Innovation - Lock In Some Value When Trading Up Tech Gadgets
by Donna Fuscaldo, June 30th, 2008FOXBusiness
How to Get Rid Of Old Technology
By Donna Fuscaldo
June 27, 2008
New York--For technology chasers, trading up for the latest and greatest gadget is a normal, albeit costly, habit.
One startup wants to alleviate some of that financial burden by offering a Guaranteed Buyback Plan on consumer electronic devices bought at participating retailers.
The Guaranteed Buyback Plan, offered by TechForward, allows a consumer to lock in a trade value for a given device two years into the future, said Marc Lebovitz, vice president of operations and co-founder of TechForward, based in Los Angeles. Customers get the money back in the form of a gift certificate they can use at the retailer they purchased the buyback plan through. They can also get cash if they go direct through TechForward which lets you choose specific products to guarantee.
Say, for example, you purchased a buyback guarantee on a laptop computer. If you return it to TechForward in the first six months you’ll get back 50% of what you paid. Between six and 12 months, you get 40%, between 12 and 18 months, 30%, and two years, 20%.The computer would have to be in good condition. Those products that come back in excellent condition will get an additional 15% bonus.
“We expect 80% of the devices to come back in good condition,” said Lebovitz, noting the company chose two years as the maximum because in a certain time frame the product depreciates to a point where there’s no value. TechForward currently has relationships with local retailers in Los Angeles, including Computer Palace, MacHollywood and Advanced Microsystems. On the Internet, it has a relationship with Amazon.com. Jade Van Doren, chief executive and co-founder of TechForward, said the company is in talks with other retailers about offering its Guaranteed Buyback Plan.
“The goal is to put the Guaranteed Buyback everywhere there’s consumer electronics," said Van Doren. “We are in talks with all the players.” TechForward recently signed a deal with W3, an extended-service-plan provider, to offer Guaranteed Buyback Plan in its plans.
The idea for TechForward came from Van Doren’s experience when traveling through Japan and Asia, before heading off to business school. There, he said people were buying new consumer electronic devices as much as every eight weeks. Consumer electronics have become a fashion statement in those regions, and that trend is migrating to the U.S.
“People want the latest iPod, and as soon as it comes out they start thinking about having the newest device,” Van Doren said. TechForward is a way to make the process “easier and more affordable.”
But consumers’ willingness to pay for a guarantee is questionable. While there is a group of consumers who wouldn’t think twice about paying extra for a warranty to protect their purchases, there are a lot of people who would scoff at the idea. What’s more, certain technology products like a TV or computer have a much longer life span than two years. TechForward said it’s seeing an attach rate of 12% on electronic devices being sold at participating retailers.
“In order for it to work, you have to see a really big potential benefit," said Rob Enderle, founder of technology research firm Enderle Group. He said it could appeal to that group of consumers that buy a new TV every year, but the savings has to be enough to make it worth it to spend the upfront fee. “For those focused on chasing technology…it’s a great way to get rid of stuff and get money back,” he said.
TechForward said the price for the Guaranteed Buyback Plan varies depending on the device and how the price of that device may change over time. A laptop buyback guaranteed can cost roughly $59, while an MP3 player guarantee may cost $29, said Lebovitz. TechForward makes money by selling the used gadgets on the secondary market, which includes countries overseas, government, education and liquidators.
“There is an interesting secondary market for some products,” said Enderle of Enderle Group. “Most cases, tech moves overseas to places like India and Africa and third-world countries that can’t afford brand-new products but still want the brand.”
TechForward isn’t the only start-up offering ways for consumer to unload unwanted technology gadgets. SecondRotation, out of Waltham, Mass., lets consumers sell their electronic devices directly to SecondRotation. A potential seller goes on the Web site to answer a few questions about the condition of the device and is then told how much he or she will get for the device. SecondRotation pays for the shipping if the seller agrees to the offer.
FlipSwap of Los Angeles, lets you trade in your cell phones for store credit at one of more than 4,000 participating retailers or trade it in for cash at flipswap.com. Flipswap claims that in 2007 it put enough phones back into the market to keep the equivalent of 50 tons of solid waste out of landfills.
TechForward, however, says its service is different than ones that let you trade in your product after the fact.
“It’s not just a different value; it’s a different lifestyle,” said Lebovitz. “You’re not waiting until the end to figure out what to do with device.”
http://www.foxbusiness.com/story/markets/innovation/lock-value-trading-tech-gadgets/
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