Gazelle – Intermediary link

Seller Gazelle Marketplace Buyer

Gazelle, a Top Rated Seller

How does it work?

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.

Why has Gazelle’s business model proven to be so successful?

- 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 daywhich made consumers environmental conscious. - This “trend” of strengthened awareness towards recycling = added more positive fuel to Gazelles already thriving business.

What did Gazelle do?

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?

• 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 upTraffic 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”