press its advantage to stay ahead of the game. As Ganot explains, whether the company continues to grow will boil down to a few key things.
One is focus. In early 2012, Gazelle pared down its device categories from 22 to six, concentrating on high-growth, high-margin items (like iPhones). It fired all of its retail partners and went strictly direct-to-consumer. Now Gazelle is trying to own the online-trade-in market, rather than the retail store experience. “Our advantage is focus—it’s the only thing we do,” Ganot says.
To that end, it will be important to keep improving the user experience and building trust with consumers, Ganot says.
“This is not an eBay experience. This is a Zappos experience,” he says. “Trust is a big issue. You send us your $600-700 laptop on the promise that we’ll pay you, we’ll pay you what we promised to pay you, we’re not going to bait-and-switch you, and we’re going to wipe your data.”
He adds that “90 percent of our offers match what you actually get paid. With other players [like Amazon], the percentage of consumers that get their offers revised downward is very high.” (He relays a story about selling a used iPhone to Amazon and having to navigate a tricky user interface whereby he could have gotten zero dollars for the phone by checking the wrong color box; the bottom line is, “What’s your payout versus the offer online?” he says.) Gazelle also allows users to lock in the payout they’re going to get ahead of time, by as much as 50 days for the latest iPhone launch.
What’s to stop Amazon or Apple from doing the same things? “Nothing,” he says. But it comes down to focus and priorities.
In turn, Ganot says, his startup’s focus and user experience have helped its marketing efforts, which recently have included a revamped mobile site and national TV and billboard ads. Those seem to be paying off, with the month around the latest iPhone launch yielding more than 4 million trade-in offers made by Gazelle. (The iPhone 5 made up nearly one-third of the company’s total trade-ins during that period.)
Gazelle also needs to keep working on its internal efficiency—important for any business that involves both Web software and physical product inventory. In June, the company opened a distribution and processing facility in Louisville, KY (roughly following the Amazon and Zappos playbook). It had previously worked with a distribution partner in Texas, but now handles that part of the business in-house.
It’s all part of a balance that Gazelle has struck over time between investing in front-end customer experience and back-end infrastructure. Meanwhile, at its Boston headquarters, which has about 75 employees, Gazelle is trying to “continue to get the best marketing and technical talent,” Ganot says.
He’s confident that his company will continue to stand out in an increasingly crowded sector. In terms of direct-to-consumer online trade-ins, he says, “We own the buying of the products, the selling of the products, and the processing … we want to own the mindshare of consumers.” Just as people think of Amazon in e-commerce and eBay in online auctions—Ganot previously worked at both companies—he wants people to think of Gazelle in re-commerce and device trade-ins.
“There’s a huge runway for us to continue to invest in the brand and build awareness,” he says. “If you invest in Gazelle, you invest in growth in mobility, you invest in growth in emerging markets. It’s an attractive growth story.”
As for the ultimate fate of Gazelle the startup, Ganot says an IPO in the next few years could be “logical.” It’s hard to get him to say whether going public is really in the cards, though, versus selling the company or remaining independent and private for a long time.
But, he adds, “If you’re a retailer or Amazon, looking to be in this space, who else are you going to buy?”
