SpeedSell wants to make selling different
A little while ago (sometime in April to be half-way precise) I attended the Mini-Seedcamp event in London and met George Bevis, founder of a British startup called SpeedSell. I was intrigued about SpeedSell primarily out of two reasons: One - the company shares the same name as a company we acquired during my time at ChannelAdvisor (and where I believe that ChannelAdvisor still holds the trademark for) and two - SpeedSell sets out to do something we tried in a pilot while I was at eBay (we failed miserably by the way - which doesn’t mean anything anyway):
SpeedSell will buy your old console and computer games, picks it up at your place, gives you a guranteed price for your game and then tries to make its money back by selling the item on eBay (or later through other liquidation channels). Here’s an explanation in their own words.
So far so good. Here are a couple of the main challenges you have to overcome in this model to make it work:
- First of all you need to have a very good idea about the price you can actually sell the item for once you bought it from the consumer. If you get this wrong your whole margin can go south - or, in case you play it very conservatively, the purchase price you offer is simply too low for any sane person to sell his stuff to you.
- Second you have to deal with people who will sell you citrons - they claim that the disc works perfectly well, that all the manuals are included, etc. As this becomes your responsibility once you’ve sold the item to another consumer you have to test pretty much every item which comes in. That’s labor intensive and therefore expensive.
- Cost control in general is one of the major issues - you have so many moving parts in this game that it can become quite a nightmare to keep your margin in a healthy band.
The first issue is a rather interesting one - you can obviously use eBays past sales data to determine future prices. eBay even has a program where they license this data to you (which by the way is another drag on your margin: if you simply scrape the eBay site to extract this data, eBay will - sooner or later - come after you and shut you down; thus you need to buy their data through the Market Data Program). The problem here is that eBay’s data is notoriously ‘unclean’ - take for example a simple search for a mobile phone. eBay’s search (and thus their data) will return anything from the actual phone to batteries for this phone to bling-bling to pimp your phone. Cleaning this data to make robust price predictions is often not an easy task - it works quite well with media titles, which might be one of the main reasons SpeedSell started with PC and console games. It gets rather nasty once you turn to stuff like sporting goods, electronics, computer equipment or - god beware - fashion.
Having said all that - SpeedSell was one of the three top rated companies in April (the selection was done by a panel of well-known VCs) and is also one of the 22 finalist for next weeks Seedcamp week. SpeedSell is not alone in this market - the German Trade-A-Game is doing very well (with a slightly different business model) and the US-based ReCellular is doing phenomenally well with a similar business model in the market for used mobile phone.
In general I believe that this model has legs - if you are able to make selling for the average consumer easier than it is today (eBay was a huge leap - yet it still is quite a pain in the neck to sell something online) you have a massive market in front of you.
So - congratulations to George for his Seedcamp nomination, I’m looking forward catching up with you guys!