Disrupting the iPhone resale market
As is the case with many startups, Orchard was born of dissatisfaction. Just after the launch of the iPhone 5, Orchard co-founder Bruno was looking to sell his 4S to cover the cost of an upgrade. A quick visit to Craigslist and Kijiji revealed a confusing and time-consuming selling process. He was so dissatisfied with their ‘product’ that he ultimately didn’t even sell his phone. Instead, he founded Orchard – the better iPhone resale market.
The first step in starting any company is to research the competitive landscape. We had a good look at every iPhone selling solution out there. Our conclusion? They all lack inspiration: the existing selling solutions simply are not working hard enough to deliver value to us common folk.
After careful consideration, we realized that all of the businesses in the iPhone resale market are forcing customers to trade off between ease of use and the value that they receive for their iPhone. Considering the market in this context, two distinct groups emerge: there are the marketplaces, and the businesses that we lovingly refer to as the liquidators. These companies and their value propositions are illustrated below for readers who prefer that sort of thing.
The marketplaces (Kijiji and Craigslist) provide a forum for buyers and sellers to meet – that’s it. It is up to a seller to figure out a fair price for their phone, what to mention in a listing, which of the responses come from an honest person, and how to set up a safe transaction. Ugh. To marketplaces’ credit though, a savvy seller can run this gauntlet and end up getting their device’s full value.
Simply put, marketplaces are a pain to figure out, but if you’re smart and you invest the time, you can earn top dollar for your iPhone.
On the other end of the spectrum are the liquidators (Gazelle, yousell.com, etc). These companies emphasize simplicity: their websites are very easy to navigate, they send you a prepaid shipping box for your device, and end-to-end, it takes maybe 15 or 20 minutes (spread over a few days) to sell your device. Pretty good, right? Well, there’s a catch: the cost of this handholding is typically on the range of $100-$150 relative to what you would receive selling on a marketplace.
Put differently, the liquidators make selling your iPhone easy, but you pay a huge fee for the convenience.
At the end of this analysis, it was pretty clear to us that there was an opportunity for a new business to disrupt this market by delivering both simplicity and value to iPhone sellers. So we set out to do just that (visualized in the chart below). We are confident that our app-based testing, valuation, and listing service delivers on this goal.
If our service sounds appealing, head over to the Orchard website to buy or sell a used iPhone! Alternatively, let us know what you think of our analysis in the comments, or tell us what other topics you’d like to hear us comment on.
Looking forward to the launch of the app guys. From what I can tell by the screenshots, the UI for the phone and web app is beautiful, great job.
Regarding the analysis, the market places work because everybody is already there, while I imagine the liquidators have huge margins so they don’t have to sell as much to make a decent profit. How do you plan on addressing each of these areas (i.e. driving up profit-per-customer and building a vibrant market place full of buyers and sellers)?
Derek, thanks for the kind words re: design. I am sure that Bruno will be particularly appreciative.
The answer to the question of how we intend to build a vibrant marketplace is quite complex (as a result of our multi-staged product strategy) but I’ll attempt a high-level explanation here (feel free to email me – alex@getorchard.com for a more substantive discussion). Our 1.0 explicitly targets sellers (beyond great listings, there is minimal functionality for buyers) and as such, our initial challenge is ensuring that sellers find buyers for their devices. The primary means by which we will achieve that is by helping sellers discover buyers within their social networks by encouraging sellers to post their listing on social media. For sellers who fail to find a buyer in their networks and who are willing to transact with a stranger, we will also facilitate sharing of their Orchard listing on other marketplaces, with a process designed to remove many of the headaches of dealing with these marketplaces.
We intend to iterate our way to a full-fledged marketplace fairly shortly after launching our 1.0, at which point we will adopt some more traditional user acquisition strategies.
As for maximizing profit-per-customer, we have some good ideas there, but you’ll have to be patient to find out what they are 😉
just stumbled across this great post. makes a lot of sense and Orchard is very easy to understand with the support of that graph (yea math 10 slopes). keep pushing this content for others to hear and engage. everyone stumbles across these frustrations and it’s nice to see someone trying to solve it for me. something I’d be willing to pay for!
Everyone loves what you guys tend to be up too.
Such clever work and coverage! Keep up the terrific works guys I’ve you guys to my
blogroll.
Thanks so much! We love to hear that. 🙂
congrats on the great idea and execution. as a reseller i routinely wade through 100’s of “I’LL BUY YOUR IPHONE!!!” type posts in the “for sale” section of CL before finding the timid, legitimate sale post. I dream of accurate listings, clear contact info, clearly listing the carrier, accurate cosmetic condition, accessories/box, and solid communication. even if you have a great price, titling your listing with “for sell” is a total turnoff.
so i’m going to check you guys out. the pricing is a little higher than i like, but you’re also doing the majority of the work for me. i appreciate an efficient supply chain. best of luck growing your market!
Thanks so much for taking the time to check us out! It sounds like you know the ups and downs (mostly downs) of CL all too well. We kind of think of it as the Wild West of iPhone sales. We wanted to build something that gives people all the information they need to make a purchasing decision that they’re truly happy with. So here we are!
We take your point about our prices. Half the fun of hunting around CL is hoping to find a motivated seller who can save you some serious cash. While you don’t have that same opportunity with our phones, our prices are set based on the average selling price for identical phones on other marketplaces, like Kijiji, Craigslist, and eBay. That way, we feel like it is fair to the average consumer. If you’re looking to buy/sell for a business, we’re always happy to talk about establishing a more formal relationship!
Thanks for your kind words, Jeremy! 🙂
I was wondering if this this site was 100% safe and ligit because the prices are really low. I have seen a review that said that they received a fake iPhone.
Hi Aiden,
Thanks for reaching out! Glad to see someone is reading all these blog posts. 🙂
Regarding your question about the legitimacy of your site… I can definitely understand the concern. Orchard works by buying iPhones from people who have upgraded and then re-selling them on our website. This is our first time hearing that a phone we sold was “fake” and we’re having a hard time making sense of it. We’re reaching out to the buyer directly to get more information but it sounds like she received a phone that was repaired with 3rd party parts, which causes Apple to void the warranty because the repair has been done with non-official Apple parts. Since that phone was purchased from us in March, we’ve worked hard to improve our quality assurance inspections to make sure we’re selling iPhones that will exceed our buyer’s expectations.