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Telecoms start-up ReWare is tapping into the growing smartphone market by offering repurposed, pre-owned Samsung and iPhones to value-conscious consumers.
Nothando Moleketi, co-founder of ReWare, says the smartphones are sourced internationally and once they arrive in South Africa they are taken through a diagnostics and repair process to ensure the devices are in good condition.
The phones are also sanitised and repackaged to include a USB cable and a plug point. All ReWare phones are sold with a one-year warranty.
“We buy a specific grade of phone that guarantees that all these phones will be operationally functional,” Moleketi says.
Currently, ReWare phones are available in 14 Edgars stores and online at www.cna.co.za. Prices range from R1 699.90 for an iPhone 4 to R3 799.90 for an iPhone 5C, while a Samsung Galaxy S3 is priced at R1 999.90. The top-of-the-range Galaxy S5 retails at R4 499.90.
“When we approached the retailers, this had been done on a small scale. For instance, Apple has done this by offering pre-owned phones, and Vodacom has tested it as well. The market for certified pre-owned smartphones exists; it is now about championing the efforts around educating the average consumer on certified pre-owned [devices]. So we approached retailers and they said their customers want iPhones and Samsungs. The key thing here was the pricing; for us it was getting to the right price point that appeals to customers,” she says.
Gumtree, the country’s largest classifieds website, says the average price for a second-hand smartphone on its site is R2 500, while the most popular second-hand phone for sale is Samsung.
The Samsung Galaxy A7 is best at retaining its value, selling for an average of R7 183. The iPhone is in second place, with the latest iPhone 6 Plus selling for R8 463.34 on the site, according to a Gumtree survey.
Moleketi, a former employee of Cell C, and her business partner Felix Martin-Aguilar, who also had a stint at Cell C, saw a window of opportunity to bring this business model of selling repurposed smartphones – a concept already available in other countries – to SA. (As reported by finweek in February last year, the duo also brought Spain’s Zwipit – a company that was started five years ago to encourage consumers to sell their old cellphones and smartphones – to SA.)
“For us it’s the right time in SA to bring this to the market,” she says. “This [second-hand cellphone sales] is happening informally already; people are buying and selling phones. This means there is a market for it; we are simply formalising that market.”
ReWare’s target consumer is the value-conscious buyer. “That’s the everyday consumer. It doesn’t matter what the [economic] climate is, they are looking for the best value and we offer that with our range. The phones have the normal wear and tear, but if you are a value consumer you want the functionality of the device.”
Buyers include parents who want to buy affordable smartphones for their children, entrepreneurs looking for top-of-the-range smartphones at a lower cost, and people seeking to replace lost phones they bought on contract that were not insured.
ReWare’s future plans include expanding to other African countries where access to smartphones is limited.
“We are not only selling devices, we are providing access, and access is something that is needed on the continent. And we see that mobile growth is big on the continent. There’s potential, so people need smartphones to access the internet,” Moleketi says. Internet access has also become key in, for example, providing access to healthcare, education and banking.
The GSM Association said in a recent report that migration to higher speed networks and smartphones on the continent continues apace, with mobile broadband connections set to increase from just over 20% of the connection base in 2015 to almost 60% by the end of the decade.
“Falling device prices are encouraging the rapid adoption of smartphones, with the region set to add more than 400m new smartphone connections by 2020, by which time the smartphone-installed base will total over 500m,” it said.
This article originally appeared in the 11 February 2016 edition of finweek. Buy and download the magazine here.
