Since Stephan, co-founder of growstage, comes from the rugged phones industry and the company from Helsinki Swappie is committed to recycling and thus the environment, we decided to investigate the case of Swappie.
Disclaimer: We do not have access to any of the internal information at Swappie nor are we in contact. This analysis has been conducted using 3rd party sources and tools.
Company background
Swappie was founded in Helsinki in 2016 and offers refurbished iPhones at affordable prices. The uniqueness of their services lies in the repair and refurbishment of the iPhones completely in-house. Their facilities for this are located in Helsinki and serve all of Europe. The exceptionally long warranty time of the iPhones can probably be guaranteed by the in-house quality standards and is equal to the industry standard. Swappie announced in the summer of 2020 that it would expand to Germany in addition to the Netherlands, Ireland, and Portugal. This took place almost at the same time as the successful Series B round.
Key data on the re-commerce industry in Germany
In terms of the number of purchases of used goods by consumers, Germany ranks fifth after Poland, the United Kingdom, the United States, and France. 80% of Germans prefer to buy consumer goods online. The most frequently stated decision criteria for the purchase, is the condition of the goods, quality, and warranty. The main reason for selling used items to professional intermediaries such as ReBuy or Swappie is to save time. About 30% of all smartphone buyers can imagine buying a used smartphone as well. 60% of buyers of used goods are also sellers.
Rebuy as the strongest competitor
Rebuy is probably the best-known professional intermediary for refurbished electronic devices in Germany. They are also active in Austria, France, Netherlands, UK, Spain, and Italy. In 2018 they generated a turnover of 140 million euros and have grown by 30%-40% p.a. since 2015. Below, the CEO elaborates on the process of grading and remanufacturing at rebuy.
Discourse: The Electrical and Electronic Equipment Act in Germany
Has the goal of raising the recycling rate of all electronic goods to at least 65%, the Electrical and Electronic Equipment Act (ElektroG) in Germany requires larger outlets and online retailers to take back electronic equipment free of charge.
First impression of the German re-commerce market
The current conditions are lucrative due to the increasing demand for used goods. Additional factors such as environmental awareness or the increasing price sensitivity strengthen the general growth of the industry. Opportunities are mainly created by the legislative changes in Germany and Europe.
The German presence of Swappie
Swappie has adapted its online presence for the most part and even offers its content for the German market in German and English. In general, however, social media activities are limited, so Swappie is not sufficiently represented in the main social channels.
Analysis of language and communication style
It is positive to note that the content in German is written at a good level throughout. However, there are often highly convoluted sentences or expressions that would not be used in German.One reason for this could be the direct, identical translation from the foreign language versions. The communication style is therefore the same on a global level, at least when comparing the English and German language versions.
User Experience swappie.com/de
In addition to the translation, an identical arrangement of elements and layouts is used. In this case, problems on the global as well as the local level are noticeable. Let’s start with the attention management on the cornerstone pages.
The main page
The rule is not to overload the area ‚Above the Fold‘ with content and to keep the possibilities of choice low depending on the objective of the page. This allows easy navigation. Also, in most (western) cultures, the eye scans the website from the top left to bottom right.
On the main Swappie page, there is the classic case of attention scattering due to content overload and the number of choice options. Here, the performance can be optimized by testing multiple versions of a more minimalistic main page.
The buy page
This page is the most important on the website due to its goal of encouraging the user to purchase directly. Thus, this page also illustrates one of the very common problems on business websites. Here, the SEO responsible with his opinion has prevailed in the discussion and a text block was placed at the top, which serves solely technical SEO optimization. Therefore, a strong scattering of attention takes place here as well. In addition, long, unnecessary texts ‚Above the Fold‘ can cause a reduction of the conversion rate.
Note: due to the constant updates of search algorithms and the stronger inclusion of user experience in the ranking evaluation, such a structure of the website can possibly harm the organic reach.
This can be solved by placing the text block on the left sidebar below the filter area. This way, the text is still placed at the top in the desktop version, but causes less of a scattering of attention. Below is a changed preview:
Subjective comments on the user experience
Positive:
- Use of trust elements like Trustpilot
- Nice features that can encourage a purchase
- Simple and understandable purchase process
- The main payment methods are available through Klarna and Paypal
Negative:
- Pages partly overloaded with content
- Too many colors, which in turn causes scattering
- No use of optimal Call To Actions
- Prioritization of important elements on the pages not guaranteed
The growth strategy of Swappie
Let’s start with the positive part. Swappie is already investing heavily in paid traffic. If you have the necessary resources, as a startup in a new country you should also make use of these short-term measures. The following is a small excerpt of the performance marketing:
Facebook Ads
Swappie has been running Facebook Ads since April 2021. In the beginning, these ads were very rudimentary and, judging by the choice of words, were not written by a native speaker. However, this has changed since the beginning of May 2021. Currently, people are portrayed in videos that try to set various incentives for Swappie via the aspect of sustainability.
There are a few points that stand out here that need to be improved. Where is the hook? It is not obvious why the user should stop exactly at this ad when scrolling. Here is an example, based on targeting environmentally conscious people:
Google Ads
According to Similarweb, 50% of global page views take place through the paid campaigns. Just by checking the picture, Swappie invests heavily in the form of higher Cost Per Clicks in order to position itself at the top of the main search terms such as „refurbished iPhone“. However, it is obvious that a lot of money is „burned“ here due to incorrect use of ads and a weak landing page. In addition, due to the most likely low-quality factors of the keywords, CPCs will continue to rise for Swappie.
The following points can significantly contribute to lowering CPCs and increasing performance:
- Wording ad text properly and highlighting product features such as warranty and testing procedures
- Improve wording: instead of „überholt“ (very misleading) -> refurbished
- Use ad extensions
- Create and optimize landing pages for paid traffic
Growth Potentials of Swappie
Swappie has an ideal foundation to grow its market shares in Germany. The legal situation, the sustainability and price aspect makes the market just more attractive. Germany is one of the countries worldwide with the highest demand for used and refurbished products. Rebuy has a solid standing among the population, but at the end of the day, it is a perfect base for Swappie. Why? From a purely game-theoretical point of view, Swappie could have a clear advantage through agility and innovation by focusing on the niche area of iPhones. The topics content strategy and optimization of the customer journey play an important role. The following is a summary of some growth potentials:
- Customer Retention: Increasing customer lifetime value by buying back and reselling other refurbished smartphones to the same customer. What is the likelihood that a satisfied former customer of a used iPhone 8 will want to sell back their phone and switch to a refurbished iPhone 11?
Exactly, with the right incentives, very high. - Customer Referral: a customer who buys refurbished iPhones has friends or family who share the same buying motives and are therefore open to the offer – especially if Swappie is recommended to them.
- Customer Review Management: On a positive note, due to the (probably) active request for reviews, many former customers have already rated Swappie via trustpilot. This helps new customers in the buying process and serves as an important trust factor. However, the way of responding to especially bad reviews definitely needs to be adjusted here.
- Create campaigns for new target groups: 60% of customers have already sold used goods themselves. The B2B sector holds potentials due to the national electronic law.
Conclusion
Swappie has a very good (technical) set-up as a retailer in re-commerce. The presence is mostly locally-focused but offers a lot of room for improvement. Concerning marketing, so far only the necessary measures are fulfilled and this partly insufficiently. Not only does this result in a lot of missed sales, but resources are used inefficiently. There is also a fundamental need for improvement in the sales funnel, to ensure that the expensively purchased traffic is converted into buying customers as efficiently as possible.
Featured Image by Manuel Iallonardi on Unsplash