The French Startup Leading the Refurbished Electronics Industry
Author & Design: Daiki Yoshioka
On November 17th, we invited Alexis Jerome from Back Market, who is the Director of Asian Growth & Operations.
Back Market is a French unicorn startup that was founded in 2014 and offers an e-commerce platform for refurbished electronic devices. In May 2021, it raised $335 million Series D funding whilst growing its customer base to 5 million globally.
Alexis shared how the French startup found its way to the Japanese market, the challenges they’ve faced.
Welcome, Alexis! Could you introduce yourself?
Hello, my name is Alexis Jerome. I am the Director of Asian Growth & Operations at Back Market. I’ve been with the firm since 2016 as one of its early employees.
Last year, we decided to enter the Japanese market as it is one of the biggest consumer markets in APAC. Since then, I’ve been leading our growth in Asia and am now based in South Korea to grow our business here.
Could you explain the value proposition of Back Market? How was it founded?
Back Market was founded from the simple observation of our founder in 2014. In France, there were thousands of refurbished items; however, none of the retailers knew how to value and sell them properly.
In addition, the manufacturing of new electric devices leaves a significant environmental impact. According to Back Market, “half of the carbon emissions from the digital sector (making up 4% of global emissions) come from the production of devices.” Back Market was founded to solve these problems.
We are the first and the biggest market exclusively dedicated to refurbished electronics. “Quality of the refurbished products” is our value proposition. We strive to create simple, smooth, and safe access to quality refurbished electronics. In fact, 30–60% of our products are as good as the new ones.
We are a strong believer that Back Market’s value proposition is global and are confident that we can scale our business globally. Since our initial success in France, we scaled our business quickly in Europe, starting from Germany, Spain, Italy, the UK, and Belgium. We are available in 14 countries in Europe and established offices in Berlin, London, and Barcelona.
Following our success in Europe, we decided to further expand our business — this time in the United States. In 2018, we opened our office in NY and have hired 60–70 people locally. Then, we decided to expand to Asia, and Tokyo was our first step, followed by Seoul.
How did you decide which country to expand the business? Why did you decide to enter the Japanese market first within APAC?
APAC is important for Back Market because of the size of the consumer market. Also, the E-commerce market is growing fast. Compared to Europe and the U.S., our business can be easily launched and scaled.
We chose the Japanese market as our first APAC market of focus because of four reasons:
- synergies with Back Market
- size of the consumer market, which is the second largest in APAC
- local demands and supply; trading programs offered by most telecom show there are wide needs for second-handed electronics here
- limited legal constraints compared to other countries like China
How is the Japanese market different, in terms of e-commerce and consumer culture?
We have identified a few unique characteristics of the Japanese market:
- UI & UX are distinct. When you look into Japanese e-commerce websites, such as Rakuten and Yahoo, the content is dense and wordy for the Western audience. Rather than amending the UI for the local customers, we increased the number of content on the website so that the users can have a similar experience.
- The diversity of payments is unique. Consumers in the U.S. and Europe prefer to use credit cards. However, we discovered that Japanese consumers don’t prefer to use them. Instead, there are digital payments (e.g. LINE pay), pay at delivery, and combini payments.
- Compared to consumers in Europe and the U.S., we have not seen maturity in eco-friendly products or services. In Europe, consumers are far keener to buy second-handed products.
What were the key challenges when launching in Japan? Could you share your learnings for fellow French entrepreneurs looking to enter the Japanese market?
We’ve experienced commercial and administrative challenges.
Commercial challenges
Raising consumer awareness was a challenge. Japanese consumers did not recognize Back Market, let alone what refurbished products were. For example, a lot of consumers questioned our difference from Mercari, which is purely C2C. Mercari does not offer a warranty for second-handed electronics or professional refurbishment, but we do.
As mentioned, Back Market’s value proposition is, in essence, very global as the need for refurbished electronics is present in Asia as well. When entering Japan, similarly to other global EC platforms, we decided to keep our core branding and value proposition. Whilst maximizing the values of consumers who are already familiar with refurbished electronics, we decided to add more content on our platform that caters to the local audience to build trust and educate them on refurbished electronics.
We are partnering with the Japanese marketing agency to increase marketing, especially search engine advertisements (e.g. Yahoo, Google, etc). Due to the effect of the COVID-19 pandemic, we are aware that the consumers are focusing more on wellness and greentech. It is a great time for us to increase our marketing effort.
Administrative challenges
We tried to form partnerships with local banks to enable digital payment. However, it was declined a few weeks before our launch. Since the main team members were still based out in France, and the bank demanded one of our representatives to visit physically, it was an issue.
Other tasks, such as incorporation, were not particularly challenging. We hired a French-speaking partner in Japan who helped us with administrative tasks. When entering a new market, we discovered it is helpful to have these helpers on the ground as local laws and regulations tend to be complex.
Did you have a partnership with suppliers when entering the Japanese market?
Yes. We had partnerships with global suppliers, so it was easier to launch in the Japanese market despite the lack of brand recognition for the consumers.
One reason why we actively look for global partnerships with suppliers is that they help us penetrate new markets effectively. We just need to activate the supplier partnership locally.
How long did it take to enter the Japanese market?
It took us 9 months. We had 5 FTEs fully dedicated to this project and were fully supported by the corporate HQ.
We were like a company that was founded within a company. Some members focused on sales and some focused on finance. Each reported directly to the general manager of the Japan team, which created a lot of agility. We iterated and pivoted fast.
The HQ checked in on a weekly basis to see if we were on track and maintain the brand integrity as they wanted to keep the Back Market “DNA” globally.
We had 3 KPIs to measure our “success” in a local market within our initial 20 months: (1) website traffic (2) capacity to meet the expectations of Japanese consumers (3) customer satisfaction rate. If any of the KPIs do not meet our standards, we would have withdrawn from the local market.
Do you have any advice for French entrepreneurs?
- Keep the agile culture. Launch and fail fast so you can use the learnings to iterate.
- Outsource the administrative tasks to a local agency that can be trusted
- Leverage the resources by La French Tech Tokyo, French Embassy, and Business France
