Startup sees a massive opportunity in Pre-owned smartphones

Posted on May 18th, 2016
Grow Technology

This unconventional startup sees a massive opportunity in pre-owned smartphoneStartups across the globe are creating a market for pre-owned items.

In South Africa one startup has captured this market so well that they have a partnership with the country’s largest non-food retailer, the Edcon group.

Launched in 2014, ReWare offers certified, pre-owned brand smartphones including Apple iPhones, with prices ranging from R1 000 to R5 000. They are catering for the market that wants a smartphone, just not the high price tag that comes with it.

In November 2015 ReWare took their product to the masses by launching in retail. Their product is available as select Edgars stores countrywide, and online on CNA.

To gain traction they first had to overcome what was the market’s initial discomfort with pre-owned smartphones, says CEO, Felix Martin-Aguilar, who launched the company together with Nothando Moleketi (COO), but the concept is gaining acceptance, he adds.

The market for their product is broad, says Martin-Aguilar. It includes parents looking into getting their child their first phone, mature users and retired value conscious individuals, varsity students and entrepreneurs that need to be connected.

“South Africans are very comfortable buying used cars, however the concept of a pre-owned smartphone is still gaining its position”

At their facility, located in West Johannesburg, smartphones are taken through a series of tests and are refurbished, including their hardware – the battery and screens, and the software – the phone is wiped of any previous user data and the operating systems is upgraded.

Both Moleketi and Martin-Aguilar have a strong background in background in telecommunications and ecommerce. Martin-Aguilar has a background in mobile including a stints at various mobile companies and Moleketi was part of the startup team of Zomato in South Africa.

The two were also responsible for bringing Spain’s Zwipit to South Africa, which was based on a similar model.

Martin-Aguilar speaks to SME South Africa about why pre-owned tech is perfectly suited for the African consumer and why sometimes you have to educate your market.

South Africa is starting to catch up in the pre-owned device market

Pre-owned devices are more common in the US and Europe, with players like AT&T, Gazelle and Carphone Warehouse taking the lead. All in all, at the moment ReWare is probably the player with the biggest retail presence on a global scale.

We have had to educate our market

The biggest challenge has been the educational process, ReWare had to convince the consumer that a certified pre-owned phone is fully functional, reliable and trustworthy option. South Africans are very comfortable buying used cars, however the concept of a pre-owned smartphone is still gaining its position.

Some people think that we just take an old phone and sell it; ReWare performs detailed testing using the latest technology to ensure that those devices are in the best condition, and to ensure that we put money where our mouth is, by offering a one year warranty with our existing range.

Why this model works in the African context

Africa needs to be connected, and we deserve to do it with the right quality product and not a substandard cheap product. ReWare brings access to Africa with the best leading brands at an affordable price.

I think the concept and the value speaks for itself. The partnership with the Edcon group has also been a key to success, South Africans trust retailers, with a presence at the Edgars stores and CNA Online we provide the element of reassurance that the consumer requires.

There are still plenty of opportunities in this space

We see other entrepreneurs going into the same space and we are looking forward to it, they will help us in expanding the concept and eliminate all the misperceptions in the market.

Our next move is to move into other African countries

For us it is critical to understand the distribution reality of each country and adapt to it. Bearing this in mind, we will open in countries and channels that make sense, taking into consideration cellphone penetration and growth. The obvious candidates are Nigeria and Kenya.