Old iPhones Get Second Chance With Resale Sites

Sites such as Gazelle and uSell make it easy for consumers to sell their used electronics.

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With the ship date for iPhone 5 pre-orders just a day away, more than a few people might be wondering what to do with their old cell phones. Shove it in the junk drawer and throw it out in a few years? Bequeath it to a younger sibling?

Israel Ganot, CEO of electronics re-commerce site Gazelle, has a better idea for the 2 million or so people waiting for their new Apple gadget to arrive in the mail: Sell their old phone to his company and do their wallet—and other consumers—a favor.

"We want to make it simple," he says of Gazelle's site, where consumers enter some information about the gadget they're looking to sell and a get a quote within seconds. Those with certain iPhones can rake in as much as $266, according to the site. Even phones with missing buttons or the dreaded cracked screen can fetch a decent price.

Just 3 percent of cell phone users now "re-commerce" their old cell phones, as Ganot calls it, but he says the benefits make it a no-brainer.

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"There are very easy, hassle-free ways to get value for your old devices," Ganot says. "It makes upgrading more affordable and you ensure that your two-year-old device has a more wholistic life cycle."

Other sites, such as uSell, have sprung up to resell used electronics—many of which are discarded before their time thanks to the relentless pace of innovation in consumer electronics. But unlike Gazelle, which is a direct buyer of used items, uSell functions more like a marketplace.

"It's like the Kayak of the used electronics industry," says Dan Brauser, CEO and co-founder of uSell, referring to the travel-focused rate comparison website.

Instead of having to market and sell their iPhone on eBay or comb the internet for the best deal, consumers using uSell go to one site, type in the relevant information about their item, and uSell returns a handful of potential offers. From then on, consumers work directly with the would-be buyer and usually receive a prepaid shipping kit to send the item to a buyer. After inspection, the seller receives a check in the mail or funds via PayPal. The whole process can take as little as three days.

While millions of Americans might be looking to unload their old cell phones every year or so, there's a healthy—and growing—market for the secondhand devices, both within the United States and overseas. But going through an Apple retailer or cell service carrier isn't always the most cost efficient method—or even possible in some cases.

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Replacing a lost or broken phone could cost unlucky cell phone users hundreds of dollars, but buying a refurbished one online is usually much cheaper. Companies that insure cell phones for loss and damage are also big users of secondhand cell phones—when a customer drops a phone in a toilet and calls for a replacement, they usually receive a refurbished device, which likely comes from a reseller.

But the market for pricey electronics isn't just an American institution. Tremendous demand exists abroad from consumers in Europe, China, and Southeast Asia. While getting one's hands on the latest Apple gadgets might be a cinch in the States, overseas consumers often have limited access to new products or they are simply too expensive.

"Some retailers will repackage and sell these items in different parts of the world where second-hand devices might be more valuable," says Steve Abernethy, president and CEO of SquareTrade, a consumer electronic warranty company. "They'll find the highest prices paid in other parts of the world. It's a bit of a different business model."

The burgeoning market for used cell phones here in the United States and abroad is prompting companies in the space to ramp up their marketing campaigns in hopes that the marketing push can get more Americans to start turning in their old cell phones for cold, hard cash. The practice has already taken a firmer hold in Europe and the United Kingdom, experts say, with about 21 percent of all used phones there reintroduced to a secondary market.