As the market leader in refurbished electronics in France, Back Market is present in 16 countries. The co-founder explains his method and reveals his ambitions.
JDN. Where is Back Market in its inception in 2014?
Thibaud embraces the Larauze. Back Market is a market dedicated to the sale of refurbished electronic products. We are now marketing 184 product categories. The platform is available in 16 countries in Europe, as well as the UK, US and Japan. The company, which has set itself the goal of becoming a leader in the circular economy in the high-tech category, employs 680 people worldwide.
What are the most popular categories on the platform? Where do the renovation products come from? ?
The smartphone, our historic product, is still our engine. This category is followed by computers, tablets and finally video games. As for the supply channels, they are varied. First, there’s our platform, which allows consumers to resell their old devices. Our algorithm will quickly propose a redemption price. Some repairers have also signed contracts with retail chains, allowing them to recover products that have been unpacked, for example, or even display models. Others take advantage of agreements with large companies to buy back their old equipment. Finally, there are also franchises, such as Cash Converter or Cash Express, which take back used products before regenerating and reselling them on our market.
What are the advantages of a renewal to sell on the Back Market?
“In June we had 1,700 renovators on the platform”
Back Market is a distribution platform that can reach customers in 16 countries, but we have different arguments. We provide reconditioners with a series of tools and, above all, a lot of data. For example, we tell them the type and quantities of products they can sell, depending on the country, at what price, etc. This allows them to better select the products they buy and to estimate the right quantities to ensure a margin. Back Market also has a dedicated innovation laboratory in Bordeaux, which allows us to identify the source of recurring failures and thus share information with our partners. We have also developed logistics services, in particular allowing refurbishers to ship their products at a lower cost thanks to the preferential rates we have negotiated with the carriers. Finally, we also offer them an after-sales service, which allows them to maintain a light cost structure.
What is the profile of these partner companies?
We had 1,700 renovators on the platform in June. Their profiles are very varied. There are SMEs with fewer than five employees generating between 500,000 and 3 million euros in turnover per year and other large companies with several thousand employees, such as Cordon Electronics.
What are your methods for checking the quality of the products sold and the services of these partners?
Our mission is to ensure that refurbished products become the first instinct for any electronic product purchase. To build trust with customers, we need to ensure product quality. To master it, we combine different processes and technologies. When a repairer wants to register, we first ask him several questions about how he repairs the products, repair parts and software he uses, etc.
On average, 30% of them proceed to the next step. We then give them the opportunity to sell five products a day for 40 days. During this time, we will monitor their activities by studying customer returns, failure rate, shipping speed, etc. If the reconditioner is validated at the end of this period, it can continue its activity indefinitely. We also monitor repairers who are not Back Market employees in the same way.
Back Market has developed its network of repair centers. For what results?
“France is still our largest market, followed by the United States”
Available in France, these repair centers are capable of solving more than 20% of common failures. A consumer can then go directly to a repair point near his home without having to return the product. We assure them of a repair in less than thirty minutes. If he doesn’t want to move, he can of course always send it back to us, as happens today. It is a service that has produced excellent customer satisfaction results since its launch. It also allows our partners to save on logistics costs, even if they are ultimately still paying for the repair. These are performed by external professionals who we have previously certified.
Plan to use these centers in the long term as physical contact points to market your products or to open corners in supermarkets ?
We have a lot of ambitions for these repair services. Back Market already refers to nearly 300 repair points. They are found in the urban centers of major French cities, as well as in medium-sized ones. This service will be launched worldwide in 2023. While we have different views on physical retail, we currently have nothing to announce.
Where is the rear market in its international development? Are you planning to launch into new countries in 2023?
“We disagree with the basis of the UFC-Que Choisir complaint”
France is still our largest market. The US is in second place with much stronger growth and is set to become our main market in the medium term. Spain and the UK are also two strong growth markets, as is Japan, where we recently launched. Japanese consumers have a huge appetite for technical products and there is no other alternative to offering refurbished products than Back Market. We will be launching in a new Asian country soon, but I can’t reveal which one yet.
Last June, the UFC-Que Choisir association filed a lawsuit against Back Market for deceptive business practices, specifically accusing you of showing the price of new products as if they were discounts. what do you reply? ?
We have been talking to the UFC-Que Choisir teams for about a year, with whom we have had a lot of constructive discussions to develop our platform. We have written a detailed answer in a blog post to explain why we disagree with the merits of this complaint. We believe that visualizing the new price of a product is important information to provide to consumers. This is a useful point of comparison and we will keep it. Our internal investigations show that this price difference information is important. Nowadays, ecological consumption generally costs more. For once it is possible to save purchasing power and at the same time have a positive impact on the planet, why not give this information to the consumer?
The association also criticizes you for showing the costs of the service only at the payment stage …
“Back Market is not profitable yet, but some of our more mature markets are already very profitable”
Earlier in this interview, I mentioned all the services we develop to ensure a quality experience and build trust with consumers. All of this comes at a cost and our fees simply reflect the investments we make. We believe that the amount of these commissions is reasonable, i.e. less than 2% of the cart amount and a minimum of € 0.49. The reason these charges appear after the product page is simply because they can vary depending on the price and the number of products placed in the cart.
Is the company profitable? Back Market achieved a fundraising of 450 millions euro in January 2022. Is another increase or an IPO planned to finance the company’s international development? ?
Back Market is not profitable yet, but some of our more mature markets are already very profitable. However, we choose to reinvest the profits in our international growth and improvement of our platform. Our profitability horizon is more in the medium term, ie over the next two years. As for your second question, the company now has sufficient resources to become profitable while continuing to develop by investing in various growth levers.
What are Back Market’s ambitions for the next few years? ?
One of the challenges for the next few years is to develop product recovery. We are investing heavily in this service because our goal is for consumers to be able to resell products they no longer use, even if they are not working, in three clicks. We believe that by limiting these efforts we can change consumption habits and thus promote the circular economy. Because selling on Le Bon Coin or Facebook Marketplace isn’t always the best experience. Finally, we continue to invest in our international growth. We have all the ingredients to replicate the same European success in the US, but there is still a lot of work to do and we are only at the beginning of the adventure.