Gazelle Leaps Past $35M in Revenue, Pushed by iPhone 5

10/10/12Follow @gthuang

Which local consumer-facing tech company is benefiting the most from the new iPhone release? It just might be Gazelle (fka Second Rotation).

The six-year-old Boston startup, which has raised roughly $46 million in venture funding from Venrock, RockPort Capital Partners, and other investors, is starting to turn the corner on the “re-commerce” market—buying used smartphones and other devices from consumers and reselling them to wholesale buyers, insurance and device-warranty companies, and online retailers.

The iPhone 5 release is a big deal for the company, because new iPhone owners can sell their older models to Gazelle and get money for them instead of putting them in a drawer, or giving them away. Gazelle says its number of device trade-ins in 2012 has been about four times what it was last year, and in the past few weeks, more than 3 million offers to sell old iPhones have come in. (Apple sold about 5 million iPhone 5s in its opening weekend, by comparison.)

“It’s a huge inflection point for us,” says Israel Ganot, Gazelle’s co-founder and CEO. “What’s changing is market adoption of re-commerce, and consumer behavior.” As Ganot puts it, the smartphone “ownership cycle is going from three to four years, to two years now, and sometimes one year.” Another change is in the startup’s marketing and advertising strategy: Gazelle has invested a lot in national TV ads and billboards in high-traffic places like subway stations and Copley Square.

“Our biggest challenge continues to be awareness, for the entire concept” of re-commerce, Ganot says. “Our biggest competitor is inertia.” Only about 3 percent of U.S. consumers trade in their devices, he says, and another 3 percent sell them on eBay and the like, though those figures are increasing. (Numbers are higher in the U.K., where some 21 percent of consumers trade in or sell old devices, he says.)

Yet Gazelle has been growing steadily over the past three years. Its revenues have gone from $8 million in 2009 to … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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  • http://twitter.com/Qibbly Qibbly

    The reason I love my line of work. Wholesale iPhones is the way to go!