Target, RadioShack Buy Back iPhones, Other Used Gadgets | Business

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Target, RadioShack Buy Back iPhones, Other Used Gadgets
Target, RadioShack Buy Back iPhones, Other Used Gadgets

The trend of dumping unwanted gadgets online at sites like eBay and Craigslist now has shifted to brick-and-mortar retail stores, with a twist.

Major retailers, such as Target (TGT) and RadioShack (RSH), are buying back products from customers in-store and offering credit toward purchase of new products. The retailers are working with a handful of websites that hunt for used gadgets, including NextWorth, Gazelle and CExchange. And there are dozens of other sites looking to snap up old gear, such as or

Buying back products from customers "drives traffic into the store, and helps tell that we're a place that can provide value above what you could find at another retailer," says Rob Dunlap, RadioShack's divisional merchandise manager. Target works with Boston-based NextWorth to handle the re-selling of the products that are traded in. NextWorth then turns to traditional online outlets such as eBay (EBAY) and Amazon (AMZN) to re-sell the gear. There's a robust market for those used goods.

The reason is simple. Because the full cost of a 16-gigabyte iPhone 4 is usually subsidized by the carrier, the smartphone costs far more than the $199.99 that most customers pay with a two-year contract. A recent iPhone 4 is worth more than $300 to $350 to resellers, who can turn around and sell it again for $400 or so, says NextWorth founder Dave Chen.

Gazelle, which is also based in Boston, buys back products from consumers on its site and at, Costco, Office Depot, Kmart and Sears, with branded sites.

It, too, plans to expand to an in-store operation with one of its brick-and-mortar retail partners this year. It declined to say which partner, although it had two in-store trials with Office Depot last year.

"For decades, when you bought a new car, you brought in your old model to trade in," says Israel Ganot, Gazelle's founder. "That hasn't existed in consumer electronics, until recently. Now the retailer can generate foot traffic, sell the new item for less and offer their consumers a way to recycle."

Ross Rubin, analyst for NPD Group, says the move is good for retailers. "It achieves the same benefit as a loyalty program: The retailer makes themselves the default choice for the next transaction."

NextWorth began its partnership with Target online, and then expanded to Target's physical stores last fall. Last year, NextWorth bought more than 500,000 old iPhones, iPods, cellphones and video games from consumers. It is in 800-plus Target stores now, and will be in most Target stores — 1,450 outlets — by March.

"We're trying to help people discover value in assets that are lying around the home and promote their reuse," Chen says. "We want to keep them out of landfills."

Ganot says the quality of the used products he has purchased is "surprisingly good. We buy the latest and greatest, and don't know what to do with the old stuff anymore. But they still work really well."

Both Gazelle and NextWorth tell consumers what their gadget is worth and send out pre-paid mailers for the items. Gazelle also sends free packaging.

The launch of the iPhone 4 last summer was huge for NextWorth, with many folks looking to dump their old iPhones. Then Chen got into Target, which now is his No. 1 source of gadgets.

When a hot new item is about to go on sale — as the Verizon (VZ) iPhone does online at 3 a.m. ET Thursday for current Verizon customers — sites like NextWorth and Gazelle see increased traffic for sales of the older items.

At Target, the trade-ins are handled in the Mobile department, which sells new phones from the four top carriers: AT&T (T), Verizon, T-Mobile and Sprint (S). Trade-ins go directly to NextWorth. (Target's mobile department is run jointly with RadioShack.)

Target likes offering the buy-back service in store because, "It's really relevant to where our guests' mindsets are," says Nik Nayar, a Target vice president.

Target and RadioShack are bracing for an expected influx of customers wanting to trade their AT&T iPhones for Verizon's iPhone 4 after it goes on sale Feb. 10. But that will be complicated. The new iPhone will initially only be sold at Verizon and Apple stores. So at RadioShack and Target, you can still trade in your old iPhone for a new one, but it needs to be the AT&T model.

Online, NextWorth and Gazelle say old iPhones already are beginning to fly in. "We've seen a significant surge since the announcement in January — 20% to 30%," Chen says.

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