Start-up

Used premium phones give Andios a new lease of life

Mr Tan, co-founder of Andios, says his firm wants to be a grade-A used phone dealer as such phones are free of hardware defects and in mint condition, with only minor scratches.
Mr Tan, co-founder of Andios, says his firm wants to be a grade-A used phone dealer as such phones are free of hardware defects and in mint condition, with only minor scratches.PHOTO: TIFFANY GOH FOR THE STRAITS TIMES

Challenger-backed start-up now sells used phones wiped clean of data and diagnosed to work

Eight-month-old Andios is quickly learning that change is the only constant for a start-up.

The venture, backed by homegrown tech retail chain Challenger Technologies, discarded its old business model barely four months into its operation, and soon found that its new direction requires a brick- and-mortar presence overseas.

Andios started as an e-marketplace in November last year to connect buyers and sellers of used smartphones. It wanted to make money from selling data wipe and phone diagnostic test services to individuals who list their used phones for free on its platform (www.andios.sg), competing with the likes of Carousell.

After drawing "pitiful" monthly sales averaging $3,500, the firm realised it had to change tack.

"This business model is not sustainable," Mr Ben Tan, co-founder of Andios, told The Straits Times. "People trying to sell their used phones did not understand the value of data wipe and phone diagnosis," said the former chief operating officer of Challenger.

So in April, Andios switched from selling just these services to selling used phones that had been "treated", or wiped clean of personal data and diagnosed to work.

Data wipe is more thorough than a simple factory reset for removing personal data. A diagnostic test ensures that any problem from faulty battery to speaker is picked up, as Andios does not sell used phones with problems.

"We want to be a grade-A used phone dealer," said Mr Tan, noting that grade-A phones are free of hardware defects, less than two years old and in mint condition, with only minor scratches.

On top of this, Andios is throwing in a free one-year warranty for all the used phones it sells.

The in-house warranty comes with free repair and replacement of broken parts that are not due to mishandling. Battery replacement, however, will incur a $30 service fee although the new third-party battery will come at no cost.

Hence, its used phones are pricier than those from neighbourhood shops. Checks by The Straits Times show that a used 64GB iPhone 5S model, for instance, retails for $448 at Andios, whereas the neighbourhood shops sell it for as low as $418.

Even so, sales have been brisk at Andios. Over the past three months, it sold about 400 used phones, mostly iPhone 5S and iPhone 6 models, fetching a tidy revenue of more than $200,000.

The company is projecting a total revenue of $1.2 million by year-end, and waits in eager anticipation for a surge in used-phone trading in September when Apple launches the iPhone 7.

"Many people are looking to upgrade to a premium phone but are unwilling to pay the price of a new handset," Mr Tan said, adding that these upgraders are mostly students and people who lost their phones.

Most customers pay and collect their phones at Andios' seven retail outlets islandwide. They are located within Challenger's retail shops at various locations, including Bugis, Plaza Singapura and VivoCity.

"Today, used-phone buyers are more comfortable with face-to-face meetings," Mr Tan said. "But more people will pay online and opt for home delivery when our brand becomes more trusted and recognised."

This is why overseas expansion, which is being planned for with its war chest of $1.5 million, hinges on partnering an overseas brick-and- mortar retailer.

Andios hopes to enter Thailand and Malaysia over the next two years, and is talking to potential partners there.

These markets have been identified as they - like Singapore - have a huge base of premium smartphone users, who can readily supply to the second-hand market when they upgrade.

"Our long-term objective is to help more users in South-east Asia get a premium smartphone at a lower cost," said Mr Tan.

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A version of this article appeared in the print edition of The Straits Times on July 06, 2016, with the headline 'Used premium phones give Andios a new lease of life'. Print Edition | Subscribe