Michael Finucane, founder of Smartspot, has been Re-Using and Re-cycling for a long time! As a co-founder of Gamesworld, with his childhood friend, they turned their big idea and small investment into a national chain, eventually bought out by the American giant Gamestop.
After almost twenty years of perfecting the trade-in model for Computer and Video Games and Hardware, in 2012 he decided to switch direction, forming Smartspot, which began trading in March 2013. “It has been a slower slog to get consumers to adopt the Used model for technology.
Where gamers are frequently young and have limited disposable income, but huge desire to play the latest games, the cost of phones in particular, and therefore their value, had largely been hidden from the consumer through the ‘Contract Model’. In the 6 years since we started, the market has changed dramatically.
Already there is a maturity; the rush to release the latest models and constant updates, the frenzied battles between iOS and Android, Apple and Samsung, America and the East – these have all calmed down.
Midnight launches and queues down the high street have given way to a sense that the consumer knows who and what they like and more importantly, what they want. Consumer habits have begun to change as rampant market growth has given way to a drop in the actual number of units shipped. In the UK for example, Deloitte estimates that in 2015 over 32 million phones were sent to retail for sale; in 2017 that had dropped to 27 million.
Still huge numbers and at time when the cost of phones is continuing to rise, with many high-end, prestige new releases costing over €1,000 (a rise of over 50% in the last 3 years), it implies that there is something else happening in the market. And, actually, several things are happening. 87% of people, of all ages, now either own or have access to a smart phone – so the market is saturated … there are only 13% of people not regularly using a phone and these non-users are probably either very old or very young!
The fierce competition between brands for the hearts, minds and life-long brand loyalty of consumers, created hundreds of high-quality products that essentially do the same thing and much more than the the average user actually needs them to do! It is hard to understand what the benefit to the customer is of an expensive upgrade and it is seriously hard to understand how that benefit is worth the additional expense of a locked-in, 24 month long contract, when SIM-only deals offer so much value for money. This means that the regular and predictable upgrade cycles of 12, 18 or 24 months has been extended.
People are on average, holding onto their phone for an additional 10 months – which in turn means that there is increasing demand for Used Phones and that these phones retain their value, not just financially, but also in aspirational terms too.
Consumers are becoming more savvy and using this value to upgrade when it suits them – part paying for their purchase with their existing phone. This circular economy, long a mainstay of products as diverse as cars, designer goods and video games, is a positive response to a society waking up to the fact that not all aspects of consumerism and shopping are good! Not to mention the positive effect it has on the environment and keeping technology out of landfill!
The fundamentals of this business model are well established and clear: Used Phones and Technology have a longer life-span than we currently exploit, as build quality has become more sophisticated and robust; Used Phones and Technology are considerably cheaper than new products and there is a cost benefit to consumers that needs to be explained.
With Smartspot I wanted to get back to fundamentals again – finding ways for the most people possible, to get their hands on the products that excited them at the best price possible.” SFA Award Winner 2015