David Parker was working happily as a civil engineer before his entrepreneurial friend in the US asked him to set up the Australian arm of BuyMyTronics.
Parker recently launched the local version of the site, which allows users to sell on their unwanted phones, cameras and other gadgets.
He speaks to StartupSmart about his ambitions for the business.
What’s the background to the business?
The business was launched in 2004 by a friend of mine in the US. I’ve been following the company since day one and Brett (Mosley, the founder) approached me and said that there was an opportunity to expand the business to Australia.
I’d seen that there was a similar thing to BuyMyTronics in the UK, but not Australia. It seemed like a good fit. Australia will be the guinea pig for BuyMyTronics outside US.
Why did you decide to get involved?
I’m a civil engineer by training and although I haven’t hung my hat up on that completely, I really like the concept of BuyMyTronics.
I’ve always wanted to run my own business, my parents did the same and I was passionate about it. I didn’t want the opportunity to pass.
I spent time in Denver at the company’s HQ and I keep in contact with them by phone and email. It’s just me at the moment but I’m hoping to hire staff by Christmas.
What has it cost to start-up?
It’s cost around $30,000, a lot of that on website development. The system was developed in Denver and has had to be customised for Australia. There are gadgets here that aren’t present in the US, and vice versa.
I’d say we have about $2,000 to $3,000 of business on the books and orders for another $15,000.
How does the service work, exactly?
If you have a gadget you don’t use any more and want to sell, you search for the model on the site and note whether you have the box, battery and the condition of the item.
These factors decide the price. You then send it to us, we check that the item is what you said it is and you get paid for it.
So how do you make money?
We are in contact with dealers and refurbishes overseas. The deals will all be based on what we can get for the gadgets.
We will do some refurbishment ourselves and some direct online sales too and as we get busier, we will have more contact with the market.
What we do with the products depends on what they are. If we get a certain type of camera or Blackberry, for example, we may wait until we have 10 of them and then sell them on eBay.
What kind of margin is there on that?
It depends on the gadget but, when all is said and done, we’re gunning for a 10 to 15% profit on each item.
What’s been the hardest part of starting up?
I think that spreading the word about the business has been the hardest part. There are a lot of electronic recyclers out there whereas five years ago peoples’ minds weren’t on being environmentally-friendly with their gadgets.
We are targeting those items that people put in their drawers for three or four years and are just sitting there, gathering dust and depreciating in value.
But it’s been hard getting that word out. We’ve used SEO, Facebook and Twitter to reach out to people.
Can you explain what the business’ targets are?
In the US, the last two years have been dramatically busier than the first two years. They’ve paid out $2.5 million and there’s millions more dollars out there not being utilised.
I’d love to pay out $1 million in the first two years in Australia. But that is a lofty goal – half of that total is probably more realistic.
What kind of competition do you have?
There are not many competitors out there. There’s a guy in Melbourne who does a similar thing to us and a couple of businesses buy phones only, rather than other items.
It may be a cliché, but our competitor is the kitchen cabinet. You wouldn’t let your car sit in your garage for six years and wonder what to do with it – you would either use it or sell it straight away.
Mobile phones cost so much now that people really want the latest thing but can’t pay $700 or $800. So why not sell your old phone so that someone can get it cheaper. Not doing so is wasteful.