Mazuma’s own recycle sets it up to make most of refurbished market

After big changes since its purchase by EcoRenew, the recycler thinks it could hit £100m this year

After 18 months of major change, mobile device recycler Mazuma Mobile is now streamlined and could hit £100 million in turnover this year under the new ownership of Hong Kong-based EcoRenew.

The company expects to gain added impetus from its fresh direct-to-consumer offering and moves into recycling products such as laptops and games consoles.

Founded in Watford in 2006 by John Lam and Charlo Carabott, Mazuma has developed into one of the UK’s most recognisable mobile recycling brands, buying and selling no fewer than five million phones since then.

EcoRenew bought Mazuma in January 2018 as part of an acquisition spree that saw it also snap up Morecambe-based asset disposal company ICT Reverse and phone repair firm iMend in October 2017 and February 2018 respectively.

All three businesses now share the Old Reebok, a vast 105,000 square-foot warehouse and office space on the White
Lund Industrial Estate in Morecambe. Mazuma takes up about 30,000 square feet of this, much larger than iMend’s 5,000 but less than the 50,000 square feet of ICT Reverse. However, these proportions are largely down to the device sizes the companies are dealing with and not the revenues they bring in.

EcoRenew Group CEO Craig Smith estimates that the three companies have together turned over £31 million in 2019 so far, but Mazuma has accounted for £25 million of that. Mazuma’s own target for the whole year is £50 million, but Smith believes the usual fourth quarter seasonal bump from Christmas and shopping events such as Black Friday could take that even higher.

On a tour of Mazuma’s processing area, marketing director Andy Cruxton and compliance director Ken Parker show me a small office full of mobile devices in various conditions, with a total value of at least £1.2 million.

STAFF CHANGES
In the wake of EcoRenew’s acquisition, there have been considerable personnel changes. Carabott left just over a year ago, with co-founder Lam and iMend co-founders Keir and Sarah McConomy following suit in January.

The restructuring and consolidation of three businesses under one roof has, meanwhile, led to some teething problems. A big challenge was moving Mazuma from its Watford HQ to Morecambe earlier this year, resulting in job losses among
employees who were unwilling to relocate.

“It was horrible,” says Parker, who had to break the news that the company would be moving hundreds of miles. “There were some really nice people, and we would have loved to retain them. But there was the distance factor.”

Yet Watford’s loss has been Morecambe’s gain. Smith says EcoRenew is now the largest private employer in the Morecambe and Lancaster area, with 163 people working across the three companies. Around 70 work for Mazuma, which Cruxton reckons is about a 50 per cent increase on the number employed in Watford.

There was also the logistical issue of moving an entire recycling operation from one part of the UK to another, which saw a slowdown in device processing. Furthermore, says Parker, there was a slight failure on the part of the Royal Mail to adequately prepare its closest sorting office for the sheer volume of phones that would come through.

For a company that prides itself on same-day payment on receipt of a customer’s device, a delay of about a week for some products hit consumer confidence – but the team got things back on track fairly quickly.

Mazuma is, however, also hoping to make things more efficient and cheaper for customers through a deal it is close to reaching to use parcel service DPD for deliveries. The company hopes this will reduce postage costs, with customers able to visit one of the many DPD collection points around the UK to send their phones to the warehouse rather than using regular post.

SMITH STEPS UP
Former EcoRenew CEO Mark Chambers, who handled the purchases of all three companies, also left this January to be replaced by ICT Reverse founder and CEO Smith, who had become EcoRenew’s UK managing director after his company was snapped up.

Smith originally started ICT Reverse 19 years ago as a trade-in service for mobile devices under the name Second Hand Phones (SHP). It gradually branched out to handle corporate computer data-wiping and recycling, changing its name to ICT Reverse to reflect the shift in direction.

From his prior experience, Smith is fairly relaxed about having the responsibility of running EcoRenew. “My background is in mobile. So when the opportunity came to run Mazuma and the other companies, I understood the task and was delighted to accept it,” he says. “If you’re looking to change and sell your business, you’re looking for what to do next. I didn’t want to not work.”

With Smith’s responsibilities now having an international dimension, he has become no stranger to airport lounges – having travelled to the US, Hong Kong (EcoRenew’s HQ), the Philippines and Japan in the first six months of his new role. “When you sell your business, assuming you want to continue, you’re looking for growth,” he continues. “There’s personal growth because I’m looking after three businesses here, not to mention those abroad.” EcoRenew has the rights to use the Mazuma brand in about 30 countries – meaning there are a lot more airline meals waiting for Smith to eat.

