READ MORE ABOUT REWARE IN THE MEDIA

We’ve made quite a splash in the short time we’ve been around

ReWare Did One Crucial Thing That Most Entrepreneurs Are Too Afraid To Do

Vital Stats

  • 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.

Related: Uzenzele Holdings Unpacks The How And Where Of Business Funding

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.

Related:

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?

Do this

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.

SA’s ReWare promises iPhones for the masses

South African start-up ReWare is helping bring older-generation high-end phones, including Apple iPhones, to a broader market in South Africa. By Duncan McLeod.

Added by Duncan McLeod on 25 January 2016.
Saved under News, Start-ups, Top
Tags: , , , , , , , , , , ,

Nothando Moleketi and Felix Martin-Aguilar

Nothando Moleketi and Felix Martin-Aguilar

South African start-up ReWare, which has been launched by the same team that brought Spain’s Zwipit to South Africa, is helping bring older-generation high-end phones, including Apple iPhones, to a broader market in South Africa.

The company, headed by CEO Felix Martin-Aguilar and chief operating officer Nothando Moleketi, now sells a range of refurbished iPhones and Samsung Galaxy S devices for prices starting at R1 699.

Martin-Aguilar has 15 years of experience in the telecommunications industry and, among other projects, led a strategy review at Cell C in 2008 and was later tasked with relaunching the operator’s business division.

Moleketi, meanwhile, has experience in management consulting and start-ups. She helped launch Zomato in South Africa and also worked in Cell C’s strategy team for a time.

ReWare’s phones are sold in 14 Edgars stores and online through CNA, with plans to begin selling them through the mobile operators and to establish direct presences online with an e-commerce store and through a physical retail presence in the form of a flagship store.

The company sells the iPhone 4 with 8GB of storage space for R1 699, going all the way up to R5 499 for the iPhone 5s with 16GB. It will soon introduce iPhone 6 models into its line-up, too. Its cheapest Samsung device is the Galaxy S3, which retails for R1 999, going up to R4 499 for the Galaxy S5.

It chose the iPhone and Galaxy devices specifically because of consumer demand for those brands. ReWare is considering adding some Sony smartphones to its line-up, too.

“We decided to create a formalised structure for buying and selling pre-owned smartphones in South Africa,” says Moleketi.

The company has a facility in Florida Glen, west of Johannesburg, where it inspects and tests second-hand phones using specialised diagnostic tools to determine if any work might be needed, such as a new battery fitted (the most common issue), the screen replaced or new speakers fitted. If this is the case, they go to trained technicians, who do the repair work, before the phones are again subjected to rigorous testing.

All previous user data is wiped from the phone and its operating system is updated to the most recent version (or the most recent version that makes sense for the device without unduly compromising its performance).

The phones are then cleaned carefully and packaged for resale with a new charger and a high-quality power/data cable included in the box. In the case of iPhones, the cables comply with Apple’s MFi licensing programme.

The final packaging is transparent to allow consumers to inspect the phone that they’re buying without removing it from the box.

The phones are imported from large, reputable “aggregators” in the US, Latin America and Asia. The company only buys second-hand phones of a “certain grade”, to allow it to offer certification and a warranty, says Martin-Aguilar.

“They’re targeted at brand-conscious consumers who can’t necessarily afford to buy the latest iPhone,” he says. Moleketi adds that there is a big opportunity in the rest of Africa. “That’s in our medium-term plans,” she says.  — © 2016 NewsCentral Media

Meet the Co-founder of ReWare, her company gives a new cause to old phones

Her interest in telecoms led Nothando Moleketi to co-found ReWare, a cash saving alternative for smartphone users.

Moleketi started her career as a management consultant with Deloitte, where she gained exposure to a wide range of industries including banking, energy and manufacturing.

ReWare provides a range of high-end, certified pre-owned smartphones to cater for those who don’t want to spend much on a brand new phone.

Talking to CapeTalk/702’s Redi Tlhabi, Moleketi says ReWare also offers a one year warranty on all their phones.

Listen to the full conversation on The Redi Tlhabi Show:

Got R1699? That’s enough for a good-as-new (fully guaranteed) iPhone 4!

We give a one-year guarantee.

Felix Martin Aguilar, ReWare

The Money Show’s Bruce Whitfield interviewed ReWare CEO Felix Martin Aguilar for his weekly “ShapeShifter” feature.

ReWare refurbishes and sells a range of older-generation iPhones and high-end Samsungs.

Got R1699? That’s enough for a good-as-new, refurbished iPhone 4.

ReWare’s phones are sold in select Edgars stores and online through CNA.

Scroll down for quotes from the audio below.

Even after a year or two you can still get a substantial amount of money for your device.

Felix Martin Aguilar, ReWare

ReWare is a 100% South African company.

Felix Martin Aguilar, ReWare

We buy from international markets in a wholesale manner. We can’t depend on local supply only.

Felix Martin Aguilar, ReWare

We’re not allowed to buy a phone that hasn’t had all the memory erased.

Felix Martin Aguilar, ReWare

There is a massive, very broad demand.

Felix Martin Aguilar, ReWare

South Africa is a very brand conscious society.

