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Why CE Trade-in Programs Make Sense

Sales of smartphones totaled 1.2 billion units last year, according to Gartner. The opportunity for retailers to capitalize on this massive consumer electronics purchasing trend is huge. But with so many retailers offering smartphones, tablets and other electronics, how can retailers set themselves apart from the crowd?

Trade-in programs and promotions create an opportunity for retailers to become the destination of choice for consumer electronics purchases by differentiating the buying experience. This is especially true in the era of showrooming, when consumers are increasingly turning to online channels for both research and purchase. So, it’s no mystery that major retailers like Target and wireless carriers like MetroPCS are turning to trade-in programs to increase in-store sales and traffic.

Allowing customers to sell used smartphones, tablets, laptops and gaming devices for store currency can deliver a big return for retailers. Not only do trade-in programs increase store foot traffic, they encourage in-store spending and foster customer loyalty – the three main reasons behind the proliferation of trade-in among consumer electronics retailers.

Let’s take a closer look at each:

Reason No. 1: More foot traffic

The balanced combination of convenience and value is a determining factor in consumer electronics purchasing choice, especially with the increased awareness of trade-in within the past five years. According to theNPD Group, smartphone trade-in is “one of the most dynamic, leading tools that carriers and retailers use to drive new device sales.” Consumer awareness and interest is especially high surrounding new device launches, such as the latest iPad or Samsung flagship phone.

With special trade-in offers and promotions, retailers can cut through the clutter and attract both loyal and new customers to brick-and-mortar locations. Highlighting retail-only trade-in offers and promotions through online channels such as social media and email marketing enhances in-store promotions and drives shopping behavior. In addition, online channels can successfully drive foot traffic into brick-and-mortar stores, effectively reversing the showrooming trend.

Reason  No. 2: Increased spending

Trade-in programs typically offer store credit or gift cards as payment for used electronics, which serve to increase the average customer basket. Once customers are in the door with gift cards in hand, about half of them will spend more than the card is worth. Those using a $50 gift card, for example, will spend about 20 percent more than the card’s face value.

Spending also tends to be directed toward higher margin “wants” versus “needs” when consumers are spending money they earned for their unused items.

In frequently upgraded categories like consumer electronics, trade-in also accelerates the consumer upgrade cycle by instantly enabling device purchases for less, therefore driving more new device sales.

Reason  No. 3: Greater customer loyalty

Because of the widespread popularity of using smartphone trade-ins to fund upgrades, consumers are constantly searching for the best deal and most convenient experience. According to theNPD Group’s Connected Intelligence report and its survey of smartphone consumers, nearly 62 percent of respondents are willing to switch retailers for a better trade-in offer. Offering trade-in not only provides a personalized, one-to-one exchange with a sales associate, but also gives customers the positive feeling of being paid back by their favored retailer.


CE trade-in is gaining traction among retailers, carriers and manufacturers. By offering this personalized experience that immediately pays the customer back for used products, trade-in can serve as a critical tool to drive in-store traffic, increase sales and average purchase price, and foster customer loyalty.

Jeff Trachsel is CMO of NextWorth Solutions, which has provided turnkey in-store and online trade-in platforms for major retailers nationwide since 2006. Its combination of expertise, team and platform is fundamentally changing the way people buy, own and disown consumer electronics.