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Boost Refurb Phones Beat Sales Forecast

Boost Mobile’s refurbished phone program has proven a hit with the MVNO’s customers, with sales of the recently launched devices already exceeding expectations.

Boost Mobile general manager Jason Haynes said early sales had been “well above our forecast”.

“We weren’t strongly ambitious, we think it’s a growing market… we’re very pleased with our results to date, we’re very pleased with the feedback, customers are getting a great experience,” Mr Haynes said.

The second hand phone sales are also translating into new Boost customers, with the conversion rate for customers who purchase a refurbished phone and use the bundled $30 Boost SIM also exceeding expectations.

Mr Haynes said customers were looking for great value from a brand they could trust, and that greatly impacted the company’s plans to implement a refurbished product line.

“We had to go through a process too, being a bit skeptical of the second hand phone market, we had to look for the right partner to start with, trust was such a huge element,” Mr Haynes said.

Boost partners with refurbishment specialists Alegre, who source, purchase, restore and refurbish phones for sale, both in Australia and overseas.

Alegre commercial director Russell Lornie said the company frequently purchased phones in bulk, often from big corporate clients like banks.

“Our sweet spot is to buy by the hundreds or the thousands from big companies… the vast majority of those devices will still be working.”

Alegre arranges for the collection of devices to make things as easy as possible for the companies they source from.

Phones are evaluated for cosmetic grading before being put through Blancco data erasure software.

The company also provides data destruction certificates to the companies it sources from to provide assurance no data remains on a device set to be sold to a new owner.

Devices sit in a 14-day quarantine while they’re checked against police databases to make sure they aren’t stolen.

Phones are also checked to make sure they aren’t user locked, before the data is wiped and the phones are subject to testing of its core functions such as camera and call ability, through software that can test 10 devices in around three minutes.

Batteries are also tested to see how well they retain their original capacity.

Phones with lower than 80 per cent of their original capacity can have their batteries replaced by partner repairers.

The phones are cleaned and buffed, before they’re packed up and shipped out to customers daily.

While some sourced phones don’t pass Alegre’s testing (and are then recycled through the industry and government recycling initiative Mobile Muster), the majority of devices collected are still working, while a smaller percentage had some degree of damage.

Devices deemed to be damaged “beyond economic return” can also be sold overseas to markets where they can be repaired more cheaply.

Mr Lornie said some partners had higher standards than others, but there was always a market for refurbished device sellers willing to compromise on lower cosmetically graded devices.

“Boost are taking some of the better stuff… but there are a lot of consumers out there who are willing to pay $50 less.”

EB Games and the Leading Edge group are some of the other refurbished retailers Alegre supplies.

Business appears to be going well for the company, who have recently moved into bigger offices in Sydney’s north.

The refurbished smartphone market is expected to be worth more than $52 billion by 2022 according to IDC research.

Growing consumer concern over e-waste and the environment is a contributor, but Boost is also seeing a market with “first phoner” customers.

This can be parents buying phones for their children as well as customers looking for a smartphone for their older parents, but who don’t want to over-invest in an expensive new device.

Selling refurbished phones also gives Boost the ability to offer lower pricing on premium devices from sought after brands like Apple and Samsung that the company couldn’t necessarily offer on new devices.

The Apple phones in particular have been popular with customers, perhaps drawn by longer support for security updates than on some Android devices.

Apple’s historically large market share and more condensed product range also means there are plenty of iPhones available compared to phones from other manufacturers using the more widely accessible Android OS.

While Apple devices are relatively easy to come by on the second hand market, Mr Lornie said it can be a challenge finding some other flagships.

“We’ve seen [the Samsung S7] become quite rare, hard to source and hard to sell,” Mr Lornie said.

Sourcing could also prove a problem for competitors in the space.

Macquarie Bank backed Nu Mobile recently announced plans to begin selling ex-lease devices.

The bank already owns these devices, having previously leased them to carriers like Telstra to then lease to their customers.

While this meant the bank had a sizable collection of ex-lease devices currently, it could run into sourcing problems down the track now that carriers are ceasing to offer leases.

Mr Haynes admitted he didn’t know much about Nu Mobile’s business model but also expressed doubts over how willing consumers would be to purchase a refurbished phone while also taking up a long plan to pay it off, compared to the Boost model of selling outright phones, pre-paid packs and month-to-month contracts.

Nu Mobile sells refurbished devices outright or on 24-month payment plans along with month-to-month network coverage, while Boost partners with buy now, pay later provider Zip Pay for deferred payments.

Boost also has use of the full Telstra network while Nu Mobile makes do with the significantly smaller wholesale Telstra network.

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