New iPad lights up trade-in services

Following Apple's new iPad intro, trade-in services are seeing record sales for tablets that are less than a year old.

Apple's new iPad.
Apple's new iPad. Josh Lowensohn/CNET

Record numbers of iPad owners sold their devices yesterday following Apple's introduction of its next-generation model.

Today both eBay and Gazelle, online services that buy used tablets and other gadgets, reported a record influx of people selling their tablets, many of which were models less than a year old.

eBay says it had "more than" 20,000 trade-in offers for tablets yesterday, 89 percent of which were iPads. eBay says that 20,000 number represents a 10-fold increase in the volume of trade-ins the company pulled in the day before Apple's event. Perhaps more telling is that more than half of those trade-ins were Apple's iPad 2, a device that went on sale less than a year ago .

Separately Gazelle, which does not offer a way to auction off goods to other buyers like eBay does, said that customers were selling it an iPad on the service every eight seconds.

"Since the announcement yesterday we've already had about 80,000 offers presented to Gazelle customers, which is a 650 percent increase in trades," Anthony Scarsella, Gazelle's "chief gadget officer" told CNET in an interview.

75 percent of those trade-ins were iPad 2s, Scarsella said, with the other 25 percent consisting of first-generation models.

To put these numbers in perspective, last week eBay said it generated more than 125,000 tablet trade-in offers during the entire month of February, with 97.6 percent of those consisting of Apple iPad models. That number was up tenfold from the number of offers during the same month last year, the company said.

That more people are trading in their iPads now than this time last year shouldn't be too much of a surprise. In February 2011, the first-generation iPad had been out less than a year and had suffered considerable supply shortages that pushed availability back several weeks for those looking to get their hands on one. By comparison, Apple sold 32 million iPads last year, with the majority of those being the second-generation model--a device that had supply problems of its own.

Worth noting is that eBay's trade-in numbers come from the online commerce site's Instant Sale program, which differs from its auction services by giving gadget owners a way to trade in items for cash. Users describe the quality of their item, and eBay picks up the shipping cost, as well as the job of wiping whatever data is on it. A company spokesperson said auction listings for both the iPad and iPad 2 increased nearly three times the number the previous day.

Where do these devices go?
You may be wondering where these tablets and smartphones go once they're traded-in, and the simple answer is that they're sold right back to new buyers. Both Gazelle and eBay wipe the data on the device, then clean it up and package it for a sale back to someone else.

Stacks of iPads sit waiting to be sold on launch day in San Francisco in 2010.
Stacks of iPads sit waiting to be sold on launch day in San Francisco in 2010. James Martin/CNET

In Gazelle's case, the company says the majority of traded-in gadgets are re-sold on the company's online stores on eBay and Amazon. Gazelle will also sell the units wholesale in the U.S. and internationally, where they end up being sold by other companies.

eBay manages its trade-ins through a third-party company, which assesses the value then puts them up for sale again on eBay's site. Whereas eBay once made users define the quality of the item, that's now something that's been simplified to "working" and "non-working."

Time is money
The diminishing resale value of electronic goods in the gadget world is not a new phenomenon, and with the advent of trade-in services has become a publicly-viewable exercise in economics. Both eBay and Gazelle estimate the value you'd get based on a supply and demand curve. And both offer a way for iPad owners to "lock in" the price they'd get for their used goods, making the eventual trade days or weeks after the price is set.

In eBay's case, the company is providing a pre-set value for how much it will give owners for their device as long as it's sent in within a certain time frame. That deadline is this Saturday, with owners having to postmark their package by Tuesday, March 20.

For Gazelle, the amount buyers can get is a moving target ahead of them locking it in, a price the company will put on hold for 30 days. Gazelle also says that it sometimes increases the pricing of trade-ins when people misjudge the quality of their item, with some 5 percent of iPad trade-ins getting a post-trade bump.

As gadgets go, Scarsella said smartphones hold their value the best among the products the company buys, but that the return people are getting on those devices has changed considerably among the varying device makers.

"In the past we tended to see that with BlackBerry devices, now nobody wants them," he said. "iPhone and iOS are becoming more corporate than when it first started, so businesses are adapting iPhone models and businesses and people are just dumping BlackBerrys. That's causing them to lose quite a bit of value."

Scarsella added that Apple's products are among the top items in terms of holding trade-in value among gadgets.

"Now that people are beginning to catch on to [Apple's] upgrade cycle, users are beginning to trade in much earlier than before," Scarsella said. "Previously they would wait until the actual launch day to know it has certain specs or features to commit to buying it. Now it's just like they're going to buy it, no matter what Apple puts out there. It could be a blender and they're going to buy it."

 

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