Cell Phone Recycling Mall Kiosk

[kebertt]

I'm thinking about starting a mall kiosk where I buy used and broken cell phones, and sell them on online marketplaces (eBay, Amazon, etc). I've been doing this locally for over a year now and have made some great side money, but I want to expand my business and take it to the next level.

I understand that to lease a kiosk in a mall with a lot of traffic it is expensive, but for a newer cell phone I can easily get around $80-100 profit. I also plan on hiring employees to work the kiosk, would this be possible in the buying-and-selling business?

Along with this kiosk I want to sell accessories such as chargers, cases, and screen protectors. I'm also looking into a service that can be used to back-up all of the information on your phone for life (contacts, photos, videos, messages, etc). You receive a card with a code on it and the customer goes online and sets it up - very simple and has a high mark up.

What do you think - Does this business sound like it could be successful or do you think I'd get in over my head?

[cellphoneguy]

Pretty much every wireless carrier now has agreements with recyclers/resellers and the marketplace is becoming crowded very quickly.

I've been doing this for about 5yrs and the profit margins are slowly shrinking which is normal when increasing the number of competitors.

[daveb1]

Hi Kebertt,

Have you thought about trying to expand your business without the hassle of setting up in a mall? I would guess you are buying the phones off craigslist or other classified / thrift stores / garage sale type places. Why not do some more advertising both locally and regionally to test if the idea is expandable? The cell phone re-sell market is becoming increasingly competitive just like the accessories business was a few years ago. I would really think if this is a business you want to get into as a mall kiosk will most likely make you sign a lease and you are talking probably at least 10k - 20k needed just to get up and running. Do you have 20k to invest in this type of business? Have you checked out companies like Gazelle?

[cellphoneguy]

The emerging secondary market for used phones is still in the infancy stages. I've taken time to test out about 6 of the so-called 'leading' businesses and the results have been very mixed. Most want you to send in your used phone, wait 10-30 days for your payment and out of 40 phones we tested, 12 of them we were given less than what their website stated. One site even took 6-weeks to get us our payment. Another site took 10-days to get us a pre-paid shipping label. Right now the secondary market can be summed up as very consumer unfriendly. Gazelle is probably overall the easiest and quickest if you are looking at those two variables but even they make you wait about 10-days for payment. However Gazelle also comes in at the low-end if you are comparing trade-in prices among some of the different companies.

The problem with wireless retail store trade-in programs is that you don't get credit at the point of sale. They make you send in your used phone to their preferred vendor and then in about 2-4 weeks, you get a pre-paid gift card only usable for that wireless carrier. Can we say big dissatisfier?

I am launching a business later this spring that provides instant cash payments (no-waiting) via PayPal and other secure payment methods, free shipping and the freedom to spend the $$ where you want, when you want. I have a lot of contacts in the wireless industry with 15yrs experience but even I find myself lacking in some specific 'business' areas so I'm having to learn on the fly as best as I can. I plan on approaching retail stores and authorized agent businesses within the first 12-months after we launch.

The biggest error that is overlooked is that you can't sell EVERY phone on eBay once your trade-in volume reaches a certain point. You have got to design a plan with multiple channels to liquidate inventory at a profit. You have to also partner with a TNR (triage and repair) business to repair some of the used phones because not EVERY used phone you take in on trade is going to be in complete working order and/or condition. TNR costs can escalate very quickly.

The second biggest error is not staying up to date with what other companies are offering for trade-in prices. Our business constantly monitors competitor offer prices and we average them out on our site for the customer so that they know that they are getting an offer price higher than the (national) average while also offering same-day cash payments.

I can't explain the entire business model here but we should have our LLC in the next 30-days and we are in the process of doing some SEO work on our site. We really hope to make a nice splash in a few months with profitability within 6 to 12-months. We are searching for a bit of financing/cash-infusion to make this all happen.

Check out our progress at whatsyourphoneworth.com.