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Back Market held a press conference on Thursday morning in Paris to talk about upcoming product launches and give an update on the company’s current situation. If you’re not familiar with the French startup it operates a marketplace of refurbished electronics devices — mostly smartphones. It’s attracted a lot of investor cash in recent years but has also been through tougher times.
In 2021, just like many large tech companies, Back Market rode the wave of zero-interest rate policies around the world and raised an enormous amount of money: a $335 million Series D round was followed by another $510 million Series E round mere months later.
After reaching a valuation of $5.7 billion, Back Market realized that the economy was slowing down. It conducted a small round of layoffs in late 2022, telling French newspaper Les Échos it was “the best way to achieve profitability in the coming years”.
Fast forward to Thursday’s press conference and the company was keen to demonstrate its focus is back on product launches and new projects. Back Market said it wants to find new distribution channels and go premium so that more people think about buying a refurbished device instead of a new one.
Finding customers where they are already
Over the past 10 years, Back Market hasn’t just captured a decent chunk of the secondhand electronics market, it has expanded the market for refurbished smartphones. The pitch is simple: a refurbished device is cheaper than a new one and it’s also better for the planet. Moreover, when it comes to smartphones, it has become much harder to define why this year’s model is better than last year’s — so why shell out lots of money buying new to get only an incremental upgrade?
The company doesn’t handle smartphones and other electronic devices directly. Instead, it partners with 1,800 companies that repair and resell old devices. So it’s essentially a specialized services marketplace. Since its inception, it’s sold 30 million refurbished devices to 15 million customers.
Most Back Market customers buy devices on its website or through its mobile app. But the company has recognized it’s sometimes constrained by its partners’ inventory. This is why it wants to expand supply and demand with strategic partnerships.
For instance, it’s partnering with Sony for PlayStation consoles. “A lot of people are coming to Back Market to try and purchase their PlayStation,” said co-founder and CEO Thibaud Hug de Larauze. But the issue is that Back Market is constrained when it comes to supplies for this type of device.
While many people think about smartphone trade-ins, most people don’t think about selling their old consoles. “With this partnership with PlayStation by Sony, we are the only partner to trade in every PlayStation within Sony’s website, within the Sony PlayStation store,” he noted.
As a result, people buying a new PlayStation get a discount with trade-ins at checkout and Back Market is no longer out of stock for old PlayStation consoles. This is a good example of what Back Market has in mind for future partnerships.
Image Credits: Romain Dillet / TechCrunch
“This is one of the first [partnerships of this kind] but we really want to bring it everywhere where customers are actually shopping new. We want to get them where they are, in order to get their old tech — in order to serve it to people who want access to refurbished tech,” Hug de Larauze added.
On the smartphone front, trade-ins are already quite popular. However, customers visiting a phone store usually end up buying a new device along with a long-term plan.
Back Market is going to partner with telecom companies so that customers can also get a discount on refurbished devices in exchange for a long-term plan. The first two partners for this are Bouygues Telecom in France and Visible, a subsidiary of Verizon Wireless in the U.S.
A new premium tier with official parts
Quality remains the main concern when it comes to buying refurbished devices. In addition to allowing returns, the company is constantly tracking the rate of faulty devices on its platform and trying to bring that number down. Back Market now has a defective rate of 4%, meaning that one in every 25 phones doesn’t work as expected in one way or another.
When customers buy a smartphone on Back Market, they can choose between a device in “fair”, “good” or “excellent” condition. The company has now rolled out a new top tier — called “premium”.
The main difference between smartphones with no signs of use and premium refurbished devices is that Back Market certifies that premium devices have been repaired with official parts exclusively.
In addition to this new premium tier, Back Market is working on an app update to turn it into a smartphone companion. You can register your smartphone with your Back Market account to receive tips to keep your device in a good shape for longer. They are also working on gamification features, including badges and rewards.
Similarly, Back Market will make it easier to check the value of your current phone. “You open the Back Market app, you shake your phone and you’ll find out,” chief product officer, Amandine Durr, explained. This feature will launch around Black Friday.
Finally, Back Market is going to use generative AI to make it easier to browse the catalog. It can be hard to compare two smartphone models to understand which one is better for you. In a few months, you’ll be able to select two phones and get an AI-generated summary of how the two models compare.
Profitability in Europe this year
When thinking about growth potential, instead of focusing on the smartphone industry, Back Market said it draws inspiration from the car industry.
“Nine people out of 10 are purchasing a pre-owned car today,” said Hug de Larauze. “Everything has been created and lined up for that — the availability of spare parts for everyone, you’re not forced to repair your car where you purchased it.”
Similarly, repairability is changing for smartphones and spare parts, starting with the European Union. By June 2025, manufacturers will be forced to sell their spare parts to people and companies who want to fix devices themselves.
The shift to refurbished devices is also already well underway in Europe. “Back Market, is going to be profitable for the first time in Europe in 2024,” said Hug de Larauze. “This is a big milestone for us because when we created the company and until very recently… we had that label that said: ‘OK, this is an impact company.’ Impact means good feelings, but the money is not there.
“Well it’s not the case, it’s actually making money,” he added. Now, let’s see if Back Market can become the go-to destination for refurbished devices in more countries, starting with the U.S.
Image Credits: Romain Dillet / TechCrunch
