When it came time for Caleb Gonsalves to buy a new iPhone earlier this year, he didn’t run to the nearest Apple store. Instead, he headed to the website of reseller Gazelle to search for a used iPhone 6, saving himself money and the pain of waiting another year for his wireless contract to end.
“The idea I could just sell back a phone [an iPhone 5S]…and put the money to a new phone that was discounted…was amazing,” said Gonsalves, a 27-year-old executive at a tech startup based in Boston.
He ended up trading in a 32-gigabyte iPhone 5S for $216 and applied the cash to help pay for a used 64GB iPhone 6 from Gazelle that cost $401. At the time, a new version of that phone would have cost $749.
Gonsalves isn’t alone when it comes to buying and selling used phones online.
As the US wireless market moves away from traditional two-year contracts, more consumers are upgrading their phones at a faster clip, while looking for ways to do it on the cheap. Device resellers like Gazelle are benefiting from that trend by offering affordable alternatives in used smartphones. Since the iPhone 6S hit the market in late September, about 100,000 iPhones have been traded in to Gazelle, a level in line with the typical trade-in number during “S” generations, the company said. Apple tends to do major redesigns every other year, opting for more subtle changes in the off-year denoted by the “S” in the product name.
Most of Gazelle’s business revolves around the iPhone, but it also buys and sells Android devices. And it’s not the only company in this market. eBay, uSell and various other companies also have businesses related to used mobile devices.
Gazelle, based in Boston, got its start offering consumers a place to sell their old or unwanted electronic wares. Last year it opened up an online storefront to sell them back to you, and it has since moved 50,000 iPhones.
“As subsidies have been taken away from carriers, folks are realizing their iPhone habit is a $650 habit, not $200,” Gazelle Chief Marketing Officer Sarah Welch said. “There has been an explosion in demand for high-quality used phones.”
To see what happens to those iPhones before they reach new buyers’ hands, CNET visited Gazelle’s facility in Louisville, Kentucky, for a behind-the-scenes glimpse.
To sell a smartphone, consumers go to Gazelle’s site and describe the phone’s condition as “broken,” “good” or “flawless” and then receive an estimate for its value. The company then sends a prepaid box to the consumer, who has 30 days to return it with the phone to the Louisville facility. The long window allows sellers to lock in a high price before the newest iPhone is announced, but gives them time to upgrade before sending off the old phone.