is the Insurance Plan being forcefully pushed on the consumers?
The phone manufacturer makes money because Flipkart is selling more phones via this method and also probably the Manufacturers gets back the used devices after 18 months.
The apps/service providers are getting money because they are getting more Subscriber base.
The influencers are getting gains (maybe monetary) by marketing this.
But who is paying for all of this?
What do you think? Is it the right thing to do?
Tweet to us @YourFinMan
So that is it for this week's FinMail, We will see you next week with another such interesting story. Till then stay protected from such offers. Special Shoutout to Ash and the Team at C4E Tech to bring this out to notice. Tweet them a Thank-you! @C4etech.
Copyright : YourFinMan