In it for the short haul
For a fee, company will buy back your electronics at a guaranteed price
A $495 Vera Wang dress can be rented for a week for $49, plus a $10 cleaning fee, from Wear Today, Gone Tomorrow. Netflix perfected the concept of borrowing for a fee, and few Boston drivers make it through a commute without reading the Zipcar “Wheels when you need them’’ logo.
The idea of short-term rentals has become so pervasive that it has made its way to an unlikely retail sector: the world of small consumer electronics.
Consumers who want a new cellphone, flat-screen television, or iPod every six months to a year can get them from Los Angeles-based TechForward Inc. Founder and chief executive Jade Van Doren said he got the idea in 2005 while traveling in Japan, where he noticed the high rate of turnover for cellphones.
“Even in the US, people are upgrading electronics very quickly,’’ he said. “People are getting a new iPod every year or two, and they’re upgrading their cellphones even faster. For most of us, the old device ends up in a drawer somewhere, so I saw an opportunity to build a business around a guaranteed buyback program.’’
Here’s how the program works: For prices ranging from $19.99 to $249, depending on the electronic gadget, customers can opt into TechForward’s buyback program. If they sell a gadget back to the company within a six months, they will receive 50 percent of the purchase price back. The buyback scales down over two years from the date of purchase to 20 percent. TechForward sends postage-paid shipping materials to customers for when they’re ready to trade in their products. The company then tries to resell the products; if it can’t sell them, it recycles the products.
Danielle Levitas, a consumer electronics analyst for market-research firm IDC, said the guaranteed buyback program being offered by TechForward is “wholly new and different.’’
“For gadget geeks, it’s worth it,’’ she said. “If you know you want a new phone every 12 to 18 months, something like this makes a difference.’’
Levitas said TechForward suffered a setback when Circuit City went bankrupt, as the retailer was offering TechForward plans at the point of sale.
The company now has similar agreements with a handful of regional and online electronics retailers, and just started a pilot program in 50 RadioShack stores. Customers can also go to the firm’s website, www.techforward.com, and purchase a plan for any consumer electronic product they have purchased in the past 30 days.
“The economy may be working against them, because I think people are watching every dollar and may be reluctant to add another $20 or $50 to the purchase price,’’ Levitas said.
Meanwhile, Stephen Baker, a vice president of research for NPD Group, a market research firm in Port Washington, N.Y., said the idea of leasing gadgets is not cost effective.
“The reason is these things are not that expensive to begin with,’’ he said. “When you see people getting things like TVs from the rent-to-own guys, it can get very expensive very quickly.’’
Still, Van Doren said some cautiously optimistic customers are buying the firm’s plans because of the economic downturn.
“What we’re finding over the course of the last six months is people are buying a less expensive TV and adding our buyback protection to it, hoping that a year from now things will improve and they can buy the more expensive model,’’ said Van Doren. “They really want that 53-inch flat-screen, but they really can’t afford it right now.’’