Felix Martin Aguilar, ReWare

We’ve had an influx of requests from the rest of Africa.

Felix Martin Aguilar, ReWare

For Apple and Samsung it’s a good way to get customers they wouldn’t otherwise have.

Felix Martin Aguilar, ReWare

We can offer around US$100 for a three year old iPhone 5.

Felix Martin Aguilar, ReWare

5 MINS WITH NOTHANDO MOLEKETI OF REWARE

Food writer and former consultant Nothando Moleketi has just branched out into entrepreneurship as the co-founder of ReWare, a provider of good quality second hand smartphones making them accessible to a wider range of users. We spoke to her to find out more about the business:

Tell us a little bit about your professional and educational background?

I have a Bachelor of Commerce degree in Economics from the University of Witwatersrand. Prior to this I helped launch Zomato South Africa as the Associate Vice President (AVP) of Operations. I started my career as a management consultant with Deloitte Consulting Strategy & Innovation, where I gained exposure to a wide range of industries including banking, energy and resources, retail and manufacturing. My interest in Telecomms led me to Cell C’s internal strategy team, where I learnt about regulatory and mobile telecommunications.

What inspired you to take the step in becoming an entrepreneur?

My decision to become an entrepreneur was a combination of the right timing, the need to make an impact and build a legacy. Given the growth of mobile internet penetration and the smartphone market, there’s a wide scope for impact in this field.

Tell us about ReWare. Where did the idea come from and what are you ultimately trying to achieve?

The ReWare story began with the consumer. We (co-founder Felix Martin-Aguilar and I ) launched a buy-back business called Zwipit South Africa and, through that, we identified a gap in the cell phone market for high-quality smartphones. The ReWare brand was launched in retail (14 select Edgars stores countrywide and through CNA Online) in November 2015. This retail partnership provides the consumer access to the ReWare As-Is range, which consists of13 fully tested, pre-owned certified smartphones (Apple iPhones and Samsung Galaxy Smartphones) in perfect operating condition at affordable prices.

What are some of the challenges that you have faced?

Building trust with the consumer. There is a big informal buy and sell market for second-hand cell phones in South Africa and the perception is not purely positive. Due to this we have to build trust in our brand, the consumer and the concept of certified, pre-owned devices. To build trust we are transparent and upfront about our devices in all our messaging – including having transparent packaging, so that the consumer can see the condition of the device they’re buying.  We also offer a ReWare certification and a 1 year warranty on all our devices.

What changed in your mentality when you became an entrepreneur?

Always looking out for opportunities and keeping a customer-centric mindset. I have also become more of a connector – aligning people and opportunities. On a personal front I have become more frugal, managing the pantry and adding extra consideration to my general spend.

How do you achieve work-life balance?

My work-life balance is a work in progress, but I have made a conscious effort to re-focus and prioritise health and fitness in 2016 to help fuel my productivity. I try to cook at least three nights a week as I find it therapeutic and a good way to toss ideas around in a creative space.

What does the future hold for ReWare?

In the short-term ReWare will be expanding its retail footprint through the Edcon network as well as launching our eCommerce platform. In the medium term we are looking at having a flagship storefront and then we would like to expand within the continent for in the long term.

What excites you about being a woman on the continent right now?

Other women! Being part of a group of women that are formalising the female-led entrepreneurial (historic) culture of our continent. Being able to witness and consume what other women are doing in the entrepreneurial and creative spaces – it’s a great time to be living and making a meaningful impact!

Find out more about ReWare: reware.co.za

Follow Nothando on Twitter and Instagram @Jozifoodiefix

Finding their calling

Listening to their customers and an ability to spot gaps in the market led Nothando Moleketi and her business partner, Felix Martin Aguilar, into the second-hand smartphone space

It was Aguilar who first envisaged refurbishing and reselling smartphones. He approached his former colleague, Moleketi, who was keen on the idea, but wanted more ownership of the proposed venture before coming on board.

“I was eager to embark on this exciting journey with him, but given the level of commitment a start-up takes, I knew I’d only do it if I had a greater stake in the enterprise. So I became a minority business partner.”
The pair’s first outlet was Zwipit SA, an online cellphone buy-back company licensed to Spanish company Zwipit, which sells new and used cellphones to emerging countries. However, the business model proved to be inappropriate for the local market.

“The uptake in SA was lower than expected, as we have a culture of handing down old cellphones to family and friends, unlike other countries, where people tend to trade them in or sell them,” explains Moleketi. “Another problem was that the pricing of the phones was established for wholesale global devices and local phones didn’t have the same value.”

However, she and Aguilar were determined to adapt what they believed was a lucrative idea and opted for a similar business model, but with a South African flavour. “We noticed lots of buying and selling of second-hand cellphones in classified advertisements and decided to formalise this by offering a one-year certification for pre-owned smartphones. That’s how our business morphed from Zwipit to Reware.”

The transition was so easy that for some time they ran the two businesses simultaneously, while expanding their offering to include a cellphone repair service.

It was a sound business idea, considering the ever-increasing demand for smartphones, but given a new smartphone’s high price tag, the devices are often too unaffordable for many.

