Back Market and the Global E-Waste Crisis

Syeda Maseeha Qumer
Adjunct Research Faculty, IBS Case Research Center, IBS Hyderabad (Under IFHE - A Deemed to be University u/s 3 of the UGC Act, 1956), Hyderabad, Telangana, India. E-mail: maseehaqumer@ibsindia.org

The case discusses Paris-based Back Market's efforts to tackle the global e-waste crisis by offering a sustainable alternative to new tech, through the creation of an online marketplace specializing in selling professionally refurbished electronic and household appliances. However, the company has been facing some challenges in its fight against e-waste, including expanding to new markets, sustaining growth, broadening the scope of refurbishment from mostly smartphones and tablets to other segments such as gaming consoles and smart home products, and encouraging tech companies to reconsider how they designed and built their devices. The biggest challenge for the company will, however, lie in building consumer trust in refurbished tech and influencing consumer behavior in order to make refurbished their first choice for electronic purchases. With e-waste being such a critical issue for the planet as well as human life, what can the three cofounders of Back Market-Thibaud Hug de Larauze (CEO), Vianney Vaute (CCO), and Quentin Le Brouster (CTO)-do to ensure that its commitment and efforts go far enough to drive change on the ground? What more can Back Market do to capitalize on its commitment and encourage more consumers to use its refurbished products?

Introduction

In March 2022, Back Market, one of the most valuable French startups and a leading renewed electronics online marketplace, was ranked #1 in business magazine Fast Company's prestigious annual list of the World's Most Innovative Companies for 2022 in the Consumer Electronics category and #18 on the overall list of top 50 most innovative companies of 2022. With more than 6 million customers worldwide as of 2022, Back Market catalyzed a fundamental shift in consumer behavior and how people consumed technology as it continued to raise the demand for refurbished electronics by delivering an experience superior to buying new.

"It is an honor to be named alongside the other companies on this list making inspiring and impactful change. We are proud to be leading a societal change that resonates with consumers and the industry around how we purchase and consume technology. Our goal is to make renewed electronics the preferred purchasing choice. Innovation is not always about new products and technology and we are pleased to see Fast Company recognize that, especially in the consumer electronics category,"i said Thibaud Hug de Larauze (de Larauze), cofounder and CEO of Back Market.

E-waste,1 one of the fastest growing and most toxic wastes in landfills, posed significant risks to the environment and to human health. The production and end-of-life disposal of smartphones, computers, and other tech devices had a dramatic impact on the environment. Discarded devices produced large quantities of electronic waste that polluted ecosystems and contributed to climate change. In addition, mining for essential raw materials endangered workers by fueling armed conflict in countries like the Democratic Republic of the Congo (DRC). About 63.3 million tons of e-waste were generated in 2021.

Launched in 2014, Back Market was one of the first global online B2C marketplaces focused exclusively on offering high-quality professionally refurbished electronic devices such as smartphones, tablets, laptops, and appliances to customers at affordable prices. Certified resellers and brands sold directly to consumers through backmarket.com and the company earned a commission on each sale. As of June 2022, Back Market served nearly 6 million customers in 13 countries with 1,500 certified sellers on its platform. By elevating used electronics, Back Market helped recirculate electronics between users, giving the devices a longer life and lessening their impact on the environment. Reportedly, since its inception, Back Market claimed to have contributed to the reduction of 384,947 tons of carbon emissions and 2,274 tons of e-waste.ii

However, along the way, Back Market faced some challenges including building consumer trust and a desire for refurbished devices and convincing customers to switch from new to secondhand devices. This was tough, given that it was competing with new flashy products from big tech companies such as Apple and Samsung. Other challenges included expanding to new markets, sustaining growth, broadening the scope of refurbishment from mostly smartphones and tablets to other segments such as gaming consoles and smart home products, and encouraging tech companies to reconsider how they designed and built their devices. Commenting on the challenges faced by Back Market going forward, de Larauze said, "When it comes to tech, the main stakeholders (consumers, manufacturers, media, distributors) are still pretty archaic compared to other areas of consumption that have been quite disrupted by sustainable movements (fashion, food, energy, transportation, etc). We manufacture, market, distribute, consume and discard a microwave in the same way our grandmothers dealt with it. Criticism about e-waste, planned obsolescence is still pretty confidential and undersized versus the amount of noise Apple still makes around its keynotes. The tech industry is struggling with a great paradox at its core: Is not technology supposed to save us from environmental apocalypse? Why then is it contributing to such an environmental and social disaster? The fantasy around Tesla's "clean" electric car is pretty symptomatic of our misunderstanding. A lot of people do not really want to scratch the surface."iii

Global e-waste was set to grow to almost 75 million metric tons by 2030, according to the United Nations Global E-Waste Monitor report (See Exhibit I). As Back Market championed the critical need to reduce e-waste, some important questions emerged: Can it disrupt the linear economy and lead the way in making refurbished mainstream? Can Back Market transform an industry that still thrived on overconsumption and change the perception around buying refurbished? Can it become a leading provider of sustainable tech and drive the transition toward a circular economy? What more can de Larauze do to strike a balance between purpose and profits, uphold growth and achieve success going forward?

