Cash For Your Old Gadgets, Without The Hassle of Selling on eBay

1/30/08

There must have been a message in the fact that my cell phone cut out—as it has been wont to do throughout my entire relationship with the device—in the middle of my conversation yesterday with Israel Ganot. Perhaps it was a sign that it’s time for me and my Motorola to finally part ways? And if it was, what are the chances I could motivate myself to find a more patient owner for the fickle thing on eBay, rather than just laying it to rest in the back of my desk drawer, beside my last phone?

Indeed, before we were so rudely interrupted, Ganot—president and COO of Waltham, MA’s Second Rotation—had been making the point that although hundreds of thousands of people buy stuff on eBay, very few people sell stuff there. Dealing with pricing, payment issues, sellers’ questions, and the (real or perceived) potential for fraud makes selling “too difficult, too challenging,” Ganot says.

He should know, having spent the six years before he joined Second Rotation (in September of 2006) working at eBay, where he helped the company expand into Europe, Asia, and elsewhere and to integrate and expand PayPal. Second Rotation founder and CEO Rousseau Aurelien had reached the same conclusion a year or two earlier when he left his job in biz-dev at Burlington, MA-based software firm Signiant to become an eBay power seller, Ganot says. So Aurelien—who had previously launched and sold another startup called Cambridge Information Systems—formed Second Rotation to do the dirty work.

Second Rotation gives consumers like me cash for their old cells, MP3 players, digital cameras, and other gadgets, then resells the devices online. From the consumer perspective, the process is seductively simple: Choose the gizmo you want to sell from a list on secondrotation.com, answer a few yes/no questions about its condition, and rate its condition, from poor to excellent. Second Rotation instantly gives you a “trade-in value” for the item.

If you’re willing to part with your item for that amount you fill in your name, address, and so forth, print up a shipping label that the site automatically generates, throw the item in a box, and call for a pickup. (Starting in a month or so, Ganot says, the company might even send you a Netflix-style prepaid, prelabeled box.) Once the company receives the device—and determines that it’s as you described—it sends you the money, via PayPal or check. All in all, Ganot says, “the average user doesn’t spend more than a couple of minutes with us, and we’re happy about that.”

One of the things that sets Second Rotation apart from many of the other companies that facilitate eBay sales is that it buys the inventory outright. “We are very proud to not be a consignment shop,” says Ganot. But since the startup is handing over the dough up front, he adds, it had better be sure its estimate of each item’s market value—which is dynamically calculated for each transaction based on the latest sales data from eBay, Amazon, and other online retailers—is right. Ganot confesses that the team was a little nervous about that before Second Rotation launched its service this past July, but “six months later the proof is in the pudding and it’s working—we can make a margin.” On average, he says, sellers get 60 to 70 cents for every dollar Second Rotation ultimately makes selling the merchandise. (The firm will also recycle items that are too old or damaged to be worth reselling, although it won’t pay for shipping on those unless they’re packaged with saleable devices.)

Now that the company knows its economic model works, it’s focusing on scaling up the business, putting particular emphasis on its marketing and PR efforts. It also plans to eventually expand beyond gadgets into sporting goods, luxury goods, and other markets. “We see consumer electronics as a good beachhead,” Ganot says. Second Rotation will be buoyed in those efforts by a just-announced $4.4 million initial financing round; the deal was led by Venrock, and included the participation of angel investors Austin Ligon, Ashton Peery, and Henry Vogel.

I asked Ganot what items folks seemed most anxious to get off their hands in the months that the service has been operating. He says phones have been particularly popular (or unpopular, depending on your perspective), but the company sees a lot of iPods and Zunes as well. Essentially, he says, “whatever was popular and exciting a year, year and a half ago.” Second Rotation is even seeing a few iPhones go on the block (I know, Wade, it’s horrifying).

My own phone? Well, yesterday evening Second Rotation offered me nine bucks for it. Pretty generous of them, given that I (accidentally) hung up on the COO.

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    This is a very interesting business model. In the past I used to be a trading assistant, selling items for other people on consignment. But that was really a lot of work.

    My clients expected me to post up their item right away and expected to get paid the next day after the auction ended. Even after I told them my procedure about getting a check at the end of the month.

    So I decided to purchase the items from them. I paid almost 3K for a huge toy and record collection. So far I’ve sold about half the inventory and already made about 4K.

    So I do believe you should buy out peoples inventory. I just never thought about it doing the way secondrotation.com does it.

    Here is to your success.

    -Carlos

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