French startup Back Market -- a marketplace for refurbished electronics goods -- has raised a $335 million Series D funding round led by General Atlantic. Today’s funding round values the startup -- which says it now has 5 million customers globally -- at $3.2 billion, the company said. It will be using the funding to expand into new markets.
At a time when mobile phone makers are seeing declines in sales due to slower renewal cycles, and incrementally fewer features added into newer models, Back Market provides another alternative to people who don't want to pay full price for a device that might still be in good condition and new to the user, if not altogether new itself.
Consumers can buy refurbished smartphones at different price points, with the stock ranging from old models through to recently released devices. Prices vary depending on the model and the condition of the device. Other stock includes laptops, tablets, headphones, gaming consoles, and other gadgets and consumer electronics.
The company is also part of what you might more generally call the circular economy, where people are recycling items back into the sales market to extend their life.
Used good sales are of course nothing new, but in more recent years the vast availability of new and cheap goods has taken consumers out of the habit of thinking of used as having much attraction or value -- witness sites focused on used goods like eBay now being quite dominated by new items. However, the concept has picked up steam and credibility again in the past year of pandemic living, a time when people are looking to save money, with many thinking of the part they play in this world of ours, possibly helping to put a little less of our plastic and other waste into it.
“Our goal now goes beyond making renewed tech a viable option," Back Market’s CEO, Thibaud Hug de Larauze, said in a statement. "We want to make it the first choice for electronics purchases. The support and confidence of these prominent funds, together with our growing customer base, marks an important step in Back Market’s journey, and more importantly for the refurbished sector as a whole.”
All the same, he estimates that new device sales is a $1.5 trillion market globally. In other words, the opportunity is big (so much to disrupt!) but also quite formidable, all the reason why those focusing on used goods as a big business are trying to up their quality game, as Back Market is doing.
The environmental aspect was one of the reasons for Generation Investment Management in this round: the firm co-founded by Al Gore invests with an ethos of sustainability.
"Back Market’s transparent and trusted approach empowers consumers to change their purchasing behavior by making it easier, safer and more affordable to buy refurbished goods," added Shalini Rao, director of Growth Equity, Generation Investment Management, in a statement. "We look forward to supporting Back Market as it doubles down in the U.S. and elsewhere globally. The world generates over 50 million tonnes of electronic waste each year. Back Market offers an alternative that has the potential to radically shift unsustainable consumption patterns."
Back Market doesn’t refurbish devices directly. Instead, third-party companies act as the sourcing partners for Back Market. They list their inventory on the marketplace and find customers more easily. That is in essence the "marketplace" of Back Market (which is not a black market after all but just a play on the idea). Overall, 1,500 companies sell devices on the platform.
Generation Investment Management also participated in today’s funding round as well as existing investors Goldman Sachs Growth Equity, Aglaé Ventures, Eurazeo and daphni.
Back Market also invests heavily in merchant services, parts sourcing and quality control. The idea is that you should be sure the device is going to work as expected if you buy it through Back Market.
The company claims that the overall defective rate of products is now sitting at 5% — there’s a defect warranty included with each purchase.
While Back Market originally started in Europe, it is now active in 13 different markets including the U.S. and Japan. Up next, the startup plans to launch in Canada, Greece, Sweden and Slovakia.
“We are excited to support Back Market, a category-defining business which is reshaping and growing the refurbished electronics market globally," said Chris Caulkin, managing director and head of Technology for EMEA, General Atlantic, in a statement. "Back Market has built a strong consumer brand centered around quality, sustainability, convenience and affordability. We look forward to working with Thibaud, Quentin, Vianney and the full Back Market team as they accelerate their expansion into new categories and geographies.”