A nasty expertise shopping for a second-hand cell phone on-line was an eye-opener for Sami Marttinen. Seven years in the past, the younger entrepreneur purchased a refurbished iPhone 6 Plus that he by no means acquired. After realizing that he wasn’t the one sufferer of any such fraud, he started to analysis the cellphone market. He quickly realized that 83% of the carbon footprint generated by smartphones comes from manufacturing and distribution, as confirmed by a latest Deloitte research. Marttinen requested himself, “Why does solely 5% of the world select to purchase a refurbished machine?” To draw extra shoppers to the refurbished machine market, Marttinen and his associate, Jiri Heinonen, based Swappie in 2016 to purchase used iPhones to refurbish and promote.
When Swappie first began out, second-hand smartphones accounted for five% of the European market. This market share has now tripled, in keeping with the International Refurbished Smartphone Market Report. “The evolution of the refurbished cellphone market is much like the evolution of the used automobile market. Within the Nineteen Nineties, second-hand autos accounted for 10% of whole gross sales, however now they command half of the market. Let’s hope the identical factor occurs with cellphones,” mentioned Marttinen.
Gross sales for the Helsinki-based firm mirror the robust progress in second-hand cellphones over the previous 5 years. Swappie’s income grew from US$500,000 in 2017 to US$97 million in 2020. Marttinen funded the startup with ten years of non-public financial savings, and in 2020, landed US$150 million in enterprise capital from Verdane, Lifeline Ventures, and different environmentally delicate buyers.
The 2 Swappi founders noticed that new smartphone costs saved climbing, but the incremental innovation of the most recent mannequin wasn’t as important because it was 10 years in the past. “System improve cycles are longer now. Customers don’t change their telephones yearly, and are extra open to purchasing older fashions to economize,” mentioned Marttinen. Based on consulting agency Kantar, in March 2021, shoppers in Spain, Italy, Nice Britain, Germany, and France saved the identical machine nearly three months longer in comparison with March 2019.
The surroundings influence of shopper merchandise is an more and more essential issue influencing buying choices, particularly for youthful shoppers. Increasingly more millennials are leaning towards refurbished units as a extra sustainable product. Nevertheless, solely 25% of shoppers promote their previous telephones for recycling, displaying that there’s nonetheless an extended solution to go for shoppers to develop confidence within the second-hand market.
Swappie at the moment operates in 15 international locations – Finland, Sweden, and Italy are its largest markets. The Nordic international locations have internalized recycling to a better extent than the southern European international locations, the place many are nonetheless reluctant to purchase second-hand merchandise, says Fanny Niman, government director of Swappie Spain. Based on the agency’s newest survey, 70% of Spanish shoppers would think about shopping for a refurbished machine, however solely a 3rd want shopping for a refurbished machine. “This can be a appreciable hole. Many customers don’t know that second-hand units are totally examined and include a guaranty in case of technical failure (Swappie gives a two-year guarantee). Step one is to enhance our branding and messaging, and Italy was a superb take a look at on this regard,” he mentioned.
The Finnish firm has its operations middle in Helsinki, the place 400 technicians examine a whole lot of cellphones that arrive on daily basis. After wiping all of the saved information, technicians test the battery, digital camera, and audio system. If the cellphone is in good situation, it’s prepared on the market. If not, it goes over to the restore division.
Robert Evans, a micro-soldering knowledgeable who has been with Swappie for 2 years, says that battery substitute is the most typical repair wanted to present a cellphone a second life. His workbench is suffering from various kinds of glue, tiny laptop chips, and tweezers of assorted sizes. “It’s like surgical procedure and requires a number of focus,” mentioned Evans. “Every cellphone takes 30-60 minutes, relying on its situation and the talent of the technician.” The repairs often take lower than a day to finish – a cellphone comes into the operations middle within the morning, and is prepared by the tip of the day.
In relation to the worth of a used machine, it’s all about aesthetics. Swappie has a analysis division that assesses display screen defects and assigns a rating between A (glorious) and D (passable) that displays the cellphone’s situation. The value of a Swappie-refurbished iPhone can vary between US$150-$1,000, relying on its situation and mannequin. Otso Ojanen, Swappie’s director of operations and logistics, says that it’s typically tough to determine which telephones are most in demand. “If Apple is usually promoting the iPhone 13 lately, our iPhones 7 and eight promote effectively as a result of they’re cheaper,” mentioned Ojanen.
Why has Swappie centered solely on iPhones? Ojanen is aware of that Apple isn’t the one cell phone producer, however believes that specializing in a single model was the important thing to streamlining operations and reaching success. “Android is an working system utilized by many machine producers, so refurbishing all these completely different telephones can be rather more complicated. We would wish 1000’s of components, and people who find themselves capable of restore many various fashions,” he mentioned. Marttinen provides that the Apple nonetheless instructions a big market share as a result of shoppers love the simplicity of its design and performance.
Nevertheless, the worth of an iPhone remains to be a barrier for many individuals. “That’s the place Swappie is available in,” mentioned Marttinen. “Though our mobiles aren’t the most recent technology, they’re cheaper and extra environmentally pleasant.” Nevertheless, in some international locations like Spain, Android’s recognition is overwhelming: 83% of all units use this working system, in keeping with Kantar. The success of the Google-owned working system could also be an impediment for Swappie in relation to attracting new clients.
Swappie hasn’t closed the door on increasing into different product classes. “In 5 or ten years, I don’t see why there wouldn’t be a second-hand marketplace for different units. However iPhones nonetheless have nice potential, and we’ve got an extended solution to go – that is just the start,” mentioned Marttinen.