Gazelle – Intermediary link
Seller  Gazelle  Marketplace  Buyer
Gazelle, a Top Rated Seller
How does it work?
Why has Gazelle’s business model proven to be so successful?
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.
What did Gazelle do?
- 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.
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?
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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”