This is one of the most common questions I get asked by people who want to start buying and selling phones.
Whenever somebody wants to start a phone flipping business, the first place they usually look is the online buyback companies.
Many companies like Gazelle, ItsWorthMore, and BuyBackBoss have already built respectable reputations in the industry.
But, what many people don't know is these companies aren't primarily buying from consumers, they are actually acquiring most of their inventory from larger corporations.
This is something that most new resellers won't understand because there is very little information about it.
That is why I decided to put together these five reasons why you shouldn't start a buyback website.
1. You Don't Have Enough Capital
The problem with paid advertising in this industry is it's already saturated.
The industry has become so competitive that advertisers are paying up to $5 per click for keywords like "sell my iPhone" or "sell phone".
At those rates, you have to be willing to lose millions of dollars in order to build a viable reputation in the industry.
2. You're 10 Years Behind
Buyback websites have been around for 10+ years in nearly every industry.
You can now find 500+ different buyback sites that will pay you cash for your phone, tablet or computer.
My question for you is...
Do you really want to launch a business in a market that already has 500+ competitors?
3. In-Store Trade-Ins Have Taken Over
These companies are able to offer much higher buying prices that resellers because they are willing to lose money on the front end in order to acquire a new customer.
Once they acquire this new customer, they can then upsell them on new devices or new service plans where they make a profit.
Companies that run buyback websites cannot afford to do this because their main business model is focused on profiting from each device.
In the long run, large retail stores are positioned to defeat online buyback websites because of this business model.
4. It Will Take You Years To Build Trust
Would you ship someone your $400 phone upfront that you've never met before and wait 2 weeks for payment?
Odds are you probably wouldn't.
This is the exact question all your customers are going to ask themselves before working with you.
If you do not have a reputation in the industry already, no one will ship you their phone upfront.
It will take years to build a brand that people can rely on and refer to others.
In that time frame, you will have to find alternative ways to produce revenue to remain profitable.
5. You Can't Guarantee It Will Work
With a buyback website, the industry already has hundreds of solutions.
Most buyback websites fail because they try to solve the same problem for customers that have already been solved time and time again.
On top of that, you will need to invest $5000+ into building a website, setting up your business, buying supplies, etc.
To conclude, these are five reasons why I believe you shouldn't create a buyback website in the electronics industry.
Although many people have been successful, there are many better opportunities available in the market to make money.
Instead of taking an unknown risk, start by asking your peers what problems they would pay to have solved and create a product around their requests.
This will greatly increase your chances of creating a successful online business.