120 million tons per year.
That’s the quantity 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.
As if that figure is not alarming enough, the UN data further reveals that less than 20% of the current 50 million tons of eWaste produced globally each year is formally recycled, leading to increased health and environmental risks as well as a significant loss of valuable raw materials like gold and platinum that end up in the millions of tons of eWaste discarded annually.
To address the challenge, there have been growing calls for a circular economy in which resources are refurbished and reused, capitalizing on the increasing consumer demand for sustainable and reusable products that reduce waste and are less harmful to the environment.
And it’s in that space that Berlin-based technology startup Grover is looking to make a difference with its rent-a-tech platform, aimed at creating a circular economy for consumer electronics as customers shift from ownership to access and become more conscious about sustainable, affordable forms of tech consumption.
As a result of that sustainability-led shift from ownership to access, Grover’s solution to rent technology in a flexible way — without having to pay for products upfront — has caught on rapidly in recent years.
“Instead of buying a new phone every 18 months and then letting it sit in a drawer, it’s becoming more top of mind for consumers that they can use a device for as long as they need it, but then simply ship it back very seamlessly to Grover and get a new one,” Thomas Antonioli, Grover’s chief financial officer, told PYMNTS in an interview. “The old device gets refurbished and reused, enabling them to actively contribute to reducing eWaste.”
Today, the German tech unicorn, founded in 2015, offers subscribers access to over 3,000 tech products — mainly smartphones and laptops, but also smart home appliances, virtual reality (VR) gear, gaming and wearables — that they can switch, return or keep on a flexible monthly rental basis.
Following the spike in demand for products like laptops across its markets — Germany, Austria, the Netherlands and Spain — due to more workers shifting to remote work, Antonioli said that the upward trend has continued ever since.
Flexible Deals, Affordable Rates
On average, subscribers pay about 45% of the retail price within one year of rental, which includes a free insurance cover which would have cost them a monthly fee of between $10 to $20 on a purchased device, as well as free shipping.
“[The insurance] is something that you get for free bundled into 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 keep on renting for a longer period of time, they have the option to purchase the device for $1 when they hit 120% of the initial retail price in cumulative rents. This deal, he said, amounts to paying “almost exactly” the same price to purchase an iPhone with an insurance cover, for example.
The difference here lies in the flexibility Grover gives users to terminate or upgrade a rental contract at their convenience.
“If you don’t [terminate or upgrade], the worst that can happen is you pay as much as if you had financed the device and got a damaged cover included,” he noted.
Moreover, unlike traditional credit, subscribers who are under contract but run into personal problems like job loss can return the device and not be held liable to pay off the remainder of the contract fee — “that makes it also easier for people to not default,” he added.
Due to the subscription nature of Grover’s business, ensuring that the company has a strong credit scoring engine is key to minimizing risk, he continued.
This is why the business-to-consumer (B2C) company enriches traditional data like a FICO score with alternative new data sources, as well as its own machine learning technology that can analyze behavioral data based on how people move around the website, providing “credit metrics [that] are way better than credit card information in Germany, for example.”
Creating Rent-a-Tech Awareness
The German circular economy-focused firm recently ventured into the embedded finance space with the launch of a Grover card, allowing users to earn credits towards their subscriptions. That has led to a surge in annual recurring revenue (ARR) to more than double what the company recorded in 2020, opening up opportunities to expand its financial services suite.
Read more: Subscription-Based Consumer-Tech Company Grover Valued at $1 Billion
As further proof of the sector’s booming growth, the firm recently raised $330 million in equity and debt funding at a $1 billion-plus valuation, with plans to increase subscriber count in existing markets and expand the circular economy to more countries.
The United States is one of those markets that the European company has targeted to accelerate its growth, launching there late last year.
See also: After Explosive European Growth, Grover Brings Tech Rental Service to US
“We always knew that this would be a very big and important market for us at some point [and] we have been positively surprised by how we were received there,” he said.
Getting the word out there and creating awareness about the consumer electronics rental service and its benefits is one key area that Antonioli said Grover will be focusing on moving forward, particularly in markets where the concept remains relatively new.
“We will use the funding that we’ve raised to increase awareness, because most people don’t even know that [the rental] option even exists,” he said.
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