- Players: Nothando Moleketi and Felix Martin-Aguilar
- Company: ReWare
- Launched: 2014
- Visit: reware.co.za
One year into their start-up journey, ReWare founders Felix Martin-Aguilar and Nothando Moleketi sat down and did something that every single business, new and established, should do, and yet so few manage to do well (if at all).
They dug deep, assessed the business, and changed their business model.
Here’s how they’ve successfully grown their start-up.
1. They closed a division
When Martin-Aguilar launched his start-up in 2014, it was as the South African partner of Spanish company Zwipit, a buyer and seller of new and pre-owned mobile phones.
Although the idea sounded good to Martin-Aguilar and Moleketi, who both had telco backgrounds, local uptake was not what they expected.
“South Africa has a hand-me-down culture and a big informal market,” says Moleketi.
“Unlike Europe, there just isn’t a big enough seller’s market here. We gave the informal market a proper price point to work from, but attracting sellers was extremely difficult.”
The lesson: Even if you’ve done your research and you’re incredibly passionate about your start-up, sometimes the business just doesn’t have the traction you expected. Take the time to review your strategy. Understand that focusing on one thing will always detract you from another, and evaluate where your best opportunity to win lies. If it’s not where you originally expected it to be, it’s time to pivot.
2. They adjusted their model to meet consumer needs
On the other hand, consumers were definitely in the market to buy pre-owned devices. “We were advertising to buy phones, but the market kept asking us how they could buy pre-owned phones from us,” says Martin-Aguilar.
Zwipit was still operating and bringing in revenue, which gave Martin-Aguilar and Moleketi the time to create their own brand, ReWare, which reconditions and sells pre-owned phones.
Zwipit and ReWare ran simultaneously for a year, until the partners could wrap up Zwipit and focus their energy on ReWare.
The lesson: Launching Zwipit first hadn’t been a complete disaster. “Buy and sell go hand in hand,” says Moleketi. “We understood the market better because we entered as buyers. We were able to critically evaluate price points and what consumers wanted. The experience made us realise that we needed a brand and product that speaks to the South African consumer.”
3. They focused on educating the consumer
If Zwipit’s problem had been finding phones and purchasing them at price points that matched local perceptions, ReWare’s challenge was one of trust.
“Certified pre-owned (CPO) was a new concept in South Africa,” says Martin-Aguilar. “We needed to formalise it, which meant educating the market.”
The business partners realised they needed to leverage off bigger brand names. “We partnered with a retailer on a white label basis. ReWare supplied the phones, but our branding was nowhere to be seen. This can be risky if you want to build your brand. However, as a start-up it was more important that the market started understanding and appreciating CPO. Educate the market first, and then supply the product.”
The lesson: Evaluate the pros and cons of every decision. The payoff of educating the market was worth making a white label deal. You can hold on to your product, idea and name, but then what? What’s the point if no one understands what you do? You can’t get market share until you’ve actually created a market.
4. They found the right partners
Ecommerce in South Africa is growing, but Martin-Aguilar and Moleketi knew that placement in physical stores was essential for the growth of their brand, and so they started looking for alignment. “Understand the objectives of any potential partners you approach,” says Martin-Aguilar.
“You need to make sure that your offering aligns with their needs, otherwise you’re just wasting everyone’s time.”
In ReWare’s case, Martin-Aguilar first started talking to the Edcon Group from a buyback perspective. He was interested in whether the retail giant would offer to buy back client phones when they upgraded.
The discussion revealed that Edcon consumers are looking for smartphones — particularly iPhones — which the group didn’t stock. CPO stock was also at a price point that Edcon couldn’t offer with its brand new Apple iPhone or Samsung Galaxy smartphone ranges, and so the business model was compelling for them.
“There’s a lot of synergy between us and their consumers,” says Moleketi. ReWare is currently in 21 Edgars stores, one Edgars Connect store, ten Jet and Jet Mart stores as well as CNA Online and Jet Cellular Online to test the uptake of the offering.
The lesson: Take the time to listen to what your clients (and potential clients) actually need. “We saw this so much when I was in the telecoms space,” says Martin-Aguilar. “Business owners are so busy pitching their product to you, that they don’t listen to what you need. Take the time to listen to your client and adjust your offering accordingly. That’s how you build a business with a compelling offering.”
5. They looked for additional revenue streams
Once you’re operational and know what your core business and area of expertise are, other revenue stream opportunities start presenting themselves.
“We have two core ranges, ‘as is’ and ‘good as new’. This means we need to be able to fix and refurb phones, and so we import parts,” says Moleketi. “So now we’re importers of LCD screens. Who else needs screens? We’re importing parts anyway — where can we add value?
“While in discussions with Vodacom, the question was asked of us: Do you have parts? This has added a great additional revenue stream for us.”
It also led to an even bigger opportunity. “The parts business is tricky. The chain of custody is long. We test something, it works, the device travels to Vodacom, the tech guy opens it and says, no, it doesn’t work. Now we have a problem. We have a good relationship with our client that we need to maintain, but there are QC errors and they can’t be tracked,” says Martin-Aguilar.
To deal with the problem, ReWare has developed an app that allows everyone in the chain of custody of a device to photograph it with a unique serial number. This means QC is tracked from start to finish.
“Here’s the secret to great solutions,” he adds. “If you have a need, chances are someone else does too. And this was no exception. Operators like the concept because they have a huge need for it. Think about this: Customers drop off their phones for repair. They’re sent from a store to a central tech centre, then back again — all via courier. Multiple hands handle each device, and by the time the customer gets it back and says there’s a new scratch or problem, no-one can track when — or if — it happened. If everything is tracked and documented its straightforward. There’s no finger pointing and everyone is accountable.”
The lesson: Multiple revenue streams work if you’re finding the gaps in areas where you’re an expert. Everything should be related. Ask yourself: As a business, where do you add value and how can you do more and offer more with what you have?
Be convinced about your idea, but don’t try so hard to educate your customers that you don’t listen to what they have to say.