The proliferation of smart phones and the one-to-two-year upgrade cycle means there will be an awful lot of discarded phones, and many broken ones. Small businesses have sprung up everywhere to repair cracked screens, water damage, and other defects.
The supply chain for the growing “recommerce” industry has, until recently, been business to consumer, as in Gazelle. But now we have Sourcely, a B2B “recommerce” site, that has been growing quietly through bootstrapping, but it is now ready to talk about itself.
There have always been startups that grow in stealth mode, but sooner or later have to surface either to get customers or to get funding. Contrary to current myth, the best of them are often started by people who leave their corporate jobs because they have a big idea. Nima Jacob Nojoumi, a former GoDaddyite and his three co-founders fit that profile: entrepreneurs who have worked for a corporation, learned something about product development, sales and numbers, and left to realize their dreams.
Three friends who have known each other since they were teens, they started a restaurant in Colorado while in school. Seeing the limitations of the restaurant business, they tried to finish college, but realized it moved too slowly for them. Nima then moved to Arizona and took a tech support job with GoDaddy. When he got there, he realized how much the job was teaching him about business, and he sent for his two buddies, who also relocated here and got GoDaddy jobs.
Seven years later, they left together with another founder to start Sourcely, a buyback platform for the cellular device industry. As a consumer, you probably won’t interact with Sourcely directly, but if you ever want to get rid of a cell phone you may be dealing with a small business that’s a Sourcely customer.
How will Sourcely grow? The total market for used devices in the U.S. is $7 billion. If you add on the rest of the world, which Sourcely is totally capable of serving eventually, it’s some big multiple of that. And it is a growing market. At the end of 2013, there were 370 million used idle devices in the market. People don’t really know how to get rid of them, and throw them in a drawer or put them on Craigslist, where they don’t receive proper value for them. This is especially true of Android phones.
Seventy percent of smartphone trade-ins will happen at retailers or storefronts operated by wireless carriers, and 30 percent will take place online. By 2018, industry experts predict over 174 million devices will be traded in through so-called “recommerce” channels.
Recommerce of smartphones alone will generate $5 billion by the end of this year. By 2017, the U.S. recommerce market for high-end consumer electronics will reach $14 billion.
Recommerce is a subset of recycling, because the devices are usually repaired, refurbished, or parted out and put back into use if possible. As a sustainability strategy, it’s awesome because we could eventually cover the landscape with mobile devices if we don’t find some way to reuse them. Small businesses all over the world exist to repair and refurbish phones, and the Sourcely platform helps them value a given phone and determine the right price to acquire it.
The only company I know that has the data right now to value used devices correctly is Gazelle, which had revenues of over $100 million in 2013, the last year for which numbers are available. Gazelle deals with consumers, and primarily with Apple devices. Sourcely will deal with small business, and potentially all over the world.
The fact that Sourcely’s founders are GoDaddy veterans is also significant, because this is what we’re hoping a growing entrepreneurial ecosystem will create: businesses borne from the earlier success of another company.