How FoneYam rental service is driving phone sales for South African retailer Pep

A month ago, African retailer PEP made headlines for the growth of its novel smartphone rental product - FoneYam. The product which allows consumers making a small upfront payment (30% of device retail price) and further instalments over a 12 month period) to rent a smartphone for 13 months and 7 days was credited with growing revenue from cellular sales by 8.8% to R1bn.

Naturally this had us thinking about the motivations of such a product and the possible impact it’s having on the business. Let’s get into it…

Product workings and impact

As mentioned above, FoneYam allows consumers to rent a smartphone just over a year and then decide to either return it or outrightly buy it. In the event that a customer fails to make a payment on time their device will be locked remotely until they make the payment. This leaves them unable to make calls, send/receive texts or utilise mobile data.

FoneYam was described as a product being “developed and tested” in Pepkor’s annual reporting for 2023. At the time the service was only available in 180 stores but it had already made a sizeable impact with 120,000 rental sales having been made during that first year of experimenting.