Background Note
Back Market was founded in 2014 by de Larauze, Quentin Le Brouster (Le Brouster), and Vianney Vaute (Vaute). Both de Larauze and Le Brouster had previously worked at marketplace distribution platform Neteven while Vaute was employed at an advertising agency BETC. While working for Neteven, de Larauze happened to visit a facility of an electronic refurbisher in France and was surprised by its factory-like sophistication and impressed at the quality and care that went into renewing the devices. However, he noticed that these re-manufacturers lacked the marketing expertise required to reach customers and their websites were often basic, giving rise to the thought that they might be fly-by-night operations.

De Larauze was aware of the toll manufacturing and improperly discarding electronics took on the environment. He quickly realized that a market for refurbished electronics existed and felt the need to make these types of devices more accessible. De Larauze felt that by creating a centralized online marketplace for refurbished devices and providing exceptional customer experience, he could help reinvent the emerging refurbishing market. Thus, the idea for Back Market was born. De Larauze then partnered with his colleague Le Brouster who also worked at the same company. The duo realized that breaking deeply ingrained consumption habits would require a massive branding effort. For this purpose, they brought onboard third cofounder Vaute, an advertising strategist. Together, the three of them cofounded Back Market with the goal of making buying renewed devices just as good-if not better than-buying new. According to Vaute, "What was lacking was a point of entry for the consumer, whether it would be my mom or my mom's neighbors. It would be so hard to navigate within this ecosystem of refurbishers. We looked at the added value proposition of the devices, which is half the price and a warranty basically that can match new devices, and we said we just need to create one safe space. That came at the same moment when we had the realization that there was a huge business potential as well."iv

The platform, launched at the end of 2014, initially focused on the marketing of refurbished smartphones. The principle was to procure secondhand phones from third-party sellers and offer them to users of the platform. Many companies and brands quickly joined the platform, which offered a wide range of refurbished secondhand electronic devices, including smartphones, computer equipment, household appliances, game consoles, televisions, etc.

Back Market was one of the first marketplaces in the world focused on bringing certified, high quality refurbished electronic devices and appliances to consumers. The company's mission was to restore trust and desire for refurbished devices and to make circular tech mainstream. Its vision was "redemption through circulation" of old devices through the economy. In the process, the company addressed one of the biggest global environmental issues brought on by the e-waste crisis caused by the volume of electronic products being produced and disposed of in unsustainable ways. The issue of e-waste was also high on the global policy agenda as the UN Sustainable Development Goal 3 (Good health and Wellbeing), Goal 6 (Clean Water and Sanitation), Goal 11 (Sustainable Cities and Communities), Goal 12 (Responsible Consumption and Production), Goal 14 (Life Below Water), and Goal 8 (Decent Work and Economic Growth) were closely linked to the management of e-waste.

Over the years, the startup partnered with numerous resellers and also raised massive investment to expand its services. In May 2021, Back Market raised $335 mn (€275 mn) in a Series D funding round led by investors such as Goldman Sachs and General Atlantic and exceeded the valuation of €1 bn, one of the first in its sector to reach unicorn status. As of 2022, Back Market had raised a total of $1 bn in funding over six rounds. In January 2022, the Parisian refurbished electronics marketplace raised a massive $510 mn series E funding round at a valuation of $5.7 bn. Some of its notable investors were Goldman Sachs, Aglae Ventures, Eurazeo Growth, Sprints Capital, General Atlantic, and Generation Investment Management. "Our goal is to make refurbished electronics the first choice for tech purchases. We expect to see a similar development in the electronics market as we have witnessed in the pre-owned car market in America, where consumer confidence in buying secondhand vehicles has resulted in sales that have increased twofold compared to new car sales. The support and confidence of these funds, together with our growing customer base, marks an important step in Back Market's journey, and more importantly, for the circular economy as a whole,"v said de Larauze.

The cofounders of Back Market held three of the company's highest positions. While de Larauze was the company's CEO, Le Brouster was the Chief Technology Officer (CTO), and Vaute the Chief Creative Officer (CCO). Headquartered in Boulevard Macdonald, Paris, Back Market had about 650 employees as of June 2022.

E-Waste Crisis and Circular Economy in Tech
Over the years, electronic devices had become an important part of the daily lives of human beings, bringing new convenience and capabilities. But this came at a high environmental cost. From the natural resources and energy consumed in creating them to how quickly and irresponsibly tech devices were disposed, electronic consumption habits were not sustainable and took a toll on the environment. The e-waste crisis was the fastest growing and one of the most toxic forms of waste in the world. According to a World Economic Forum report, about 50 million tons of e-waste were generated annually, polluting drinking water and harming ecosystems globally. Africa-based supply chains for cobalt and rare earth metals used in components of smartphones were riddled with human rights violations and child labor.

