With literally hundreds of millions of mobile phones piling up in U.S. homes, how to profitably recycle these devices is a pressing question.
Start-up eRecyclingCorps on Tuesday is scheduled to announce that its customer Sprint is offering a phone buyback program in which consumers can get money for older phones when they upgrade to a newer model.
eRecycling Corp has developed an in-store application and a Web service, offered from Sprint's site. The application lets a person see how much an older phone is worth and get a credit for its residual value when buying a new one. A consumer can also use a Web site from home, mail a phone in, and get a credit for the returned product.
There are existing take-back services, which will pay for an older device and then refurbish them for resale later. Rather than rely on consumers to mail back goods or go to drop-off points, eRecycling designed its system around carrier retail outlets in the U.S. where between 50 percent and 60 percent of sales happen, said eRecyclingCorps CEO David Edmonson, the former CEO of Radio Shack.
"You can play around with independent dealers and online programs, but you are not going to make a quantum leap in the process until carriers are engaged in low-cost and safe process that doesn't interfere with their core processes," he said.
According to eRecyclingCorps, the recycling rates of cell phones is about 10 percent and about 130 million new devices will be sold in the U.S. this year, which means there are tens of millions of phones available for refurbishing. The company estimates that phones that will be upgraded this year are worth $3.3 billion and older devices are worth $2.5 billion.
The company's business model is to collect turned-in phones and have the data cleaned off. Right now it plans to resell those phones for the domestic market in which people are seeking replacements for lost or stolen goods. But the company is seeking to establish relationships with carriers in India, China, and other countries outside the U.S.
Sprint rolled out the program in 2,500 stores and dealerships so far and has seen its recycling rates shoot up far above the industry average. The company has set recycling rate goal of 90 percent.
About 70 percent of consumers show preference to returning old cell phones at the point of sale, according to eRecyclingCorps' estimates. The company is also working on an online application that will let people transfer contacts from an old phone to a new one, Edmonson said.
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