A brief flashback into history… - In 2007 the Economic Crises started weakening the financial sectors of some of the biggest economies across the globe. E.g. The United States. - In 2008 the Economic Crises burst quickly, spreading and affecting smaller countries’ financial sectors which were interconnected with the “super” economies. - The Economic Crisis resulted in bankruptcy, budget cuts and mass unemployment across the globe. - In the long run, this affected the typical/regular consumer and left them with very little head-room in their personal economy. Why has Gazelle’s business model proven to be so successful?
- In the wake of the Economic Crises consumers became aware of how they spend their money in order to “stay afloat”. - Gazelle saw an opportunity in this omnipresent conversion of consumer’s economy patterns and aimed to embrace it. - Gazelle therefore embraced that consumers had very little head-room by offering to buy their old used unused electronic goods to a price suiting the current market value and price that made it affordable and “effort able” convenient for consumers to pursue. - A “Green Movement” saw the light of day which made consumers environmental conscious. - This “trend” of strengthened awareness towards recycling = added more positive fuel to Gazelles already thriving business. What did Gazelle do?
Sum up! - Combing consumers’ “Soft values” and “Hard values” Gazelle pursued a segment that was in the necessity of taking action but also willing to do so. - Also the lack of jobs made it easier for Gazelle to maintain a strong workforce e.g. student jobs for students at MIT. - Electronics evolving constantly, but not everyone can afford the newest product, So re-selling used/ older products to people who aren’t able or willing to pay for the new products had a marketplace for this.
What are the characteristics of Gazelle’s revenue model? Retailpartners eBay Kiosks Selling broken products Selling products in bulk
Online retail partners
Other retail partners Small chain of discount consumer electronics 3-week pilot project with Office Depot’s physical stores.
eBay Lower fees Premium listings
Other characteristics Kiosks Selling broken products Selling products in bulk for companies
Does Gazelle need a different intermediation model?
New intermediation model? Buy-side – Buying/obtaining products (Sears/Kmart, Costco, Wallmart and Office depot – offer their customers a trade-in service for their old electronics devices when they purchase new devices) New intermediate model - Cutting out partnerships? Obtaining products solely themselves? Pro: Expenses: “paying” partners. Risk of partners becoming more dominant. Con: Partnerships essentially extended Gazelle’s initial model of buying products through Gazelle.com. – Mo’ gadgets, Mo’ money –
Sell-side – selling products Cut out ebay (disintermediation) and sell on Gazelle.com and Gazelle-stores instead? Pro: Less expenses to E-bay fees – transaction fees down/contribution margin up Traffic stays on Gazelle.com (selling customers is also potential buyers of products) Easier to control own brand Con: “Working with retail partners (online and in-store) provided instant access to the huge customer bases of those retailers – Gazelle would be hard pressed to achieve the same level of customer reach through its own direct marketing efforts” - Israel Ganot, CEO Second Rotation (Gazelle.com) Expenses: whole new marketing, store/employees Expenses: attracting old and new customers – is competing for customers with E-bay realistic? E-bay, as a marketplace, becomes a competitor (Other sellers on E-bay has potential more buyers with gazelle out of the pictures) Realistic to do both – sell on E-bay and Gazelle.com?
“Ganot had to find the right balance between investing in further developing the retail partnerships and investing in Gazelle’s own consumer-facing efforts”