Adding to this, crisis was the fact that only a small percentage of e-waste was collected and recycled properly; the rest was burnt or dumped in landfills. In 2018, about 44.7 megatons of e-waste was produced worldwide, and less than 20% of that was recycled in some shape or form (See Exhibit II). The remaining 80% made its way to landfills to come to a more environmentally damaging end. These landfills had disastrous consequences for both human and environmental health. The disposal of e-waste contributed to climate change due to the chemicals released when burnt, causing harm to both humans and the environment. In terms of carbon emissions, 90% of the CO2 produced in the lifetime of an electronic equipment was made in its original manufacturing. In 2019, about 53.6 million metric tons of e-waste was generated globally, up 21% over five years.

Moreover, the problem of e-waste was aggravated by planned obsolescence of manufactures and the release of new models of smartphones, tablets, and wearables by big tech brands such as Apple, Samsung, and Google every year. These tech brands were encouraging a culture of consumption that would significantly increase mining and procurement of the materials needed to manufacture devices, thereby intensifying the toll their production would have on the planet's finite resources and their contribution to overall GHG emissions. Not only did new smartphones produce a staggering amount of e-waste, but the vast majority of their environmental impact also came from manufacturing. For instance, the one iPhone 7 could create up to 72 kilograms (159 lb) of greenhouse gas emissions (excluding shipping and recycling) and use about 44 kilograms (97 lb) of natural resources in its manufacture. On an average, 130 grams of minerals and rare metals went directly into a smartphone. Elements like gold and copper were present in the body and circuitry of the iPhone; lithium and cobalt in the battery; and neodymium in the magnets. Indium formed a transparent conductive layer on the touchscreen. Mining all those elements from scratch consumed a lot of energy.

Moreover, the massive factories that assembled iPhones, iPads, and other devices for Apple in China faced accusations of labor abuse, poor working conditions, and harsh penalties for workers who made mistakes. The workers often worked up to 10 hours a day in hot workshops, handling noxious chemicals-sometimes without proper safety masks. According to Gary Cook, Senior IT Sector Analyst at Greenpeace US, "These things all fit in our hands and seem like they do not have a very big impact, because they are so small. But the impact is quite significant, both in terms of the chemicals used, the amount of energy that goes into manufacturing these products, the e-waste at the end-of-life. And the repairability of the device ends up being critical."vi

Refurbishing was considered as an alternative to the overproduction of appliances and e-waste. Buying a refurbished computer or smartphone meant avoiding both the environmental footprint of its production and its disposal. According to research by the French Environment and Energy Management Agency (ADEME), choosing a refurbished smartphone instead of a new one was 91% less impactful in terms of CO2 emissions, and refurbishing a smartphone required 91% less raw material and 82% less water than manufacturing a new one. Refurbishing rather than purchasing new smartphones also generated 88% less e-waste. Reportedly, a single refurbished smartphone prevented 6.17 oz (175 g) of e-waste.

In the first quarter of 2021, Apple sold 58 million smartphones while Samsung sold 76 million. According to some analysts, even if half of those sales had been replaced by refurbished smartphones, the world would have saved 11,725,000 kg of e-wastevii (See Exhibit III). Nevertheless, there had always been a stigma attached to buying secondhand tech such as multiple scratches and dents, unrepairable parts, very short lifespans, etc. Most people would not ever consider buying a secondhand smartphone, in large part due to mistrust.

In 2020, the demand for refurbished gadgets increased as consumers looked for affordable alternatives at affordable prices due to the financial implications of Covid-19. According to a survey, in 2019, only 16% of consumers purchased refurbished electronics for environmental reasons, but that number climbed to 25% within two years.

Business Model
Back Market was one of the pioneers in bringing refurbished gadgets to a wider consumer market. It tackled the problem of e-waste by giving expertly restored devices a second life. Rather than refurbishing devices directly, Back Market worked with independent vendors who acted as the sourcing partners for it. It provided a marketplace for third-party sellers: either individual sellers or stores selling refurbished goods that took used devices and restored them to top condition in factories (See Exhibit IV). By listing their inventory on Back Market's website, these resellers were able to find customers more easily. For a 10% commission on each sale, Back Market facilitated sales from more than 1,500 refurbishing partners worldwide as of March 2022, including global companies such as Brightstar, Apple, and Dyson.

