Making the Leap into reCommerce

Trade-ins of used electronics could become a viable revenue stream for major retailers, and a firm that bills itself as the nation’s largest reCommerce company is working to make that happen.

Under the program established by trade-in and recycling firm Gazelle, merchants reward shoppers with gift cards when they turn in their used home electronics. What’s in it for retailers? ReCommerce has the potential to boost store traffic, accelerate sales, foster shopper loyalty and enhance merchants’ eco-friendly image, says CEO Israel Ganot.

Before founding the company in 2006, Ganot headed up international expansion for eBay and held finance and operations roles with companies like PayPal. The inspiration for Gazelle began with his quest to unload a couple of outdated smartphones.

“I wanted to recycle my BlackBerrys, and a retailer wanted me to pay $10 for the privilege,” Ganot says. That’s when he realized that even eco-conscious consumers “are not going to pay for being responsible.” So Gazelle set out to do the reverse.

The idea was to offer people a way to ditch that stash of retired electronic devices cluttering drawers and gathering dust in basements in an eco-friendly manner — and reward them with cash.

When consumers trade in their items on Gazelle.com, they walk away with an average of $100, Ganot says. Gazelle also removes all personal information from the devices.

The trade-in concept certainly isn’t new: “You trade in an old car and get a new car,” he says, but “it doesn’t exist in other industries.”

While the company currently boasts a catalog of more than 200,000 SKUs it accepts for trade-ins directly from consumers — from cell phones to gaming consoles and digital cameras — it expects “the retail portion of our business to grow the fastest,” Ganot says. Gazelle has already established programs with Walmart.com, Costco and Sears, and more retail partnerships are in the works, he says.

ReCommerce as sales tool
Ganot says a typical U.S. adult spends $1,200 on electronics annually and has an average of 25 gadgets in the house — many of them unused. And in this post-recession era where many shoppers are maintaining a tight hold on the purse strings, retailers looking for fresh ways to jump-start sales could find a winning strategy in reCommerce, he says.

“At the end of the day, consumers want to be smarter about how they spend money and about the way they recycle products,” Ganot says. “This is a program that’s good for the wallet and [lets consumers] feel good about the environment.”

And while retailers do not profit directly from the program, they end up reaping “tremendous benefits” in the form of incremental sales and improved customer loyalty, Ganot says. “If you get a $100 gift card, you’re most likely to spend $200 to $300,” he says, and offering what is in essence a free recycling service allows retailers to showcase “the green side of the business.”

Costco is offering Costco Cash cards for shoppers’ unwanted electronics; Walmart.com’s electronics trade-in program rewards shoppers with a prepaid Wal-Mart Visa card.

Since launching its electronics trade-in program with Gazelle in November, Sears has seen 60,000 additional visits to its website, says Karen Austin, president of home electronics for Sears Holdings. The program enables Sears’ shoppers to trade in cell phones (which account for a hefty 61 percent of the returns), laptops, MP3 players and digital cameras. And Gazelle makes it easy for shoppers, sending them the box and picking up the cost of shipping.

While Austin would not quantify the sales lift Sears is deriving from its partnership with Gazelle, “We are pleased with the amount of traffic that the program has driven,” she says. Austin also affirmed Ganot’s claims of boosting incremental sales. “When a customer has a Sears gift card, they always spend more than the actual value of the card,” she says.