But the company still has a big focus on the UK market too, with EcoRenew’s owners keen to see Mazuma continue to thrive and evolve beyond basic recycling.

As part of this mission, Mazuma launched its first online shop last summer, with consumers now able to directly buy used phones that the company has bought.

The devices are also properly repackaged in a branded box with a charging cable and rubber container to build customer confidence in refurbished phones.

Parker explains the logic: “Even though they are buying a used phone, they are still getting the unboxing experience, and the ‘Wow, here’s my new phone!’ factor.”

CLOSE INSPECTION
Parker, an ICT Reverse veteran of 10 years, is in charge of the process by which incoming used devices receive a thorough 88-point inspection to give them a final four-level grading. A device that is like new is given a ReNew rating, with Excellent, Very Good and Good making up the other grades.

Meanwhile, around 15 per cent of phones received each week are returned to customers free of charge for not being up to standard. A computer algorithm works out the popularity of a device and the price at which it should be sold.

The product is then given a 12-month warranty and insurance policy provided by Bastion Insurance Services – another new element in the company’s evolution.

Consumers are the company’s main target market, but Mazuma is also looking to secure bulk sales of refurbished devices to business clients and insurers, as well as the retailers, resellers and traders that have been with the company since the beginning.

The most popular devices being sent in at present are models that are one or two generations behind a manufacturer’s latest versions – so lots of Galaxy S8s and iPhone 8s. The 88-point check is important because it comprises a deep assessment that combines use of the Blackbelt diagnostics app alongside extensive cosmetic, user and NFC testing to determine a device’s value. It also uncovers issues that the average customer may be unaware of, one of the most common being screen burn – something that Parker says is a common issue from long-time usage of OLED screens.

Mazuma has, meanwhile, expanded its portfolio to add a WiFi hotspot app, with the company also developing a marketplace app replete with a diagnostics tool that can give more accurate valuations of customers’ devices. In addition, Smith wants Mazuma to move into processing laptops and gaming consoles, adding to the tablets and smartwatches being sold online. There’s even talk of a Mazuma MVNO in the future.

Smith plans on offering white-label recycling services for other companies as well, having been in talks with an MVNO and a retailer to allow Mazuma to handle device-trading for their brands.

“They have big customer bases and want to offer trading to offset the cost of their services,” he says. “You might see their service as ‘powered by Mazuma’, or you might not see us at all. But we’ve got the systems and processes to offer our services to other people.”

FINANCIAL OUTLOOK
Smith is bullish about the company’s financial prospects. “We’re looking to capitalise on peak and seasonal times, and product launches, particularly Apple’s launch schedule,” he says. “If we get our numbers right, turnover could go through £100 million. Some of the handsets we’re buying and selling are around
£200 to £300, compared with the average price of a trading handset a few years ago of £40 to £50. The average is now £130 across all our products, which is going to contribute to turnover.”

Smith plans to move into an as-yet unused section of warehouse by Christmas to help streamline the production process. The 88-point diagnostic check, as well as the plan to expand the range of devices processed, means the need for efficiency is key.

“A trading handset a few years ago averaged £40
to £50. It’s now £130 across all our products”

It certainly seems that the time is ripe for Mazuma to increase its turnover, with the refurbished phone market growing year-on-year amid stalling sales of new premium devices. Last year saw sales of between 2.2 and 2.4 million refurbished devices in the UK according to Counterpoint Research, making it the largest individual market in Europe.

Powerful branding baked into the Mazuma ethos can help it achieve its lofty goals. Its earworm of an advert from 2010, in which a troupe of animated anthropomorphic mobiles sing about the company to the tune of the Oompa Loompa song from Willy Wonka & the Chocolate Factory, has had more than one million YouTube views.

EcoRenew has given Cruxton a £2 million budget for online, radio and TV advertising, with programme sponsorships also in the mix. The ads will focus on the rigorous testing and
checking process, and product presentation.

“Hopefully, there will be a lot of brand recognition for the way we do things and distinguish ourselves,” says Cruxton. “The trick is to get the UK absolutely rocking and rolling, and then replicate that model wherever else EcoRenew wants us to go next.”