Monday Sep 24, 2012 by Susan Johnston - Contributor, VentureFizz
The September 12 announcement about the iPhone 5 release means big business for Apple, of course, but also Boston-based recommerce company Gazelle.com, which buys and sells used electronics. Cofounder, president, and CEO Israel Ganot compares the launch to the retail frenzy of “Black Friday,” because the company made more than half a million offers on older phones the day the iPhone 5 was announced.
Consumers who now upgrade their smartphones every year to year and a half have created a growing market opportunity for Gazelle, which surpassed the one million device milestone earlier this month (“before the iPhone 5,” as Ganot is quick to point out). “We buy the latest shiny device, but we don’t know what to do with the old stuff,” says Ganot, who’s worked at several other ecommerce sites including eBay and PayPal. “About a third of consumers just stash away old technology in a drawer.”
Many consumers want to avoid the hassles of reselling old devices on eBay or Craigslist but don’t realize they have other options, says Ganot. “Our biggest competitor is inertia,” he adds, explaining that when people get a new phone they’re more focused on setting it up than the deciding what to do with the old one. But selling an old device allows consumers to unlock some of the device’s value and offset the cost of an upgrade. Plus, it’s “a much more sustainable way to consume electronics,” as Ganot points.
Gazelle is working to raise awareness about recommerce through ad campaigns on TV and in public transit stations in Boston and San Francisco. Street promotions are another faucet of Gazelle’s promotional push. The company bought phones for the first five people in line for the iPhone 5 in Boston and New York. They’re also setting up pop-up shops in New York’s Grand Central Station in New York City and Boston’s Faneuil Hall where users can trade in their old phones for cash on the spot. For those who want to wait until their new device arrives, Gazelle recently extended its price lock from October 1 to 10 for consumers who locked in trade-in prices during the month of August.
The company’s offices had moved around Cambridge and Allston until settling into its new digs in the Innovation District last summer. “We shifted the logistics side of the business [where users ship old devices] to Dallas so it’s in the middle of the country,” says Ganot. “That created an opportunity for us to relocate our headquarters to a place that doesn’t require space for warehousing. Here we have better access to talent and access to transportation. It’s creating really good buzz for the area.”
This year, thanks in part to demand for newer Apple devices, Gazelle has seen an increase of nearly 500 percent year over year. “It’s just mind-blowing,” says Ganot.