BuyBak Blog

Testimonials from a few of our clients

My name is Mark Young and I’m a client of Buybak.com. I wanted to provide you a perspective of my experience with Buybak and its business model. First, I have over 20 years of regional and store level management experience in traditional entertainment retail. Most all of the companies that I’ve worked for bought back consumers CDs, DVDs and Video Games for cash and we resold them within our stores. I can say first hand that if it wasn’t for pre-owned entertainment many of the retail chains (the ones that are left) wouldn’t be in business today. The sale price on pre-owned is extremely attractive to the entertainment buying consumer and the margins are 2 to 3 times that of new media.

For the last couple of years I have left the corporate environment and researched various opportunities around my background and arrived at Buybak.com. Most anyone would consider us a “mom and pop” business. Buybak provides us a unique opportunity to source product that we are able to resell quickly on Amazon.com. Prior to Buybak we would have to compete with online sellers who use dropship companies or bid on product offered by brokers, store closings or customer returns. With Buybak we buy from consumers who have product that is “mile wide and an inch deep” versus the competitive “foot wide and a mile deep” with the previously mentioned sources. We didn’t realize it at the time but we have a good portion of repeat customers and word of mouth. We don’t have to constantly have a significant amount of our time taken up by sourcing of product. We advertise in various ways and product comes in on a consistent daily/monthly basis and so far has grown month over month over the past year. We source 100% of product based on our site with Buybak.com. With this effort I’m able to have a better income that I did in my previous corporate career. We also feel good with our business because not only do make a living, but we provide our customers with (in today’s economic climate) much needed cash but we feel we’re helping the environment by recycling previously bought goods.

If you’re interested in asking questions directly to me feel free to do so, if you’re interested in testing our service let me know at Mark@EntertainmentBuyback.com

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Hello, I’m Phil Forman and I’m the owner of Newtown Video (also NewtownVideo.com). I have been buying and reselling movies (back in the early days of VHS) for 25 years. We currently sell our product on multiple online marketplaces and wholesale channels. We are a top 10 seller on Amazon.com for the CD, DVD and Video Game categories.

Our Buybak site represents sources product from consumers that represents about 20% of our business, but it’s a 20% that we really don’t have to be worried about in the constant need to acquire product for and we sell well over 500,000 units per year. We believe and hope that this channel of product will grow to make up a majority of our inflow of resalable product and help us expand into new categories that we would be challenged in sourcing. We have been and continue to be excited to be a client in this relatively new online opportunity.

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My name is Randy Smythe and I’m the owner of Inet Media Source and BuybackDirect.com. I previously owned Glacier Bay DVD a large online media retailer. I’ve been selling online since 1996.

In my previous business, I sold new catalog product (DVDs, CDs and Video Games) sourced directly from large distributors; a low margin, highly competitive business. I found this business model to be lacking as the margins continued to get squeezed and marketing expenses grew.

With my BuyBak site I am able to source product directly from the consumer, for sale on Amazon and other marketplaces. I am approaching the end of my first year with BuyBak and looking forward a very successful holiday season.

The product comes to us from the consumer and we inspect it, clean it and ship it to Amazon’s FBA warehouse in Reno, Nevada, where our orders are then fulfilled by Amazon’s world class fulfillment services.

Buybak is 100% of my business and is crucial to the success of my company.

Sourcing high margin, quality product for resale is one of the top challenges of every online seller. I’ve reached out to many online retailers and many are either starting to work with Buybak or considering it.

Check out my blog at www.rksmythe.blogspot.com 

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The Buyback Business Model

For Consumers

Consumers on average will spend anywhere from 10% to 80% (or more) less than a comparable new item.  This is the underlying basis that drives the used or pre-owned marketplace, both offline and online.   Plus, consumers are able to resell their recently purchased pre-owned items for an even lower cost of ownership than new, thus furthering the buyback cycle.

For Online Sellers/Retailers (on Amazon.com)

The ability to acquire pre-owned product provides the online seller/retailer with something very unique (and most of the time rare) - high margin (50% to 60%+ gross margins), high desirability - thus resellability product.  Also (through Buybak.com) online sellers are able to actually adjust their Buybak prices based on the relative ability for that particular item to sell quickly (sales velocity).  For example, an item that has a high degree of confidence in a quick sale may have a higher buyback price (thus lower gross margin) since it will be sold quickly or an item that is desirable, but may have lower sales velocity will have a lower buyback price (thus higher gross margin) since it will have a longer shelf life.

Average Buybak Percentages and Margins

	Averages	Percentages
Average Retail Price of Consumer Media Item	$8.88	100%
Net Shipping Margin to Seller	$0.63	7%
Total remitted to transaction after shipping costs	$9.51	107%
Est. Cost of Consumer Media Item (Buyback Price)	($4.00)	45%
Amazon Commission Fee (15% of Retail Price)	($1.33)	15%
Amazon Transaction Fee ($0.80 item)	($0.80)	9.0%
Acquisition Cost (Advertising, etc.)	($0.45)	5.1%
Est. Check-In Fee for Buyback Items	($0.25)	2.8%
Net Margin to Online Seller/Retailer	$2.67	30.2%

Assumptions - 55% Gross Margin, Consumer Media (CDs, DVDs or Video Games) sold on the Amazon Marketplace as a Pro Seller.  Buybak Per Item Fee waived for the first year.