Not only have they opened a whole new level of technology to consumers who previously couldn’t afford to access these devices, but their phones are environmentally friendly, decreasing the number of phones in landfills.

There’s also a lot of scope to grow, as they’re seeking to work with cellphone operators and insurers to supply phones with equivalent value to their customers for claims.

However, despite the sound localised business model, they faced a challenge in accessing funding.

“When you’re looking at funding smartphones and importing devices, you need a partner with the right risk appetite, someone to help fill that gap of paying the supplier, as we don’t get paid until the customer pays us. We tried to get government funding, but couldn’t, as we don’t manufacture the phones. The forms were problematic to complete because of the unconventional business model. Private investors and corporates were more interested in our offerings,” says Moleketi.

Ultimately they chose to fund the start-up themselves.

“It’s a lot of sweat equity on our part. We’re not drawing salaries: instead, we’re focused on growing the business. We’re funded with a combination of capital coming in and lending facilities. We need to have a lot of working capital to deal with constant buying of new handsets. Things like currency fluctuations can have a huge knock-on effect. We’re constantly watching the exchange rates and budgeting for those increases,” she says.

Their concept soon caught the attention of the Edcon Group, which quickly recognised the concept’s potential.

“Partnering with it was a no-brainer, as we can use its infrastructure and its physical presence was key. We launched with 14 stores and 1 000 units in our initial order over December last year and we’re onto our third order. We’re currently available at 21 Edgars stores, as well as CNA and Jet online.”

There are big expansion plans too, from expanding their ecommerce platform, selling directly to the public, to growing their footprint nationally and across Africa. They’re determined to open the market – one smartphone at a time.

  • This article first appeared in the September 2016 issue of DESTINY

Cashing in on old cellphones

Telecoms start-up ReWare is tapping into the growing smartphone market by offering repurposed, pre-owned Samsung and iPhones to value-conscious consumers.

Nothando Moleketi, co-founder of ReWare, says the smartphones are sourced internationally and once they arrive in South Africa they are taken through a diagnostics and repair process to ensure the devices are in good condition.

The phones are also sanitised and repackaged to include a USB cable and a plug point. All ReWare phones are sold with a one-year warranty.

“We buy a specific grade of phone that guarantees that all these phones will be operationally functional,” Moleketi says.

Currently, ReWare phones are available in 14 Edgars stores and online at www.cna.co.za. Prices range from R1 699.90 for an iPhone 4 to R3 799.90 for an iPhone 5C, while a Samsung Galaxy S3 is priced at R1 999.90. The top-of-the-range Galaxy S5 retails at R4 499.90.

“When we approached the retailers, this had been done on a small scale. For instance, Apple has done this by offering pre-owned phones, and Vodacom has tested it as well. The market for certified pre-owned smartphones exists; it is now about championing the efforts around educating the average consumer on certified pre-owned [devices]. So we approached retailers and they said their customers want iPhones and Samsungs. The key thing here was the pricing; for us it was getting to the right price point that appeals to customers,” she says.

Gumtree, the country’s largest classifieds website, says the average price for a second-hand smartphone on its site is R2 500, while the most popular second-hand phone for sale is Samsung.

The Samsung Galaxy A7 is best at retaining its value, selling for an average of R7 183. The iPhone is in second place, with the latest iPhone 6 Plus selling for R8 463.34 on the site, according to a Gumtree survey.

Moleketi, a former employee of Cell C, and her business partner Felix Martin-Aguilar, who also had a stint at Cell C, saw a window of opportunity to bring this business model of selling repurposed smartphones – a concept already available in other countries – to SA. (As reported by finweek in February last year, the duo also brought Spain’s Zwipit – a company that was started five years ago to encourage consumers to sell their old cellphones and smartphones – to SA.)

“For us it’s the right time in SA to bring this to the market,” she says. “This [second-hand cellphone sales] is happening informally already; people are buying and selling phones. This means there is a market for it; we are simply formalising that market.”

ReWare’s target consumer is the value-conscious buyer. “That’s the everyday consumer. It doesn’t matter what the [economic] climate is, they are looking for the best value and we offer that with our range. The phones have the normal wear and tear, but if you are a value consumer you want the functionality of the device.”

Buyers include parents who want to buy affordable smartphones for their children, entrepreneurs looking for top-of-the-range smartphones at a lower cost, and people seeking to replace lost phones they bought on contract that were not insured.

ReWare’s future plans include expanding to other African countries where access to smartphones is limited.

“We are not only selling devices, we are providing access, and access is something that is needed on the continent. And we see that mobile growth is big on the continent. There’s potential, so people need smartphones to access the internet,” Moleketi says. Internet access has also become key in, for example, providing access to healthcare, education and banking.

The GSM Association said in a recent report that migration to higher speed networks and smartphones on the continent continues apace, with mobile broadband connections set to increase from just over 20% of the connection base in 2015 to almost 60% by the end of the decade.

“Falling device prices are encouraging the rapid adoption of smartphones, with the region set to add more than 400m new smartphone connections by 2020, by which time the smartphone-installed base will total over 500m,” it said.

REWARE ON FINWEEK

Watch the video