In its second-largest acquisition, Amazon buys the company for $970 million.
The venture-backed firm buys used electronics and resells or recycles them.
Gazelle.com, with the assistance of major e-retailers co-marketing its services, reached the 100,000-customer point this summer. The venture-backed startup also has raised another $12 million in financing to help it pursue its goal of making what it calls “recommerce” a part of consumers’ normal routine when purchasing or retiring electronics.
“Recommerce” is based on the idea that one man’s trash is another man’s treasure and, in Gazelle’s case, that used electronics still have value. “Strategically, we rotate products from early adopters and rotate them to late adopters who will buy them as prices depreciate,” says Israel Ganot, Gazelle’s CEO and president.
Consumers with electronics to sell go to the site and enter product information and condition. The site generates a price it will pay for the product. If the consumer accepts the price, Gazelle sends pre-paid shipping materials to the seller. After Gazelle receives the package and confirms that the product is as described, the company issues a payment. Gazelle removes all personal information from the device. The firm typically buys products that are between six to 36 months old.
When a product has enough demand in the reseller market, such as a late-model iPhone, Gazelle sells it through its eBay store. Ganot says Gazelle uses eBay to resell about 80% of what it buys. If a product with value doesn’t work or there is little demand for it, the company resells it to repair or refurbishing shops. If the product has reached the end of its life and has no value, it gets recycled.
Co-marketing arrangements with some of the largest multichannel retailers in the United States are helping raise awareness of Gazelle’s service. The e-commerce storefronts for Walmart, Costco, Office Depot and Sears use Gazelle as their trade-in and recycling service. A consumer shopping on one of these sites can sell her electronics to Gazelle in exchange for gift cards from the retailer whose site she’s on.
For example, a promotion of the service on Costco.com’s home page reads “Costco.com electronics trade-in program” and connects to a page describing the service. Consumers connect to a Costco-branded site that is “powered by Gazelle” to complete the trade-in. Ganot says retailers benefit because consumers are paid in the retailer’s gift cards, which promotes future purchases, and the merchants can market it as a free recycling service for customers. Office Depot also offers the trade-in and recycling service in stores in conjunction with Gazelle.
The average trade-in price across the 20 electronics categories is about $100, Ganot says. Ganot says consumers may get more money reselling a product themselves on eBay, but they’ll work a lot harder for it, such as having to remove all their personal data, he says.
“Our mission with recommerce is to redefine the process of how consumers buy electronics,” Ganot says. “We want them to think that when they are ready to upgrade, they trade in the old product, and make it part of the behavior. Retailers are helping us achieve this mission faster.”