4 Things an Apple iPhone Trade-In Program Would Need to Succeed

The devil's in the details.

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Spencer Platt / Getty Images

People walk in front of the Fifth Avenue Apple Store in New York City on Jan. 14, 2013

Apple has yet to confirm rumors that it’s planning to roll out an in-house iPhone trade-in program, but 9to5Mac reports the deal is done, that employee training is ramping up and that it’s just a matter of when Apple officially pulls back the curtain — either before, or shortly after it rolls out its next iPhone, possibly due to be unveiled in just a few weeks.

How would it work? According to 9to5Mac, you’d bring your older iPhone to an Apple Store, then swap it for a newer model, paying whatever the difference adds up to after your used device credit. Nothing special, in other words, though there may be a few wrinkles: It sounds like the program would restrict you to iPhone-for-iPhone swaps, meaning you couldn’t use your iPhone as credit, say, against a new laptop, iMac, Mac Pro or whatever else catches your eye on Apple’s shelves.

You also couldn’t swap it for cash: the program would be for credit toward an iPhone only. And if TechCrunch is right — the site claims the trade-in program has been in pilot mode for weeks — it sounds like you’ll have to be eligible for an iPhone upgrade with your carrier; assuming that’s right, if you’ve just bought an iPhone 5 on contract, for instance, you couldn’t trade it in for credit toward a new iPhone announced a few weeks or months later.

How much would Apple offer for a used iPhone? TechCrunch says it’s hearing $120 to $200 for a 16GB iPhone 4 or 4S, while a 16GB iPhone 5 determined to be in “good” condition could fetch as much as $250 (though the site correctly observes that none of that pricing need be final, even if it’s what Apple’s using for the pilot program).

The prospect of Apple getting into the secondary smartphone market at the retail level is unsurprising given what the company already offers today: mail-based store credit in exchange for reusable electronics via PowerON, including the iPhone (back to the iPhone 3G). Drop a 16GB iPhone 5 into Apple’s evaluation questionnaire, for instance, and assuming a “good” condition model that hasn’t been dropped in a swimming pool, you’re looking at just under $300 in store credit. Popular online trader Gazelle, by comparison, offers $315 for a “good” condition 16GB iPhone 5 and only a few bucks more for an all but impossible to clinch “flawless” rating. Yes, you’re talking cash (or an Amazon gift card) in the latter case, as opposed to Apple Store credit, but for those just looking to up-convert or buy more Apple stuff, Apple’s program is already as appealing as anyone else’s.

What would it take for an Apple Store-based iPhone trade-in program to succeed? Not much. All the company needs do is match or better other in-store trade-in prices and I predict (without going out on a limb) that it’ll do brisk business. Still, here’s a list of four points I’d like to see Cook and Co. address before throwing the switch on a store-based iPhone trade-in program.

Apple already has a trade-in program. Sort of.

Forbes writes “Apple, perhaps mired in agreements and contracts with cellular carriers, has never had an iPhone trade-in program.” This is either wrong or mostly wrong, depending how you parse the semantics. Yes, Apple doesn’t have something technically referred to as a “trade-in” program for the iPhone, but — as noted above — its “Reuse and Recycling” program is a trade-in program by any other name. Using PowerON as the back-end, Apple lets you select any model, iPhone 3G forward, provide your best guesstimate of the phone’s condition, get a price, then forward the phone to PowerON, which evaluates it, then sends you back an Apple Store gift card.

What happens to your old iPhone? The Apple rep I spoke with this morning wasn’t sure, but assuming the phone is usable, the “reuse” portion of the program likely means it’s put back into circulation somewhere in the world, not scrapped. In any event, you’ve traded your phone in for Apple Store credit — that, by any definition, is analogous with a trade-in program. Assuming Apple doesn’t radically retool said program down the road, its challenge is going to be convincing walk-ins that its in-store program is as good (or better) than the deal you might get if you’re willing to wait a week or so to trade mail with Apple partner PowerON.

Don’t restrict iPhone trade-ins to carrier upgrade eligibility.

Reports suggest Apple won’t let you trade your old iPhone in for a new one if you’re not eligible for an upgrade with your carrier (TechCrunch surmises there’s a carrier check involved when you initiate the store trade-in). That would be inconsistent with what Apple lets you do today if you trade in your iPhone online, the only difference being that you have to wait for PowerON to receive your phone, authenticate your assessment, then mail you back the gift card. Sure, if a customer isn’t eligible for a phone upgrade, then by all means, they should have to pay full price for the new phone, but that shouldn’t preclude them from getting full credit from the sale of their existing one.

I bought my iPhone 5 last October, for instance, meaning I won’t be eligible for a phone upgrade for some time, but that won’t stop me from selling my phone to Gazelle or via Craiglist to come up with funding to buy the new iPhone, full price, if it arrives in September. Apple needn’t get involved with automating contract cancellation or paying a carrier’s early termination fees if all the customer wants is to upgrade their phone while honoring their carrier plan.

Manage traffic in already claustrophobic Apple Stores.

Most Apple Stores I’ve visited across the country are long and narrow and relatively small — like most mall stores, in other words. They’re also typically chock full of people crowding the aisles and milling around tables, making navigation tricky (and rolling a baby stroller into the store, speaking from experience, out of the question). A trade-in program would be a completely new store service, one that requires Apple employees take the time to assess each phone’s functionality and appearance on top of working with a customer to select and program a new phone. That has the potential to turn already traffic-clogged stores into outright jams. Apple’s going to have to somehow manage the extra traffic, and if its pricing is competitive, there will surely be extra traffic.

Match or exceed other retail trade-in programs.

An Apple in-store trade-in program would compete less with companies like Gazelle than other walk-in retailers with in-store trade-in programs, say Best Buy, which currently pays $300 for a “good” condition 16GB iPhone 5 (in trade for store credit). If TechCrunch is right about Apple’s program pricing, that’d put Apple $50 short of Best Buy on the 16GB iPhone 5 — a difference significant enough to drive customers away, especially if Apple restricts trade-ins to carrier upgrade eligibility (something Best Buy doesn’t). Perhaps the $250 price for a 16GB iPhone 5 is Apple’s way of anticipating a trade-in price drop coming once it releases the next iPhone.

Whatever the case, if the program comes out of the gate significantly stingier than its competition, well, you’d have to really be into “magical” thinking, as a consumer, to throw that kind of money away for the sake of transacting with Apple.

2 comments
LynnProfeta
LynnProfeta

I’d have loved to hear more about the smaller players as options for trade in services comparision. iPhonesIntoCash.com (http://iphonesintocash.com/ -- pricing grid is right on the homepage), who buybacks all used or even broken iPhone models in any condition, offers the highest buyback prices in the space. They are a much leaner outfit so they can pay out more to the seller. Comparing customer experience, iPhonesIntoCash.com is on par with both Gazelle and NextWorth. The just better pricing is due to much lower overhead. Plus they pay cash and not in the form of a gift card of store credit.

buybackworld
buybackworld

Other websites will pay you CASH for your old iPhone, even if it is water damaged.  These buyback companies will also buy tablets and devices from other manufacturers, such as HTC,  Motorola, Samsung, and many more.  They even offer you free postage and a free shipping kit.  All you need to do is drop the package in a mailbox.  Think "Netflix" of electronic trade-in programs.  Check out BuyBackWorld or Gazelle and notice they will both pay more than Apple's Trade-in program.