The global market for second-life mobile devices is going to reach epic growth say the Phoenix men
Phoenix Cellular specialises in distributing used mobile phones and now claims to be Europe’s top distributor in its field, selling around 40,000 used top-tier handsets a month.
Based in Crewe, the company was set up in October 2015 by brothers Marc and Paul Walters and their friend Andrew Dulla when they spotted massive potential in the used mobile sector.
Three years in, Phoenix expects its turnover to hit £32 million this year. This compares with a figure of £22 million in 2017, an increase of more than 100 per cent over 2016. The turnover target for next year is £50 million.
The Walters brothers were previously involved in recycling at Mobile Phone Xchange (MPX), a company they ran with their father Geoff, who passed away in 2012.
“There is still huge growth ahead in this area,” says Paul Walters. “We understand the global market and our combined knowledge has given us a chance to succeed in this.”
Both brothers are industry veterans. Their father was one of the first mobile dealers in the industry’s heyday in the 1980s, selling BT car phones from his Latchborder company. He later moved into airtime provisioning, setting up Complete Mobile Communications, which was bought out by Avenir.
Their father’s influence is still evident. Enter the building in Crewe and one of the first things you’ll see is a cabinet stuffed full of old mobile phones that belonged to Geoff.
“This cabinet is part of him in the business,” confides Paul. Now aged 46, he has been in the telecoms business since he was 20.
Working with their father taught the brothers about the industry and gave them the experience and confidence to start Phoenix.
“We learned a lot from him. He was well-respected and had virtually no enemies in the industry. He taught us to never ruin relationships, but to build them and gain people’s trust,” said Paul.
But having achieved success at CMC and MPX, why not just call it a day and enjoy the fruits of success?
“We weren’t ready to retire. Telecoms is in our blood. We’re still young and have a lot of energy left in us. We like to think we have evolved in every business we created and this has been no different.”
When they set up the business, the Walters funded it and brought in Andrew Dulla as an equal partner.
What was the thinking behind locating the business in Crewe? Paul says this based on where Dulla lived, in nearby Nantwich.
“The business was based around Andy, as initially me and my brother didn’t expect to be as involved as we are. Also, the costs to operate a business in the north-west worked out much cheaper than down in London.”
“This is the third business we have set up,” continues Paul. “It is never easy. It will definitely be our last.”
When it was being established, Phoenix needed equipment for testing handsets. They brought in FutureDial diagnostics software, which tests all of phones’ functionality, including Bluetooth, WiFi, screen and network settings.
Dulla recalls that it was a challenge finding suppliers and building the customer base, but that obstacle has now been overcome with a strong supply base.
Phoenix’s claim to fame is that is not just another recycling company selling old mobiles. The business model is more that of a distributor of quality used devices graded according to their condition.
“A recycler is often restricted in what comes back from their buyback programmes,” says Paul Walters. “Rather than running a buyback programme, we look to add value with a high-value distribution channel based on price, quality, consistency of grading and a fair returns policy, which we know is important to our customers.”
The grading process indeed seems robust, involving testing followed by visual and computerised assessment. Products are graded either as A/B (good as new), B (in great condition but with signs of wear) or C (good condition). Once the phones have been graded, they are packaged and boxed up in-house.
Quality and consistency are vital to ensure that customers trust the process. “Our team checks the phones’ cosmetic appearance. They are then put through the quality-control process. Many people have had bad experiences buying used phones. We’re trying to make the experience a good one.”
Phoenix offers customers a standard warranty of between 14 and 30 days, while its premium-packaged GR8 Mobile service comes with a 12-month one. The package includes a charging cable, screen protector and either a repair or replace warranty option.
Phoenix’s mission is to become a preferred global distributor for used mobile phones. The focus is currently on tier-one handsets primarily from Apple and Samsung, with sales of these running at around 40,000 a month.
Other brands are also processed, but the split is mainly between Apple and Samsung sourced around the world from a number of suppliers. Phoenix tends to buy bulk volumes of most models.
The customer base is primarily businesses, including wholesalers, retailers, e-retailers, insurance companies and dealers.
The company has been given a boost with four ISO accreditations (ISO 9001, 14001, 18001 and R2) after an exhausting six-month audit. According to Paul Walters, it is virtually unheard-of for a business only three years’ old to attempt and pass that many accreditations.
The Walters brothers and Dulla are encouraged by the outlook for used smartphone sales. IDC predicts that shipments of new devices will decline this year, but analysts at Deloitte have confirmed that the used-mobile market has grown considerably in recent years, with 120 million used smartphones worth £12 billion sold in 2016.
Paul Walters says: “The industry will continue to grow and evolve. As handset prices continue to rise, so will the global demand for used ones. Mobile phones are the most-used electronic devices we have. As they wear out, people replace them, often with a used device.”
Paul thinks the gloomy statistics for the overall handset market would be different if used mobile shipments were included.
“There are different ways to look at this data. If they are tracking sales of new and used phones together, it wouldn’t look so slow-moving.”
Price and value are determining the growing preference for second-hand devices.
“The entry point into an Apple or Samsung product is around £800,” says Paul. “If a customer buys a used device, they can pay as little as £150 and still get the latest iOS and Android experience.”
The iPhone 7 is the most popular model for Phoenix, though the 6 and 6S versions are still in high demand. Paul expects 2019 to be similar in terms of the continued demand for the iPhone 7.
The company currently employs 60 people, but has plans to increase headcount and move to bigger offices next year. The uncertainty around Brexit doesn’t phase Phoenix, with Dulla confident that the business can adapt.
“Nobody knows what is going on with this. We will adapt to whatever happens and whatever trends take place,” he says. “We’ve discussed having an office in Europe. We’re also looking to expand in the UK to a bigger warehouse.”
Phoenix has recently invested £150,000 in an enterprise-resource-planning platform to make their customers’ accounts more user-friendly.
“Having three owners is nice. We motivate each other and drive each other forward, and all have the hunger to keep succeeding.”
With none of them having plans to retire just yet, it appears that Phoenix will continue to keep pushing for growth in a market that they feel is there for the taking.