Do you remember the last time you rushed to a record store to buy your favourite artist’s new CD? Or when you bought a Hollywood blockbuster DVD? The vast majority of music, movies and software are now bought through subscription services. How about tech and clothes? Manufacturers of physical products are also looking at this business model.
Founded in 2018, Fairown has created a financial platform that lets any company offer products based on a subscription model. They have resolved all of the kinks and details of facilitating this kind of service.
The idea driving Fairown’s subscription service is sustainable and it manages product renewal cycles. This means that consumers can renew their products after a certain time. They could, for example, return an iPhone 2 years after the purchase and upgrade to a new one. The time of return is carefully planned to match the end of a product’s useful life cycle – the point where the first signs of depreciation kick in. At that point, Fairown collects old products, which are then either:
♻️ refurbished, getting a new life on the secondary market;
♻️ dismantled and used as spare parts for repairs or to produce new products;
Most importantly, old products don’t end up in landfills.
A sustainable finance
Collecting products and pushing them back into circularity helps reduce waste massively because product life cycles are extended by several years. As production is the most energy-consuming phase in a product’s life cycle, this reduces the ecological footprint and impact on the environment.
Manufacturers can now produce products in a more environmentally friendly way. Knowing the exact time, a product is returned by a customer, a manufacturer is better able to plan production volumes and doesn’t waste so many raw materials. On the other hand, brands and retailers can predict their sales flow more steadily. Binding consumers through subscriptions will bring long-lasting benefits such as lower customer acquisition costs, increased sales and customer loyalty, for instance. From the consumption side, consumers do not need to pay a large amount up front but can spread the payments for a product over a longer period. This simplifies access to the latest products and makes them more affordable.
At his previous job, Hendrik Roosna, founder and CEO of Fairown, saw that one-third of Apple customers in Scandinavia bought Apple products with a monthly payment plan. Four years ago, this gave him the idea to start Fairown. Roosna’s idea has seen rapid success and growth. With the help of his company, customers of world-famous brands like STIHL and Apple can use their products in a sustainable way.
The success of Roosna and his team has not gone unnoticed. At the end of last year, they managed to raise around 4.2 million euros during a seed round from German Commerzbank, Austrian primeCROWD fund and German STIHL Digital.
“For 18 years, my passion and mission have been to help companies move towards a circular economy, and I realise how difficult it is. With the raised capital, our goal is to expand across Europe,” Roosna describes.
Dream turnover growth, even for an Estonian startup
Every startup would like to be as successful as Fairown has been. Last year alone, the 15-member team was able to show 3,000% growth to investors. While Fairown provides a simple process for the end-user, it has developed sophisticated systems to underpin its service.
“We moved from zero to one with incredible speed, even in the startup sector it is rare. In October 2021, our platform brokered 5 million euros worth of transactions, while at the beginning of the year it was only 151,000 euros,” he says.
Customers can already buy more than 3,000 products through subscriptions, with manufacturers knowing when the goods will be returned and taking this into account during the R&D process. According to Roosna, a large part of customers wants to consume products as services. In addition to popular phones, other consumer electronics, and gardening products, high-end handbags will soon be added to the product range.
“We have been able to grow fast because there is simply a great demand for our service. The growth of the company’s value is important, but the opening of new markets and cooperation with global brands is even more important for us,” Roosna says.
He does not see any major changes coming up in the service they provide to end customers, brands and retailers, and manufacturers. Fairown’s core business is and will remain the promotion of the circular economy by providing an environmentally friendly subscription service.