Net Shipping calculated as $2.98 (Amazon Shipping Credit) minus $0.20 (ave. cost of shipping materials), minus $0.35 (est. cost for picking/shipping handling), minus $1.80 (est. cost for USPS Media Mail - 1 disc).  This leaves a Net Shipping Margin to Seller of $0.63/item.

Acquisition Cost (Advertising, etc.) is calculated with the assumptions that 50% of all items acquired are the result of package inserts, emails to past and current customers, direct mail, etc. - this cost is estimated at $0.10 per item received.  The other half of this calculation is that 50% of all items acquired are the result of keyword advertising, third party or affiliate relationships, banner advertising, etc. - this cost is estimated at $0.80 per item recieved.  By combining the above efforts - this produces an average of $0.45 per item received.

Summary - Buybak can provide the online seller/retailer high sale velocity product for resale along with Net Margins of upwards of 30% or more.

Future Posts - we'll calculate Net Margins on additional marketplaces (eBay, Half.com and others), plus across additional Buybak product categories, next up Consumer Electronics.

Why Buyback!

Today's online buyback offers consumers everywhere what young adult consumers in more populated areas have enjoyed for well over 30 years through the nations independent record stores - the direct purchasing and subsequent resale of previously owned albums and in the mid to late 80's compact discs.  One of offline buyback high points occured around the early 90's when national entertainment chain Wherehouse Music sued four major music distributors who eliminated advertising support for stores selling used CDs.  In that same year (1993) Garth Brooks threatened to not allow his upcoming album ("In Pieces") to be sold by stores that deal used CDs.  Later that year and the beginning of 1994 both the distributors and Garth Brooks reversed their stances on stores who bought and sold previosly owned CDs.

This legal tussle helped set the stage for online buyback in the later 90's pioneered by SecondSpin and others.  This also set the stage for the online sale of previously owned media by eBay, Half.com, Amazon.com and others. 

Why Online Buyback?

Consumers choices for turning their no longer wanted inventory (in this case CDs, DVDs and Video Games) range from offline - independent and national (those who are left - FYE mainly) entertainment retailers to Pawn shops; online - Person to person sales through eBay, Half.com and Amazon.com or the many buyback sites.  The pros and cons of each choice are many. 

Offline: Pros - Local, Quick cash, Bulk sale; Cons - Lower prices, Higher chance of not selling everything, stigmatism in dealing with Pawn or like shops.

Online Person-to-Person Sales: Pros - Done from your home, Higher Prices; Cons - Each sale is individual, Higher fees, Lack of online reputation, Requires lengthier account setup, Time consuming, Perception of higher fraud incidences, High chance of not selling everything, longest time in receiving your monies.

Online Buyback: Pros - Done from your home/work, Bulk sale, Know immediately what your purchase price(s) are, Good Prices, Good turn-around time for your monies, Ability to compare;  Cons - May be unfamilar with buyback entity, thus apprehensive.

We are biased (it is called the Buybak blog), but finding and utlizing a reputable buyback site provides you with; 1) the ability to know what you're going to receive with less committed time, 2) the ability to sell more items and actually a similar or even higher total dollar received than from the other two options, 3) less time and hassle.

In the future, buyback will become an intergel part of a new purchase.  Buyback sites, online marketplaces and other sources have more than enough data to accurately predict the "cost of ownership" of a new item based on an items purchase price minus its expected buyback value.  For example, it may be cheaper to purchase a more expensive item based on its quality, reputation/cache and its subsequent buyback value than a less expensive competitor, due to its overall lower cost of ownership.

Future Posts - we'll calculate Net Margins on the Amazon Marketplace for the Consumer Media (CDs, DVDs, and Video Games) category.

Additional reading...

USA Today - Web sites re-spin your used music CDs

Welcome! (a history)

Welcome to the first blog posting on Buybak.com.  This blog is dedicated to the history, development, business, and future of "Buyback" as a consumer, retailer and environmental benefit. 

First let's start with a definition...

buy·back [bahy-bak]

–noun

1.	the buying of something that one previously sold.

2.	any arrangement to take back something as a condition of a sale, as by a supplier who agrees to purchase its customer's goods.

Also, buy-back.

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[Origin: 1960–65; n. use of the v. phrase buy back]

Based on the Random House Unabridged Dictionary, © Random House, Inc. 2006.

Our definition - the buying of any item, primarily from consumers, with the intent of reselling it through a secondary marketplace.

A bit of Buyback history...

Through my research and understanding online "Buyback" was first pioneered online by Gus White of SecondSpin.com.  Alexa states that SecondSpin.com came online in 1996/97.  SecondSpin.com began purchasing CDs and VHS tapes in the early days.  In 2000, they added the buying back of DVDs and stayed that way until around 2004 when they dropped VHS for Video Games.  TransWorld Entertainment invested in SecondSpin in 2000 and finally acquired them in 2004.

In 1999/2000 Spun.com followed by purchasing just CDs online, later in 2000 they added both DVDs and Video Games (the first one to do so).  Spun was founded by brothers Andy and Steve Gundy and was acquired by idealab in 2000.  A couple of years later both brothers acquired Spun.com back from idealab and they continue to run it today.

Each of these companies operated both an online buyback program to purchase consumer media from consumers for either cash or online credit and an online ecommerce operation for the sale of used consumer media.