Inside the Decluttr warehouse.
Decluttr buys anything – because that’s their business model. They will literally buy any CD, DVD, or video game you want to mail them. And they pay the postage, too.
Someone once gave me a CD of heavy metal Hanukkah songs called Gods of Fire. It was funny for a minute. Then it sat on a shelf for years, because I didn’t want to throw it away and it’s not like anyone on eBay would buy it from me, but I finally found a taker. The new company Decluttr paid me $2.85 for it, which, when combined with a bunch of other crap I sent them, netted me a total of $45.95.
“We have 470 Alanis Morissette Jagged Little Pill CDs,” says its U.S. president, Brett Lauter. “We can’t get rid of them. We open up the box and it’s like, not another one! But we’re still buying them.”
This isn’t some charity for 1990s survivors. The company, including its U.K. counterpart, notched more than $150 million in revenue last year.
The thinking goes like this: Although the number of physical-media retailers has gone down–farewell to Borders, Blockbuster, and many others–an actual market for this stuff still exists. In 2013, 165.4 million CDs were sold, according to Nielsen SoundScan. And although consumers could sell their own stuff on eBay or Amazon, it’s a big pain: We’d have to list them individually and manage a ton of listings, all to make a few measly bucks a pop, if anything at all. Who has the time?
Decluttr takes advantage of that gap. The reason it buys everything is simple, Lauter says: “The first CD you scan in may be another Jagged Little Pill. If we say we’re not going to buy it, you may give up. We just lost you. So we’re going to give you the minimum, 50 cents, because maybe your second one is Green Day’s Insomniac, and oh my gosh, this will sell quickly.” In fact, that 1995 album is one of the hottest on the market now; Decluttr currently pays people $5 for it. “It would be poor judgment on our part if we’d blown you off on your first CD.”
Decluttr then sells your media in a variety of ways, and earns more than a 50% margin.
The amount it pays you is controlled by a proprietary algorithm, which takes into account how many copies of an item are already in its warehouse, what the item sells for on Amazon or eBay, and how quickly it usually moves. That makes Decluttr’s prices a sort of Billboard chart for the bizarro second-hand market. What’s super hot right now? Judy Collins’s 1971 album Living. “We’re paying $5 because they come in and fly off the shelves,” Lauter says. What’s not hot? The widescreen DVD edition of the 2000 X-Men movie; he has 416 of them piling up.
The company began life in the U.K. in 2007 as music Magpie, and now receives 100,000 items there every day. Its two British co-founders officially launched a U.S. expansion this past January; they hired Lauter, the one-time CMO of Wine.com, to head up the operation. Lauter’s first move: change the U.S. version’s name to one Americans can understand. (The magpie reference only works in the U.K., where people commonly know it as a bird that picks up shiny objects.) Although it’s done very little marketing, Decluttr is already buying 10,000 items a day from people. Lauter expects to reach profitability by the end of the year.
There’s only one restriction on selling to Decluttr: All media must come with the original artwork. If you kept a disc but threw away the jewel case with the art inside, you’re out of luck. Otherwise, selling is simple. First, download the app. (There’s a web version too, but the app is more elegant.) Use it to scan the barcodes of any items you’re selling; the system instantly tells you what Decluttr will pay. Once you’re done–you need to sell a minimum of 10 items, but there’s no maximum–the system emails you a UPS sheet, which you affix to a box and send off.
Your package arrives in a warehouse just north of Atlanta, where employees confirm that you sent what you promised. Items are immediately listed on Amazon, eBay, or Decluttr’s own site for resale. (Lauter is so embarrassed by Decluttr’s site, which sells 20 items a month, that he refuses to reveal its name: “It’s really, really bad. Honestly, people who are buying off of it right now must be masochists.” He says a better version will be up in a few months.) When a disc is bought, Decluttr buffs it up and, if needed, replaces its jewel case. Then it’s mailed off to its new owner.
For a world that supposedly stopped buying CDs, sales happen quickly. I sent in a box of 30 items in late February, and within its first day of arrival, the first CD was sold: Depeche Mode’s Delta Machine was sent back to its native U.K. Three weeks later, 12 more items had found new homes.
Decluttr won’t reveal how much my (or anyone’s) CDs sell for, or show any of the individual listings online. This is the one opaque part of its process. That’s in part because doing so would violate agreements the company has with Amazon and eBay. But there’s also security in that secrecy: Decluttr doesn’t want to inspire copycats who are impressed by their margins, or make customers feel ripped off. “Some consumers would say, ‘I just sold you this DVD for a dollar, and you’re selling it for two dollars!’” Lauter says. “They tend to forget, yeah, we paid you a dollar, but we also paid all the shipping, we’re putting it in inventory, we’re refurbishing it, and putting new cases on, and we’re handling customer service issues.’” (For what it’s worth, I found only one copy of my heavy-metal Hanukkah CD on eBay. It’s going for $8.98, being sold by a user called estocks_usa. Decluttr won’t confirm whether this is the same CD they bought from me for one third the price. Either way: Good luck with that, estocks_usa.)
So, what will happen to all those languishing copies of Jagged Little Pill? In a few months, Decluttr will have a solution: It’s launching a wholesaling business, where it’ll sell used CDs in bulk to places like Dollar Tree and mom-and-pop shops. The margin is lower, but at least Decluttr can offload the junkiest of the junk. This already happens in the U.K., where a discount chain might, say, request a random mix of 200 CDs at a time. If the store prefers, Decluttr will even shrink-wrap its selections so that they look new. Decluttr is also seeking out new relationships with retailers overseas, particularly in parts of the world where physical CDs are more popular.
Lauter is confident that the market for spinning plastic discs will be around for some time. A quarter of Decluttr users, he says, aren’t selling because they don’t want the albums anymore; they’re doing so to make room for more, newer CDs. Still, the numbers don’t look good: CD sales dropped 14.5% between 2012 and 2013, according to Nielsen SoundScan.
Perhaps that’s why Decluttr is also expanding past media. Its U.K. version is already buying people’s electronics and used designer clothing; it washes or patches them up, then sells them the same way it hawks music. Lauter expects to do the same by 2015. “When we build up our clothing business, maybe in a year or so, I might see if there a great boutique space in SoHo or something [for Decluttr to sell clothes],” he says. “We get great products–literally, True Religion jeans that cost $300 and maybe someone’s worn two times, and we refurbish them and sell them for $50 dollars. That’s a great deal for somebody.”
Maybe Alanis Morissette has some old jeans she’d like to sell.
Via Fast Company