The service offers instant cash quotes, generating from a detailed pricing algorithm. Users receive a pre-paid shipping bag, in which they post the gadget to the company’s warehouse.
Within a few days after the gadget is received, the money is deposited into the customer’s bank account.
Owen McCrink, founder of the Victorian-based business, says the service encourages customers to recycle their old electronics rather than throwing them out, as is the norm.
McCrink talks to StartupSmart about technicalities, cashflow and the benefits of being green in his new venture.
What gave you the idea for ReGagdet?
I’ve always been passionate about what’s been happening online. I’m always on the lookout [for opportunities] to start up a business and was tossing a few ideas around.
One that’s really stuck with me is that in the US, I’ve seen a big market in essentially trading in your old electronics – old phones, old laptops, old game consoles – and there was really nothing in Australia that was similar.
You’ve got Cash Converters and a couple of online mobile buyers but nothing that offers a full electronic trade-in service, so I thought I’d give it a crack and see what comes out of it.
What was the next step?
I’m a mechanical engineer so I have quite a technical background. I did quite a bit of the groundwork myself in terms of getting the concept together; how it was going to work technically.
I sourced a programmer from overseas to work on the project fulltime, who’s still working for me now while we’re working on the next version of the website.
The guy that is working for me now – he was working for an outsourcing company from the US and during the financial crisis they eventually laid off all their overseas developers.
So during that time, I thought it was an ideal opportunity to get someone really experienced to work on the technical development of the business.
We launched in April of this year and we’d probably been developing it for about a year before.
How did you fund the business?
It’s all self funded at the moment from my savings. We’re paying a lot of money out for our gadgets so cash flow is a massive issue at the moment.
But there’s been no external investment; it’s all been funded by myself. So far, [I’ve spent] probably around $20,000 and that will probably be increasing soon.
As we’re paying out more money, we need to put more money into the business to pay people on time, so we’re looking at another $10,000 in the next couple of weeks.
How many staff do you have?
I’ve just got myself and the fulltime developer.
As soon as the cash flow really allows it [I will consider taking on additional staff]. Right now, I’m not in a position to be able to afford someone else in Australia to help with the operations of the business.
But obviously as we grow, we’re going to need to get some staff in Australia to help out.
How have customers responded to the service?
We haven’t done that much marketing – a lot of it has been through word of mouth.
Most people seem to use our service and come back with really positive feedback. There’s been quite a few mobile phone-related websites writing up about our service.
In two months, we’ve probably had about 200 orders admitted to us. Right now, probably 90% of our business is through retail customers.
We haven’t been targeting businesses specifically at the moment but with the launch of our new website, we aim to cater for businesses wanting to dispose of bulk amounts of phones, laptops, etc.
What has been the biggest challenge?
Obviously it’s just been us two working on the website and you don’t realise how complex something is until it’s launched, and the bugs that you couldn’t possibly predict all start to come out at once.
It’s been a big experience in terms of trying to keep everything working as it should be.
How do you ensure that everything does in fact go to plan?
When we were testing our first version of our website, we tested it as much as we could. We’d put in 10 different items to see if our system could handle that many items from the one customer.
But you really can’t predict what a customer can do. We had a case where, if there was more than 17 items in the one cart and the customer tried to check out, it lost all their items.
What do you think is the biggest risk you face?
As it grows, cash is always going to be an issue because we are paying out before we get our income coming in from refurbishing and reselling.
If we have a big influx of orders, we’re going to have to pay these out before we get paid for them ourselves.
If it grows too quickly, we may see ourselves in a situation where cash is going to be a big issue, but also you’ve got the risk of other businesses coming in and entering the market with more funding and a bigger advertising budget.
What are your revenue projections for 2011?
We’re probably hoping to get $250,000 revenue – that’s kind of a conservative forecast but we can see it going a lot higher if we can get the word out a lot more.
If someone were to develop a similar service, how would you respond?
Right now, we’re trying to promote ourselves as being a green way of getting rid of your electronics.
None of the electronics that we get will end up in landfill; they’ll be recycled to metals or plastics or refurbished and resold.
We’re trying to promote the fact that you can be good to the environment and it doesn’t have to cost you – you can actually be kind of rewarded.