Back Market's massive product portfolio included smartphones, tablets, laptops, computers, smartphones, audio equipment, gaming consoles, home theater systems, cameras, and home appliances. It sold refurbished electronic devices from multiple brands including smartphones and tablets from Apple and Samsung; laptops and computers from Dell, Microsoft, Lenovo, Acer and HP; gaming consoles from Sony, Nintendo, and Microsoft; and audio equipment from JBL, Sennheiser, and Bose, among many others. However, smartphones accounted for 75% of Back Market's sales and about 84% of the products it sold were Apple products. The company was one of the first refurbished product re-sellers certified by Apple.

In order to ensure the quality of each product, Back Market came up with a quality program called Back Label that ensured that every seller underwent a screening process before joining the platform. Before they could sell their devices on the Back Market platform, each independent vendor had to go through a stringent validation process which included questions about their operations and quality and periodic checks on their products. Each new refurbisher had to fill in a questionnaire on their operations and quality procedures and provide proof of their procedures. In real time, products had to pass a 23-point test before being sold on the platform. In addition, new sellers had to go through a trial period with restricted sales until they proved themselves reliable, including an acceptance rate for joining the platform of only 30%, followed by a sales limit of five items a day for 40 days to prove their products had low failure rates and their customer service met the standards. On an average, only 1 out of 3 sellers who wanted to join Back Market got approved.

On Back Market, every device was checked by experts. Back Market created a transparent grading system that took into account both the appearance and technical condition of renewed devices. The company broke down its devices down into five different grades based on their condition: Stallone (functional), Fair, Good, Excellent, and Mint (the best). Every device it sold, the company said, was guaranteed to be 100% functional regardless of its grade. "We basically take all the feedback from the clients. We make a quality score. And then thanks to that quality score, we only push the best sellers to the end user,"viii said de Larauze.

At Back Market, the prices were enticing (See Exhibit V). Customers could grab products at prices up to 70% lower than the price of a brand new product. For instance, an iPhone 11 (64 GB) fully unlocked was available for $294.99, 40% less than a brand new one while an iPad 9.7-inch (32 GB) was priced $108.17, 67% less than a brand new one. Customers could buy an iPhone 12 in good condition for $593 and a Galaxy S21 for $474. Back Market sold over 200,000 products every month.ix Overall, 6 million customers had purchased a device on Back Market as of 2022. "Outstanding option to find affordable Apple products and others. MacBook Air I purchased is exactly what I need for my work and at a 1/3 of the price. Very pleased and will look to buy more refurbished electronics from Back Market in the future,"x said one customer.

One important metric for refurbished devices was the quality and the average failure rate. Initially, when Back Market was launched, the defective rate of devices sold over its platform was about 15%, compared to the average rate of new devices which was about 3%. The Back Market Innovation Lab verified the technical quality of devices sold on Back Market and shared its best practices with its refurbisher partners. The company audited the refurbishing process to assess the quality of the product and assessed the different types of battery-related issues in various phone models, drastically improved the quality of the refurbished and managed to reduce the defective rate from 15% to 4%.

In order to maintain quality standards and ensure that every device functioned as good as new, Back Market provided training and support to expert refurbishers, monitored seller performance through a dedicated team, and shared data with them on trending products. After compiling five years of historical data from more than 400 merchants and about 1,000,000 consumers, Back Market implemented robust machine learning techniques to help refurbishers foresee future demand. This allowed the refurbishers to purchase the right amount of stock for specific devices at the right prices. The search algorithm on the Back Market website rewarded refurbishers with higher quality ratings. In addition, the company's own in-house experts placed anonymous orders every week to personally verify the quality of items of third-party sellers. If a refurbisher's quality score was low, they were immediately placed on probation.

Back Market was committed to being a socially and environmentally responsible company as it evaluated the social and environmental impacts of selling refurbished products in terms of reduction of greenhouse gas emissions and mitigating climate change or job creation. For instance, Back Market set up a carbon footprint assessment to track its greenhouse gas emissions, and in October 2020, suggested an idea to ADEME to assess the environmental impact of the refurbished electronics industry globally. It also carried out a study to assess its socioeconomic impact in terms of job creation, whether directly within the company or at its partner companies in the countries where it operated. The study revealed that refurbishers on the Back Market platform represented around 5,000 jobs as of 2021.

Customer Service
In addition to quality control, customer experience was also at the forefront of Back Market's strategy, with a commitment to take e-commerce best practices a step further, offering a streamlined shopping experience, and free standard shipping with every item. Each purchase came with a 30-day return policy and a minimum warranty of one year on all products on its site, a virtually unheard-of perk in the refurbishing world. "The main compromise is about the way I talk to new consumers-how I convince them to switch from New to Refurb. At first, I was keen to aiming at the hearts of people, talking about e-waste, rarefaction of raw materials, talking about how buying on Back Market is like joining a movement. That is, by the way, where our name comes from: getting on sidetracks, joining a parallel, underground market to screw new over. But I quickly realized that we could not scale this way. A vast majority of people do not think about e-waste; they just want a good phone, tablet, freezer, at a good price, with great service. And it's hard to blame them for that. Realizing this had an impact on my relationship with users: Now, I'm talking quality-price ratio, fast shipping, guarantee... instead of being 100% ideological,"xi said Vaute.

