At Device Pitstop, Call Goes Out for Used Gadgets

As Americans update digital devices more frequently, Device Pitstop and others want to rescue last year’s models from the junk drawer. Sourced from: Star Tribune.

Old gadgets tend to gather in drawers, and Ron Olson wants to change that.

Olson, president of Minnetonka-based NTY Franchise Co., acquired a laptop exchange company in Las Vegas later renamed Device Pitstop, brought the concept to the Twin Cities and is now poised to expand it nationwide.

The stores buy, sell, trade and repair laptops, cellphones and tablets. The first local store opened in Minnetonka a year ago and more came along in Maple Grove, Maplewood and Burnsville. A store in Edina is expected to open in the spring and others in Eden Prairie and Woodbury by the end of the year. 

“We hope to have 10 locations in the Twin Cities and up to 250 nationwide in five years,” Olson said.

Device Pitstop associate helping customer with repair of his laptop in store
Jon West, right, a service technician at Device Pitstop in Minnetonka, took down information from customer Clint Canfield about his laptop.

The target is people like Madi King of Victoria. She says her 4-year-old digs out her old cellphones and tablets from the family junk drawer. “I never sell” the gizmos she’s no longer using, she said. “I’m kind of lazy about it.”

Besides the Twin Cities locations, stores are open in Las Vegas, Phoenix and Lexington, Ky. New stores in Pittsburgh and Kansas City will open this spring. NTY is actively recruiting franchisees and recently started national advertising on SiriusXM radio.

Chad Olson, the company’s operations chief and Ron’s son, said the concept is similar to a clothing resale chain NTY owns called Clothes Mentor. “That grew from seven, 10, 30 and 40 stores until it became the 127 stores we have today,” Olson said.

Device Pitstop sells all major brands of used and refurbished laptops for $99 to $500, tablets for $100 to $300 and smartphones for $100 to $350. Each comes with a thorough inspection, 90-day hardware warranty and a theft check.

The used electronics concept has plenty of competition. Sites such as Gazelle, NextWorth and uSell will estimate the value of a consumer’s device based on its features and condition and send a check after the device has been mailed in and the condition verified.

Best Buy and Target also offer trade-ins or store credit online and in stores. In October, Best Buy expanded its online outlet, which now includes used games and a few devices as well as open box items and refurbs. In a recent check, there were nearly 5,000 games but only nine used cellphones online.

“We have a strong demand for trade-ins,” said Best Buy spokesman Jeff Shelman. “Items traded in might appear on the outlet, be used for parts or sold to a wholesaler.”

The company loses nearly $400 million a year due to returns, exchanges and damages. Selling trade-ins and items that are refurbished by its Geek Squad operation is a way to reduce that, Shelman said.

Recon Analytics’ State of the Wireless Union report last year said that Americans replace their cellphones every 22.4 months, more often than any other country. As manufacturers and retailers try to coax consumers to upgrade their technology often, gadgets less than two years old can now be seen as outdated.

What seems like a gold mine for resellers is still in many ways untapped. In a poll of 1,000 Americans, USell.com found that 68 percent had held onto an old device for two years or more without using it.

Retailers used to think that the reason consumers didn’t turn in their devices for cash is because they underestimated the value of unused gadgets thrown in a drawer. While a portable CD player has little value, an iPhone 4 can still put cash in someone’s pocket. And an iPhone 5s in good condition can yield $150 to $175.

To combat consumer inertia, Device Pitstop is touting “found money in the back of the junk drawer” just as gold dealers have done since 2009. “We’re pushing the message that gadgets have value whether you want cash or a discount on a repair or an upgrade,” Chad Olson said.

The faster that consumers sell an old model device, the more money they can get back. Generally, a consumer will get the most money for a device when the newer version is released. The iPhone 5s that’s worth about $170 in cash now was getting $275 when the iPhone 6 was released last September.

So why do so many consumers let their old gadgets sit in the drawer? It’s probably not laziness as much as it is loss aversion, said Vladas Griskevicius, professor of marketing and psychology at the University of Minnesota’s Carlson School of Management.

“Once we have something, we are especially averse to let it go,” he said. “It’s irrational, but it’s how humans behave.” 

John Ewoldt • 612-673-7633