As Boxing Day sales loom, many Gen Z consumers, flush with Christmas cash, will be eyeing the latest smartphones, gaming consoles and hair stylers. But rather than shelling out hundreds upfront, a growing number are opting to subscribe to use their gadgets instead.
Raylo, a London and Belfast-based tech subscription company, believes younger consumers no longer consider device ownership to be essential. Instead, they want constant access to premium devices at a lower monthly cost, with the freedom to upgrade regularly.
Founded in 2018 by Karl Gilbert, a former investment banker, and co-founders Richard Fulton and Jinden Badesha, Raylo offers monthly subscriptions for smartphones, laptops, tablets, consoles and home appliances from brands including Apple, Dyson and PlayStation. Customers pay a fixed monthly fee, return the device at the end of the term and can upgrade it on the website.
Raylo has raised £150 million in funding since its launch in 2019 from investors including Macquarie and NatWest, and supports more than 135,000 active subscriptions. The company’s most recent accounts, for the year to September 2024, show turnover of nearly £28 million, though it remained loss-making. Gen Z, adults aged up to 28, is the company’s fastest-growing customer segment. Gilbert said the appeal lay in affordability and sustainability. “They love great tech, but they face the biggest challenge from an affordability perspective,” he said. “This segment also resonates most strongly with our circularity approach.” Many of the devices supplied to customers are supplied new. When they are returned, Raylo refurbishes them, often through the original manufacturer, before offering them again to customers who prioritise value over having the latest model. Gilbert believes the environmental element also has sway with Gen Z consumers. “It’s a massive category — $1.5 trillion globally — and there’s an enormous amount of waste baked into the way people access and use these devices.” The company promotes a “circular economy” system, where products are reused rather than clogging up drawers or landfill. That waste is familiar to many consumers. While a smartphone might be usable for six or seven years, many people upgrade every two or three. Technology can also decrease in value drastically. New phones don’t last long before the battery life drains by midday and software updates can quickly render old devices obsolete. Raylo claims it can ease that burden by spreading costs more efficiently. Monthly prices are typically about 30 per cent lower than traditional financing options if customers commit to a longer subscription term, Gilbert said. The company positions itself as a more flexible alternative to buy-now-pay-later services, which it says works best for cheaper purchases rather than £1,000 electronics. Premium brands benefit from hooking new customers on their products, encouraging more regular upgrades and extending the useful life of products. Raylo said users on its platform upgraded roughly every 30 months, compared with an average of 43 months across the wider UK market. However, not owning the device outright may deter some consumers who argue that the model is more expensive if the lack of resale value is factored in. Raylo’s early market research found that asking customers if they were happy not to own a device elicited a “very negative response”. Gilbert said that when the questions focused on low prices and flexibility, ownership became secondary. “Customers are happy to give up ownership for a fundamentally better way to access tech.” He said that the mindset shift was a “strong bet” the company took, but one that had paid off. The business, which employs about 100 people split between London and Belfast, is planning international expansion in the United States and parts of Europe.