Back Market's website was simple and easy to use, and users could search by device or keyword to narrow down the results. Back Market developed a "buybox" method based on proprietary algorithm that searched the entire available inventory to find the best value offer for a customer in terms of quality and price for each SKU. Instead of displaying the entire catalog like a traditional marketplace, the website only displayed the single best product at any one time for a specific product model, taking into account not only price, but also the historical performance of every refurbisher including customer service responsiveness, failure rates, etc.-along with 14 other variables. Users could find several filters to cull the selection, including price, brand, model, individual specs, and product features. Customers could find item reviews and also profiles of the reseller, their average overall rating, how long they had been on Back Market, and how much merchandise they had sold overall. Talking about Back Market's unique offering compared to standard retailers, Katy Medlock, UK General Manager at Back Market, said, "The issue of e-waste is relatively unknown to many people, so as a business we try to constantly educate, inform and empower people to use their purchasing power to make a difference. We try to do it without sounding too "preachy", too. Other than helping people save the environment a bit, as well as their hard-earned cash, our main point of difference is specializing in tech so your shopping experience is easy. Enjoyable, even."xii

Back Market also informed customers of the environmental impact of buying a refurbished item, right from the selection stage. It calculated the amount of e-waste a customer could save from going into landfill with each purchase. For instance, the company's website mentioned that A MacBook Air 11" could save 30 ounces of e-waste, an Apple Magic Wireless Keyboard in mint condition 8 ounces, while a PlayStation 4 Slim in good condition could prevent 156 ounces of e-waste.

The company's Back Care program provided customer service on behalf of the refurbishers. Back Market regularly obtained detailed feedback from its customers and its Customer Care team closely monitored customer complaints, and intervened to resolve disputes when necessary. With consumer experience at the core of its operations, Back Market held customer feedback in the highest regard. Commenting on the importance of customer service at Back Market, Le Brouster said, "We realized, to be successful with customers is to be really passionate about them. We have customer reviews printed on the wall in the offices, with a process called 'Everyone Support'. So every employee of Back Market that joins the company does one day of customer support. They will work as a customer care agent to understand and talk to the customer, understand the pain they could have, understand the complexity of the problems they face. We have a dedicated team to manage customer care, but we also have a dedicated team to manage the worst experience and bring some answers to that. So, for example, sometimes we ship products that are working at 99%, but maybe the Bluetooth is not working well. So it is enough for us to send them a new product, but many of our customers need their mobile phones for work, etc. To ensure they are not without a device, we send them a temporary phone in the meantime, which they ship back to us when they receive their new one."xiii

Through the Back Replace service, a customer could receive a replacement product without first having to supply the company with their existing damaged one. In 2021, Back Market launched a mobile app with a diagnostic tool that allowed buyers to check whether their refurbished device was in good shape. The startup also introduced a new program for customers called Back Repair, which connected customers whose products were still under warranty with local repair shops. This initiative not only saved the refurbishers money and improved their typically thin margins, but it also improved confidence among consumers who were wary of buying secondhand goods. "Back Market puts a fresh new spin on the idea of buying refurbished electronics. And you should definitely give the service a shot especially in the contemporary context of rising environmental awareness. And while refurbished products often get a bad reputation, Back Market shows us a completely different facet of the industry. By focusing on quality above anything else, Back Market ships products that are as good as new, at a wallet-friendly price,"xiv commented Alexandra Arici, a tech writer.

Marketing Campaigns
To make consumers more aware of their choices, Back Market invested heavily in branding and marketing campaigns. Through targeted campaigns, it educated buyers that new was not the only way to go and about the environmental implications of e-waste. The company spent heavily on advertising, with outdoor posters and ads on TV to give refurbished products a more attractive image. "We are going to be a bit louder on the brand side. The brand could be everywhere. It could be in the streets. It could be on classic marketing channels. You are going to basically encounter Back Market more often as a consumer,"xv said de Larauze.

On Earth Day (April 22, 2022), Back Market teamed up with Paris-based agency Marcel for a new campaign to promote refurbished Apple devices. The guerilla campaign was designed to convince those who were about to buy a new device to choose a secondhand model instead. Using an Apple feature called AirDrop,2 Back Market broadcast messages to Apple devices on display at six Apple retail stores in Paris, Berlin, and London. It was able to airdrop about 4,000 messages that read, "This iPhone 12 comes in pink, blue, black and greener. Switch to refurbished" and "The iPhone you love without the carbon footprint you hate. Switch to refurbished" to customers browsing the displayed devices. Users who accepted the Airdrop request which appeared as a pop-up message reading, "'Back Market' would like to share the website 'backmarket.co.uk'", could then click through to the Back Market website where they could directly buy the same refurbished model of the product they were considering at a lower price.

