COVID-19 crisis spurs triple-digit growth for refurbishing startup Back Market

While a number of startups have been hard hit by efforts to curb the spread of the COVID-19 virus, refurbishing firm Back Market is showing increased growth globally.

The Paris-based startup encourages customers to send in their old devices so they can be refurbished and resold into the e-commerce secondhand market. The growth achieved in the midst of the COVID-19 crisis is partly due to increased laptop sales as people seek better devices to work remotely.

For people who are unsure whether refurbished products are reliable, Back Market permits customers to send in old devices, exchange them for newer versions and pay the difference. CEO Thibaud Hug de Larauze said this payback service is currently possible only in France, but starting in Q2, it will be available in other markets.

Founded in 2014, Back Market has raised a total of €48 million in funding over two rounds, most recently a Series B in June 2018. The company is profitable and reportedly still has money to spend from its last funding round.

“We don’t release the gross merchandise volume, but it’s a three-digit growth rate,” Hug de Larauze told TechCrunch. “We saw an increase in demand for laptops, printers and other devices needed for working at home. Demand for refurbished phones is going down as people seek to get the first necessity items, like food for their situation.”

Over the past two weeks, Back Market saw skyrocketing demand from Italy, a nation with a high coronavirus death toll where citizens were warned they would be confined to their homes for four weeks.

Another factor that helped the platform’s growth: Smartphone brands like Apple and Samsung closed their retail stores, a move that turned Back Market into a major supply channel. While offline retailers and carriers are shut down in Europe, Hug de Larauze says Chinese offline retailers and refurbishing factories are starting to get back to work.

Logistics are critical for the company as it receives old devices and ships out refurbished units. All major delivery carriers like UPS, USPS, FedEx and DHL have remained open during the crisis, and despite the fact that some labor unions want to withdraw workers from delivery activities, Hug de Larauze said Back Market workers are handling the work safely.

The company now maintains offices in Paris, Bordeaux and New York. The platform operates in France, Belgium, the U.K., Spain, Italy, the United States, Austria and Germany (Austria and the U.K. launched in February).

“The U.S. and Germany are pushing the growth,” says Hug de Larauze. “They are the main two drivers of the boom of Back Market.”

The company works with 1,200 refurbishing factories in 27 countries, including France, China and the U.S., and takes a 10% commission from the facilities they work with. Globally, the refurbishing market is worth $80 billion, with 13% growth year-over-year.

“They realized that it’s not only ecological, but it’s also a good business. Two hundred (new refurbishing factories) are on-boarding,” he says.

As customers head to Back Market instead of original device manufacturers, the startup is partnering with OEM brands. For example, when a customer sends a Dyson product to Back Market, Dyson will refurbish the product itself before reselling it on Back Market.

This approach sets it apart from other big players like Amazon, Craigslist and other C2C and B2C marketplaces, where consumers sell and ship their old gadgets. A possible competitor is Berlin-based Grover, which received €250 million in funding in January and offers a monthly subscription to private customers and businesses that allows them to buy and swap tech products.

“In the U.S., we saw the sales more than double in 12 months and it’s accelerating fast,” says Hug de Larauze. “We have been operating in the U.S. for two years and we are putting more resources there.”

Behind the scenes, he says the company is working on algorithms to provide better quality of their refurbished devices and claims to have cut its defect rate in half.