Grover CFO: Rent-a-Tech platforms reduce e-waste
120 million tons per year.
This is the amount of global electronic and electrical waste (eWaste) that will be produced per year by 2050 if current trends continue, according to a United Nations report report.
As if that figure wasn’t alarming enough, UN data further reveals that less than 20% of the 50 million tonnes of e-waste currently produced globally each year is officially recycled, leading to increased risks to health and the environment as well as a significant loss of value. raw materials like gold and platinum that end up in the millions of tonnes of electronic waste thrown away each year.
To meet the challenge, calls for a circular economy in which resources are refurbished and reused are increasingly heard, capitalizing on growing consumer demand for sustainable and reusable products that reduce waste and are less harmful to the environment.
And it is in this space that the Berlin-based tech startup Grover seeks to make a difference with its rent-a-tech platform, aiming to create a circular economy for consumer electronics as customers move from ownership to access and become more aware of sustainable and affordable forms of tech consumption .
Following this sustainability-focused shift from ownership to access, Grover’s solution to renting technology flexibly — without having to pay for products up front — has caught on quickly in recent years.
“Instead of buying a new phone every 18 months and then leaving it in a drawer, consumers increasingly believe that they can use a device for as long as they need to, but that’s enough. then very transparently send it back to Grover and get a new one,” Thomas Antonioli, Grover’s chief financial officer, told PYMNTS in an interview. “The old device is refurbished and reused, allowing them to actively contribute to the reduction of electronic waste.”
Today, the German tech unicorn, founded in 2015, offers subscribers access to more than 3,000 tech products – primarily smartphones and laptops, but also smart home appliances, virtual reality (VR) equipment, games and portable devices – which they can change, return or keep. on a flexible monthly rental basis.
Following the surge in demand for products such as laptops in its markets – Germany, Austria, the Netherlands and Spain – due to more and more workers shifting to remote work, Antonioli said the upward trend has continued since.
Flexible offers, affordable rates
On average, subscribers pay about 45% of the retail price within a year of the lease, which includes free insurance coverage that would have cost them a monthly fee of between $10 and $20 on a purchased device, as well than free shipping.
“[The insurance] is something you get for free in the subscription price, so you’re going to pay less than half the price if you bought it with insurance,” Antonioli said.
For users who decide to continue renting for longer, they have the option of purchasing the device for $1 when they reach 120% of the original sale price in accrued rents. This deal, he says, is like paying “almost exactly” the same price to buy an iPhone with insurance coverage, for example.
The difference here is the flexibility Grover offers users to terminate or upgrade a lease at their convenience.
“If you don’t [terminate or upgrade]the worst that can happen is that you pay as much as if you had financed the device and got damage coverage included,” he noted.
Plus, unlike traditional credit, subscribers who are on contract but experiencing personal issues like job loss can return the device and not be held responsible for paying the rest of the contract fee – “this also allows people not to default,” he added.
Due to the subscription nature of Grover’s business, ensuring the company has a strong credit rating engine is critical to minimizing risk, he continued.
That’s why the business-to-consumer (B2C) company is enriching traditional data like a FICO score with new alternative data sources, as well as its own machine learning technology that can analyze behavioral data based on the how people move around the website, providing “credit metrics [that] are much better than credit card information in Germany, for example. »
Awareness of Rent-a-Tech
The German company focused on the circular economy recently ventured into the integrated finance space with the launch of a Grover card, allowing users to earn credits for their subscriptions. This led to an increase in annual recurring revenue (ARR) that more than doubled from what the company recorded in 2020, opening up opportunities to expand its suite of financial services.
Read more: Grover, a $1 billion subscription-based consumer tech company
Further proof of the industry’s meteoric growth, the company recently raised $330 million in equity and debt financing at a valuation of over $1 billion, with plans to grow subscribers in the markets. existing ones and extend the circular economy to more countries.
The United States is one such market that the European company has targeted to accelerate its growth, launching there late last year.
See also: After explosive European growth, Grover brings technology rental service to the United States
“We always knew it was going to be a very big and important market for us at some point. [and] we were positively surprised by the way we were received there,” he said.
Spreading the word and awareness of the consumer electronics rental service and its benefits is a key area Antonioli said Grover will focus on moving forward, especially in markets where the concept remains relatively new.
“We will use the funds we have raised to raise awareness because most people don’t even know that [the rental] option even exists,” he said.
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