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February 23, 2018

Trocafone's Plan To Expand the Market For Used Electronics

While many technophiles love nothing more than to buy the latest and greatest smartphone, others hang onto their dated devices due to the potentially high cost of upgrading.Trocafone, recognizing the popularity of used and refurbished electronics as consumers opt to get the technology they want for less, raised $15 million in a new financing round last fall.With the financing, Trocafone, an online marketplace specializing in used electronics, will look to grow its footprint in emerging markets other than Brazil and Argentina where it already works.

The Opportunity to Invest in Trocafone

Trocafone, which raised $7 million in a separate financing round in 2016, said in a report that the investors who took part in its latest financing round included Callfort, Mercado Libre Fund, MIT Castor Ventures Fund, Rocketship, FJ Labs, and others.There's a reason why the company is concentrating on Latin America. Trocafone said in the report that the region is the fourth biggest smartphone market worldwide. But around 418 million people there lack the financial wherewithal to actually purchase new smartphones. What makes them so expensive? Smartphones are taxed so heavily in Latin America that these mobile devices, instead of becoming the commodities that they are in many places around the world, are more like an overly expensive luxury. In fact, smartphones in Latin America are twice as costly as they are in many developed markets, and then there is the fact that wages in Latin America are about two-thirds less than wages in some developed markets. These factors make the purchase of new smartphones an unrealistic proposition for many people in the region.

Where does Trocafone come in?

Many potential smartphone sellers are wary about the used marketplace given, among other things, safety concerns. After all, there is no shortage of news reports focusing on deals gone horribly wrong. Trocafone, however, simplifies things and gives sellers and buyers some peace of mind. The São Paulo, Brazil-based company has half a dozen contracts with Latin American telecommunications companies and has 1 million buyers and sellers in its marketplace.

The company carefully assesses, tests, and fixes up all handsets, and then it offers these devices -- at up to 60% less than it would cost to buy these devices new -- to consumers who can’t afford new models.Buyers also get a free three-month warranty. Consumers who sign on with Trocafone get vouchers in exchange for their used smartphones, and they can redeem these vouchers via a trade-in store.

The Market For Used Electronics

As it turns out the global market for used and refurbished mobile phones is still looking strong. A report from Persistence Market Research, for instance, predicted that the worldwide refurbished and used mobile phone segment will achieve a substantial 8.9% compound annual growth rate during the 2017 to 2025 period. Global sales, meanwhile, were projected to reach revenues of $19.7 billion in 2017.The report added that leading mobile phone makers are highlighting the fact that buying refurbished and used mobile devices is one way that people can go green. It adds that the rapid changes in technology have decreased customer usage cycle for mobile phones.Trocafone, for its part, recognizes that the rollout of new technology is a key reason why many people are moving onto newer models faster than they may have in the past, which is why its marketplace can be a means of reusing, recycling, and repurposing. Rather than allowing older and unused smartphones to sit around collect dust, the company offers consumers a means to sell their old devices to people who can put them to good use.

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