Earlier in April 2021, Back Market opened a special Earth Day shop, making it easy for shoppers to purchase renewed electronics for a lower price. The shop featured special deals on select Apple products and accessories as well as educational resources for consumers looking to reduce their environmental impact. Of all purchases made through the shop, 5% was donated to the Closing the Loop Foundation, an organization dedicated to upcycling and reducing e-waste.

In September 2019, Back Market launched an out of home advertising (OOH) campaign called "New is Old" in order to encourage people to change their perspective on refurbished products. The campaign was launched in cities across France, Germany, and Spain on TV, print, and digital media to demonstrate that the biggest difference between old and new was just the price. In order to engage Gen Z in its mission to reduce e-waste, Back Market offered a 5% discount to students enrolled in a college or university of an eligible country subject to validation of student status. This offer was valid once per user per year, for any purchase starting at $5 and was valid on all the products offered on the website. Those in the military, veterans, and their families also got an additional 10% off on everything. Back Market also launched a free affiliate program, designed for referral partners who wanted to earn money by referring their friends and customers to other affiliate programs. In 2020, the company launched a new global initiative called "Screw New" in order to reinvent "refurbished" as desirable and cool. During the Screw New campaign, a survey in the US found that a majority of customers on Back Market had bought refurbished for the first time. The campaign led to an average year-over-year growth of 120% and attracted over 20 million monthly visitors.

A Global Marketplace
Since its founding, the French startup continually ramped up its expansion efforts into global markets. Back Market scaled pretty quickly across several European countries. Its gross sales grew from $4 mn in 2015 to $120 mn in 2017.

In 2018, Back Market entered the US market, the second-largest for gadgets after China. It wooed Americans by offering a more efficient and formalized user experience on its website. The company also changed its marketing approach to adapt to the American consumer culture. To help do that, the company appointed Serge Verdoux, a business development expert who had earlier worked with companies such as American Express, Expedia, and Amazon, to run its US operations. To overcome fetishism around new devices, Back Market hired American marketers and branding advisors to help reposition the platform and emphasized bargains that rightly resonated with American consumers.

The environmental aspect was also a powerful selling point for Back Market in the US market. By November 2021, Back Market's gross merchandise value3 (GMV) reached $300 mn in the US. "When we came to the US, we had to reinvent ourselves. It's a very big country where the market dynamics were very different with big players such as Amazon on the new product side and companies like eBay on the used side. That's the big hurdle. From a consumer standpoint, people do not know our products and are reluctant because of the negative stigma that used products have historically,"xvi said Verdoux.

In 2021, Back Market expanded internationally, opening offices in Berlin and Barcelona, as well as entering new markets, including Japan. As of June 2022, Back Market was shipping its devices and appliances to customers in 16 countries-US, France, Germany, UK, Italy, Spain, Belgium, Austria, Netherlands, Portugal, Japan, Finland, Ireland, Greece, Slovakia, and Sweden. The company also planned to expand into Canada in the future. Black Market employed a team of about 650 people in four offices in New York, Berlin, and Paris as well as Bordeaux, France.

In November 2021, Back Market, entered into a partnership with ecoATM, the technological expert in automatic smartphone recycling, and UK-based retailer Carrefour to set up smartphone recycling kiosks at Carrefour stores. Customers could get their old smartphones valued at these kiosks, and exchange them for Carrefour gift vouchers that were valid for all products, including groceries, and could be used at all Carrefour stores. Once they had been collected, the phones were refurbished by ecoATM and then sold on the Back Market website. More than 135 kiosks were in operation in a number of Carrefour stores by the end of 2021. In April 2022, Back Market entered into a contract with musicMagpie (Magpie), a leading re-commerce business in the UK and US specializing in refurbished consumer technology, to sell Magpie's range of electronic products on its website.

Results
Since 2014, through the sale of refurbished smartphones, Back Market prevented the emission of 580,144,582.08 kg of CO2, the use of 1,878,480,190 kg of raw materials, the consumption of 498,015,680,400 liters of water, and the production of 1,274,162.93 kg of electronic waste. In 2019, the generation of nearly 450 tons of e-waste was prevented through the Back Market platform. Some analysts felt that Back Market had successfully capatalized on the growing consumer awareness of the environmental implications of e-waste. According to de Larauze, in 2014, only 3% of consumer purchases on Back Market were for ecological reasons, but that number had grown to over 25% in 2019. Black Market recorded a significant turnover over the years, which attracted new investors. Back market's sales jumped from €30.5 mn in 2016 to €230 mn in 2018xvii (See Exhibits VI and VII). According to de Larauze, Back Market witnessed a three-digit global growth each year.xviii

The company got a big boost in May 2020 due to the outbreak of Covid-19. As the pandemic hit, Back Market was able to grow at a very fast pace as sales of used gadgets skyrocketed. With the pandemic driving big sales of devices on the platform, the company's customer base grew from 1.5 million customers in July 2019 to 5 million in June 2021. "I think, especially over the past two years with the pandemic, people realize that we need to do better for the planet and behave more responsibly in the way we live and consume. We cannot realize our vision without our team, which has been able to diligently drive forward Back Market's mission of making circular tech mainstream-even through the pandemic. The number of people buying from our platform and choosing refurbished in general is growing, and that is the true sign that we are making progress and moving toward a more circular consumption pattern. Without our employees and customers, we would have no impact on the world,"xix said de Larauze.

