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Buyback programs turn electronic trash to cash

Retailers offer to buy back old devices to recycle or resell, in return for cash or in-store credit. (From Reuters)

DENVER--Leave it to the gadget industry to turn concern over electronic waste into a sales opportunity. Simply put, they're offering to buy back old devices to recycle or resell, in return for cash or in-store credit.

Coming to consumer electronic retailers nationwide this spring is the ecoNEW program from NEW Customer Service, the company that provides extended warranty plans and protection programs for such retailers as Best Buy and Wal-Mart Stores.

Under the program, consumers can return any electronics products they own to participating retailers (which have not yet been announced)--even if they weren't purchased at the store. In return they'll receive an in-store credit gift card for a predetermined amount based on the type and condition of the device. EcoNEW handles all the collection and evaluation details and issues the gift cards directly.

Another company, TechForward, offers a guaranteed buyback program similar to the optional extended warranty services offered by many consumer electronic retail stores. But instead of buying extra coverage in case the product breaks, the consumer buys insurance of sorts against future upgrades.

TechForward vice president of operations Marc Lebovitz says the program enjoys a 12 percent conversion rate on the devices covered. Close to 70 percent of the devices covered under the plan are returned for the agreed-upon fee.

Both ecoNEW and TechForward then evaluate the condition of the devices returned, wipe clean the hard drives and either resell the refurbished devices online via used MP3 sites or eBay or harvest the components and sell them as salvage parts.

The money gained from this process pays for the rewards given to the customer. While TechForward hopes the difference will make a tidy profit, ecoNEW will be happy to just break even.

"It's not necessarily the revenue opportunity, because frankly it's not that great," NEW senior VP of strategy and corporate development Kevin Porter says. "If you look at the margins...they're razor thin. Until we have more experience on the flow rate of product, we're not quite sure yet if this will be a positive moneymaker. We're hoping to at least make it neutral."

The benefit, ultimately, comes in encouraging more sales.

"It allows people to purchase now with more confidence," Lebovitz says. "Sometimes people will wait to make a purchase because they know a new device will come out in three or six months. This allows them to purchase now and know they can upgrade to the new one whenever they're ready."

But environmental responsibility is also a driving factor, and both companies are gambling that end-of-life programs like these will become more profitable in the years ahead as demand increases for safe disposal programs for consumer electronic products.

Following is a quick snapshot of companies providing buyback programs.

How it works: Customers buy the plan at point of purchase for a guaranteed rate, then return the item using the program's free packaging and shipping.

Supporting stores: Los Angeles-area independent electronics stores

Cost to consumer: About $9 for MP3 players, more for other devices

Reward rate for an MP3 player: The guaranteed buyback on an iPod Touch is $240 for a 3-month-old device, $190 for up to six months and $160 for up to a year. Prices may vary if the units are damaged or inoperable.

How it works: Customers fill out an online survey detailing what devices they want to get rid of and the condition of the product, and ecoNEW provides an estimate for the buyback, as well as free shipping.

Supporting stores: To be announced, but warranty clients include Best Buy and Wal-Mart

Cost to consumer: None

Reward rate for an MP3 player: $20-$60 range depending on model; in-store credit only

How it works: Customers can return iPods to any Apple store for a discount on a new iPod bought that day. Also offers a mail-in recycling program for iPods and mobile phones.

Supporting stores: All Apple retail locations

Cost to consumer: None

Reward rate for an MP3 player: 10 percent discount on new iPods when returning to the store. No reward if mailed in.