Catching Up with Philipp Gattner: Second-Hand Electronics Retailer Rebuy Stands Firm in Competitive Market
Repurposed Gadgets Dealer Rebuy Embraces Market Expansion Due to "Clear Entry Barriers"
"Secondhand goods are seeing a growing appeal among consumers"
Founded in 2000 and originally known as trade-a-game, Berlin-based online platform Rebuy has been repurposing used electronics like smartphones and tablets for over two decades. With a shift towards sustainability and budget-friendliness, the second-hand market has flourished, but growth rates have cooled recently. Despite this, Rebuy's CEO, Philipp Gattner, remains optimistic about the company's place in the industry.
By Joe Metzger, Chicago
Under Christmas trees worldwide, countless second-hand gifts likely found new homes this holiday season. A survey by the German Retail Federation indicates that the trend towards second-hand items continues, with 54% of Germans having given something used in 2022. Among the items most likely to be passed on are household and decorative items, accessories, electronics, and clothing. As living costs rise and environmental awareness increases, more people are embracing pre-owned goods. Analysts predict that the second-hand market for electronic devices and clothing will expand by double digits in the coming years.
Newcomers like Back Market and Vinted
The secondary market has evolved in response to the surge in popularity. Multiple platforms have emerged where individuals can trade their pre-owned items directly or through an intermediary. Some of these platforms have soared in value, with Back Market (a marketplace for refurbished electronics) and Vinted (a marketplace for used fashion) each achieving a company valuation of approximately 5 billion euros in their most recent funding rounds. Given their success, these platforms are now eyeing the electronics market. Even established e-commerce giants like Amazon, eBay, and retailers such as Saturn, H&M, Zalando, and Zara have joined the ranks of the used-goods wave.
Philipp Gattner, CEO of Rebuy, remains unruffled by the increasing competition in the market. "Sure, there are frequent newcomers," he says. "It's not surprising, and it doesn't automatically trigger a replacement competition. The market is simply becoming more appealing."
Profitable for several years
Among the companies dealing in second-hand electronics, Rebuy is something of a trailblazer. The company diversified its product offerings in 2009, changing its name to Rebuy Recommerce GmbH and expanding beyond used video games. Earlier this year, Swiss financial investor Evoco invested 21 million euros, becoming the majority owner of Rebuy. In 2019, the company reported profits for the first time, according to its own claims. Gattner expects to post black numbers again this year, with revenues exceeding 220 million euros, up from 216 million euros in 2021. "But we're also a bit spoiled by the past years," Gattner remarks, “where we've grown at an average double-digit rate.”
In 2022, Rebuy saw growth of just a single digit. However, competitors like Back Market reported a 45% increase in revenue in the same period, generating 320 million euros. Refurbed, another provider of refurbished electronic devices, boasted an external revenue of over 1 billion euros in June 2023, just five months after raising 54 million euros in a funding round.
Gattner maintains that Rebuy is well-positioned in the competitive landscape, as it provides customers with additional services to maintain product quality. These include checking, cleaning, data wiping, refurbishing, and offering a three-year warranty. "We handle the products ourselves, with nearly 10 million items in 2023, which creates a significant barrier to entry for potential competitors," says the CEO. Building the necessary logistics and expertise behind the business model takes years.
Strategic Priorities
For the next 12 to 24 months, Rebuy aims to focus on its core business in Germany, where the majority of its revenue is generated. Besides Germany, the company operates in Austria, the Netherlands, Spain, Italy, and France. "Given the billion-dollar re-commerce market and the level of our current turnover, we see great potential in our existing business, and it makes little sense to expand into new categories or countries too early," says Gattner.
While the company's short-term focus is on Germany, it has its sights set on international expansion in the long term. A region that particularly captures Rebuy's attention is Scandinavia, where society has a favorable view of purchasing used products. "This is something we're seeing more of among younger generations here," says Gattner.
In the medium term, the company aims to expand into new product categories. "We're thinking of household appliances, for example, with the Thermomix being a classic example that fits well within our product range," says Gattner. This would make Rebuy similar to its competitors Back Market and Refurbed, which already offer household appliances like the Thermomix.
Potential Mergers and Acquisitions
When asked about potential consolidation movements in the market, Gattner emphasizes the importance of flexibility for Rebuy. The company could consider actively acquiring smaller targets, with an eye on current acquisitions. However, if acquiring a larger strategic partner with potential synergies presented itself, that would also be considered.
The barriers that set Rebuy apart in the growing recommerce market include:
Quality Control and Refurbishment Standards
Rebuy may require substantial investments in refurbishment processes to meet customer expectations. Newcomers must develop stringent testing protocols and offer guarantees, such as 12-month warranties, to establish trust. Leading contenders like Amazon Renewed and Back Market have already set high standards, making it costly for new entrants to match their certification systems.
Consumer Trust and Brand Loyalty
Rebuy benefits from its first-mover advantage in consumer education. Platforms like Back Market and eBay leverage AI-driven fraud detection and certified refurbished programs to differentiate themselves. New entrants must overcome skepticism through expensive marketing and partnerships with established brands.
Online Infrastructure
The importance of online channels, with a 69.5% commercial end-use share in Europe, calls for robust logistics, smart filters, and mobile app integration. Competitors must invest heavily in technology to remain competitive, as Rebuy has already optimized its systems.
Eco-Friendly Initiatives
Eco-friendly initiatives, such as tree-planting programs and electronic waste reduction strategies, create a reputation barrier. Rebuy's adherence to circular economy principles presents an obstacle for newcomers who lack similar commitments.
Market Connections
Collaboration with manufacturers for trade-in programs ensures a consistent supply of devices. Rebuy's existing relationships with brands and retailers act as a moat, making it challenging for new players to secure comparable partnerships.
Data and Pricing Insights
Advanced algorithms for dynamic pricing optimize listings and identify fraudulent items. Rebuy's access to historical sales data and machine-learning models create a competitive edge that requires specialized knowledge to mimic.
By leveraging these obstacles, Rebuy and similar companies, such as Back Market, maintain a competitive advantage in a burgeoning market propelled by eco-conscious consumers and rising device costs.
- The survey by the German Retail Federation indicates that 54% of Germans gave something used in 2022, with household and decorative items, accessories, electronics, and clothing being the most likely items to be passed on.
- In the electronics market, platforms like Back Market and Vinted are eyeing expansion, given their success and the predicted double-digit growth in the second-hand market for electronic devices and clothing in the coming years.
- Rebuy, a pioneer in the second-hand electronics market, provides additional services for maintaining product quality, such as checking, cleaning, data wiping, refurbishing, and offering a three-year warranty.
- For the next 12 to 24 months, Rebuy aims to focus on its core business in Germany, seeing great potential in its existing business given the billion-dollar re-commerce market and its current turnover.
- In terms of potential consolidation movements in the market, Rebuy values flexibility, considering active acquisitions of smaller targets or mergers with larger strategic partners with potential synergies.
- To establish trust among customers and overcome skepticism, new entrants into the second-hand electronics market must invest heavily in marketing and partnerships with established brands.
- The importance of online channels calls for robust logistics, smart filters, and mobile app integration, making it necessary for competitors to invest heavily in technology to remain competitive, as Rebuy has already optimized its systems in this area.