In January 2022, Back Market claimed the title of most valuable French startup on the heels of a $510 mn funding round led by Sprints Capital Management. The company was valued at $5.7 bn. "By prolonging the lifetime of millions of consumer electronics devices and providing low-cost access to the best products, Back Market changes the world for the better. The company is well-positioned to become the global number one alternative to new tech,"xx said Henrik Persson, Founder and Partner at private equity investment firm Sprints Capital Management.

Challenges Ahead
Going forward, one of the biggest challenges for Back Market would be to convince customers to switch from new to refurbished and to overcome the negative stigmas associated with used electronics goods. Consumers, particularly those in the US, did not favor buying pre-owned phones and considered buying refurbished devices a risky option. According to a poll conducted by Back Market in 2019, about 80% of Americans revealed that they never shopped for refurbished electronics. Of those, half said they did not trust resale devices; the other half had never considered them. Moreover, the frequent release of new flashy models by big tech companies encouraged consumers to buy new every time. The big challenge before Back Market would be to build desire for secondhand devices and to find inventive ways to educate consumers about the environmental impact of electronic devices. "Quality is king. It is what is preventing people from buying used devices and refurbished products. So our job is to make these transactions safe and give them more reasons to think refurbished first,"xxi said de Larauze.

Moreover, when it came to electronic devices such as mobile phones or tablets, applying the concept of reuse reduce, and recycle could be a challenge as these devices were often difficult to repair and had a limited lifespan. Some analysts felt that the reconditioned devices sector was still in its infancy and Back Market had a long way to go. Another challenge for Back Market would be to expand to new markets and broaden the scope of refurbishment from mostly smartphones and tablets to other segments such as gaming consoles and smart home products that had limited access to the refurbished market. "It is pretty cliche, but I'd say the scale of the business, though I do not think scaling is an end in itself. The challenge of Back Market is global-billions of gadgets and household appliances are manufactured every year, with dramatic environmental and social impact. So if we want to fix this, we have to scale. We have to create a mainstream alternative to this device consumption and impact the amount of new devices that are being manufactured. We are still far from the Big Tech guys, but we are getting there,"xxii said Vaute

Going forward, a big task for Back Market would be to influence the behavior of device manufacturers and get them to change their practices and reconsider how they designed and built their devices and make replacement components more widely available at reasonable prices. For instance, Apple's Touch ID and facial recognition technology made Apple devices more challenging to refurbish. France's new repairability rating law4 which came into effect on January 1, 2021, required certain categories of device makers to post a repairability score next to the price. According to Verdoux, "I think a lot of OEMs and manufacturers are kind of torn with the concept of refurbished. In the short term, it hurts their sale of products. On the other hand, they realize that consumers more and more are demanding sustainability. At Back Market, we play a role in converting consumers in mass to the concept of sustainability."xxiii

Growing competition was also a cause of concern for Back Market as it faced some intense competition in the refurbished devices space. Apple entered the refurbished sector and launched a new service called Apple Trade-In which allowed customers to recycle their old smartphones and, in exchange, save money when buying new ones. Samsung also launched an initiative called Responsible Recycling program (STAR) for eco-friendly recycling of e-waste. Users could donate old or unused smartphones at specified drop-off locations or get them picked up on their doorstep. According to some analysts, being in direct competition with such tech giants would be a real challenge for Back Market. Many other players such as Swappa (US), ecoATM International Ltd. (US), Refurbed (Vienna) and Swappie (Finland) were trying to capture the refurbished devices market. But according to de Larauze, the real competition was in what he called the linear economy: people buying new gadgets directly from companies such as Apple or Amazon. Reportedly, the sales of refurbished devices were between $80 bn and $90 bn annually compared to $1.3 tn sales of new electronic devices every year.

