Hot Trend in 2012: Retailers Turning E-Waste Into Gift Cards

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Looking to spot the next retail trend in 2012? Look for retailers that pay customers to turn their old electronic items into something new (like a gift card). The concept lies in the “reCommerce” industry, and industry analyst site TrendWatching.com predicts that “trading in to trade up” will be a major economy in 2012. Major retailers have jumped on board the trade-in program idea, and those who develop a working formula might just pull ahead of the competition.

The idea of “reCommerce” is not new, but as technology changes rapidly and the economy lags, customers are collecting more and more electronics they cease to have a use for. According to the Consumer Electronics Association, Americans now own approximately 24 electronic products per household. While the “early adopters” gain media attention when they form lines outside of Apple stores, they actually represent just 13.5% of the population, according to the Diffusion of Innovation Theory.

The “late majority” and “laggards,” on the other hand, make up 50% of the population. These segments are either priced out of the retail technology market or are simply uninterested in paying top dollar for technology. In any case, they have created an increased demand for refurbished gadgets sold at an affordable price. Thanks to online aftermarkets, many customers are aware of the value of and demand for their old models and are looking to unload electronics they no longer want, especially for a small reward.

Gazelle, the self-described “largest and fastest growing player” in the reCommerce industry, has been around since 2007, offering cash or a Wal-Mart or Amazon gift card to customers for their old electronics. Retailers recognize the demand and value of the trade-in market, too.

Gazelle has partnered with Costco, Walmart.com, OfficeDepot, and Sears to manage their trade-in programs. According to the official Gazelle press kit, key partnerships could account for up to 30% of the online recyclers’ revenue in 2012, versus the 5% it generated from the relationships this year.

Apple also has a “reuse and recycle” program through a partnership with PowerON, which has been recognized as one of America’s fastest growing privately held companies, and offers a gift card for the “fair market value” of an iPhone, iPad, Mac or PC desktop, or notebook computer. In the program, for example, an iPad 2 in “mint condition” is valued at $290. By contrast, a new model retails for at least $499. Target has partnered with NextWorth to manage its trade-in program.

Arman Sadeghi, founder and CEO of full-service recycler All Green Electronics Recycling, explains that corporations with a “buyback” program typically outsource to a third-party waste management vendor (like those mentioned – and a slew of others) to test the products, wipe the data, clean the items, repackage, and resell them through eCommerce channels.

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