Refurbished smartphones, PCs, tablets and their ilk are in high demand as professionals and students work from home during the Coronavirus pandemic...
A perfect storm is brewing for consumer electronics marketplace Back Market. The items it specializes in — refurbished smartphones, PCs, tablets and the like — are in high demand as professionals and students work from home during the coronavirus pandemic. In many regions of the world, unemployment has skyrocketed, so consumers are increasingly budget-conscious. Finally, by extending the lifecycle of consumer devices, e-waste — and the pressure to continually upgrade electronics — is reduced.
The online e-tailer, headquartered in Paris, launched in 2014. Awareness of e-waste—the metals, chemicals, plastics and other elements in discarded electronics — was escalating as an environmental concern.
“Few people were aware that consumer electronics were creating 50 million tons of e-waste and only 20 percent of that was being re-used,” said Serge Verdoux, managing director of Back Market in the U.S. “Back Market envisioned a platform dedicated to high-quality, refurbished electronics that would make restored devices mainstream.”
The global market for refurbished phones, PCs and appliances is estimated at $80 billion.
Back Market, which entered the U.S. in 2018, has millions of paying customers; is growing annually by more than 100 percent and has raised $120 million from Goldman Sachs, Aglaé Ventures (the venture arm of Groupe Arnault), and Eurazeo Growth. With the advent of the Covid-19 epidemic, sales doubled between March and April this year.
Many businesses, including electronics distributors, provide refurbish/recycle services and products. These B2B transactions largely occur between long-term, established business partners. Consumers are more wary of renovated items, so Back Market partners with professional refurbishers that meet exacting quality standards.
“We’ve developed 15 quality metrics that we track, starting with the order,” said Verdoux. “Was the order shipped on time? Was it the right order? Is the item fully functional? If something goes wrong, how responsive was the refurbisher? We track all of our sellers this way.” These metrics are also integrated into the pricing of the products.
Back Market recognizes that consumers are most concerned with brand names and products and not the company that renovates them, so its market is set up like any retail outlet. “We want buying conditions the same as if a consumer was buying brand-new,” said Verdoux. “We’ve found that approach successful – and we are building trust.” Refurbishers warranty the devices sold by Back Market. If a company can’t honor the warranty — if it goes out of business, for example — Back Market will replace or repair the device.
In addition to providing value to consumers, refurbished electronics benefit the environment. “If you are extending the life of a product you can lessen the impact on the environment,” said Verdoux. According to the US PIRG, Americans purchase some 161 million new smartphones each year. That requires roughly 23.7 million tons of raw material to produce.
“If we held onto our phones one year longer on average, the emissions reductions would be equivalent to taking 636,000 cars off the road each year and would reduce manufacturing material demand by 42.5 million pounds per day — which would be like cutting a jumbo-jet’s weight in raw material use every 17 minutes,” said US PIRG’s Nathan Proctor.
Back Market’s model also addresses the right to repair movement, which allows consumers, rather than manufacturers, to modify or repair their devices. Many brands essentially “force” consumers to buy new devices through planned obsolescence.
“A lot of consumers are more aware of planned obsolescence – which may mean outdated software or incompatibility with other devices,” Verdoux said. “One of the ways to battle that is the extending the life of the products.”
Although wireless carriers and retail stores — such as Verizon and Best Buy — also sell refurbished goods, marketplaces such as Back Market augment, rather than compete with — these outlets. “Manufacturers that sell ‘open box’ items see that as cannibalizing sales of new products, to some extent,” said Verdoux.
Covid-19 is having a second impact on the refurbished-electronics market. The volume of repairable goods is shrinking as people hold on to their devices longer. “The supply chain for new items is bouncing back [from factory closures] and many consumer devices are manufactured in Asia,” Verdoux pointed out. “What we are seeing is fewer people are returning their old products.”