Driven in large part by the purpose-driven Gen Z, the "ReCommerce",5 market is booming and expected to hit $64 bn in revenue by 2024. Some analysts pointed out that there was a real turnaround of consumer sentiment on buying refurbished as millennials and Gen Z shoppers gained more buying power and became more passionate than ever before about sustainable tech. Moreover, the Covid-19 pandemic stimulated the overall demand for refurbished goods. Since 2020, people were increasingly buying refurbished smartphones as the prices of new smartphones shot up due to a rise in input costs. According to market intelligence firm Persistence Market Research, the global refurbished and used mobile phones market is projected to increase from $49.9 bn in 2020 to $143.8 bn by 2031, growing at a CAGR of 10.2% during the same periodxxiv (See Exhibit VIII). In order to build a strong and sustainable business model, de Larauze said Back Market was in the process of applying for B-Corp certification.6 "Yes we are currently working to become a B Corp company. This is a very important process for us. Internally first, because answering the B Corp questionnaire helps us to find out how to have an even better impact on the society and the planet. And of course externally, this would be monumental for a company that sells electronics. Big tech companies are not generally seen as sustainable companies because of the linear business models they run on, which is one reason why we are obsessed with building a circular business model. Circularity can be achieved, and Back Market will lead that change,"xxv he added.

Going forward, Back Market expects to double in size with a specific focus on the US market. The company also plans to expand its services, improve the ensuring of device quality on its platform, invest in consumer-centered informational marketing, and triple its headcount globally, bringing in new talent with proven expertise in product design, supply, innovation, software development, merchandising and creatives. According to a spokesperson from the company, "As the refurbished electronics market continues to grow and have a bright outlook for the foreseeable future, we will focus upon building our messaging around quality, sustainability, convenience and affordability. New players are rising in the market as they see the increasing demand from consumers. Back Market will strive towards becoming the go to marketplace for everything refurbished and look towards expanding into new geographies in 2023, in order to become the preferred brand globally."xxvi

End Notes

1. "Back Market Named to Fast Company's Annual List of the World's 50 Most Innovative Companies for 2022," https://backmarket.reportablenews.com, March 8, 2022.
2. "Back Market," https://fortune.com, 2021.
3. "In Conversation With: Vianney Vaute, Co-Founder of Back Market," www.standard-deviation.co, February 11, 2020.
4. Chris O'Brien, "Back Market's Refurbished Revolution," https://frenchtechjournal.com, 2021.
5. John Koetsier, "Big Cash for Old Tech: Back Market Raises $510 Million for Reselling Old Electronics," www.forbes.com, January 11, 2022.
6. Leanna Garfield, "A New Report Claims That Apple Products are Contributing to a Huge Environmental Problem," www.businessinsider.in, June 29, 2017.
7. https://www.backmarket.com/en-us/c/iphone/refurbished-smartphones
8. Jane Lanhee Lee, "Back Market, Platform for Refurbished Tech Gadgets, Raises $335 Million," www.reuters.com, May 18, 2021.
9. https://refurbisher.backmarket.com/
10. https://www.backmarket.com/en-us/r
11. "In Conversation With: Vianney Vaute, Co-Founder of Back Market," www.standard-deviation.co, February 11, 2020.
12. "Meet Back Market, the Tech Company That Doesn't Want You to Buy Any New Tech," www.maddyness.com, December 7, 2021.
13. "Disrupting the Technology Marketplace with Back Market," https://mobile-magazine.com, July 22, 2022.
14. Alexandra Arici, "Back Market: Saving the Environment One Phone at a Time," www.androidguys.com, October 26, 2018.
15. Amy Buxton, "Circular Electronics Platform Now France's Most Valuable Startup as Repair Movement Strengthens," www.greenqueen.com.hk, January 24, 2022.
16. Chris O'Brien, "Back Market's Refurbished Revolution," https://frenchtechjournal.com, January 2019.
17. https://cdn.filestackcontent.com/6BUGd1SKCx9ycmtVD61A
18. "Success Story: Back Market, the Refurbished Revolution," www.ideal-investisseur.fr, March 2, 2022.
19. Christopher Marquis, "France's Most Valuable Start-Up's Raison D'etre is Creating a Circular Economy for Tech," www.forbes.com, February 10, 2022.
20. Patricia Allen, "Paris-Based Renewed Electronics Marketplace Back Market Raises €449 Million and Becomes one of France's Most Valuable Startups," www.eu-startups.com, January 12, 2022.
21. Chris O'Brien, "Back Market Raises €276m to Build a Circular Economy Giant," https://sifted.eu, May 18, 2021.
22. "In Conversation With: Vianney Vaute, Co-Founder of Back Market," www.standard-deviation.co, February 11, 2020.
23. Chris O'Brien, "Back Market's Refurbished Revolution," https://frenchtechjournal.com, January 2019.
24. "Refurbished and Used Mobile Phones Market Outlook (2021-2031)," www.persistencemarket research.com, 2021.
25. Christopher Marquis, "France's Most Valuable Start-Up's Raison D'etre is Creating a Circular Economy for Tech," www.forbes.com, February 10, 2022.
26. "Back Market Discusses its Journey Thus Far and Future Plans," https://retailtechinnovationhub.com, August 23, 2022.