Pair uses Internet to recycle gadgets
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Shanghai Daily, August 29, 2011
In this digital age when wireless gadgets become outdated in the blink of an eye, Jacky Sun, 33, and Kerry Chen, 31, have found a way to make money from all those discarded mobile phones, laptops and cameras.
Last April, the pair launched Aihuishou.com - meaning "love of recycling" in Chinese. The Internet start-up is believed to be the first online bidding platform directly connecting electronics consumers with recyclers in China.
According to a report released by the United Nations Environment Programe, China discards about 10 million tons of electronic gadgets every year, but little of that hardware finds its way to proper disposal channels. Some of the gadgets are dumped in landfills, where their toxic heavy metals pose a threat to soil and water systems. Some of them just sit on household shelves, collecting dust.
Manufacturers that set up recycling bins to encourage people to throw away their old machines in a safe manner have made few inroads in enticing consumers.
"We are never short of well-intended programs, but the trick is to offer incentives," Sun said. "People need to know they have something to gain from being part of a good cause."
To make a few yuan from recycling their old electronics, consumers can initiate closed bidding on Aihuishou. Recyclers access the system on a tailor-made mobile application. If a bid is accepted, Aihuishou handles the offline transaction and charges recyclers a commission.
The company brokered transactions valued at 500,000 yuan (US$78,235) last month and is expecting to break even next year if the present success continues.
"The prospect of a growing user base turning the platform into a big supplier of recycled electronics is attracting more recyclers to the site," said Sun.
Sun and Chen once worked together at SYKES, an international information technology outsourcing company. They found themselves intrigued by the idea of leveraging the power of the Internet to make the most of idle resources.
The two quit their high-paid jobs to start a barter website in 2008. The investment in their entreprenuerial dreams has accumulated to 2 million yuan since then. Though the project was later aborted because the market was not ready for it, it formed a team of 10 people now working with Sun and Chen.
The average age of the team is 28 and most come from high-flying technology companies. At Aihuishou, they share an eagerness to participate in a business-driven model in the realm of environmental protection.
"The idea of Aihuishou might be simple, but the core of any electronic commerce success is always user experience," said Chen.
Any consumer interested in recycling a piece of electronics gear first fills out a questionnaire as a preliminary assessment of its value. Factors include the age of the gadget, its technological specifications, brand and condition.
Easier participation
Aihuishou has made it easier for consumers to participate by requiring only a mobile phone number as contact information, eschewing the usual tedious process of having to apply for a website account.
The bidding process lasts no longer than 10 minutes. When completed, a chart featuring the average offer prices from recyclers is shown alongside with the winning bid. The platform relies on industrial insight, offline channel management, and an online monitor program, to acquire the real-time data, and a powerful server to process the numbers.
"All the extra work we've done is to reassure consumers that they can make informed decisions here," Chen said. "The business starts only when they feel motivated."
Every day, Aihuishou attracts 1,000 visitors, holds 300 auctions and brokers 30 deals on average. With 2,045 mobile phone models and 1,864 laptops on its current deal list, Aihuishou is expanding its scope to digital cameras and computer accessories.
The whole industry is upbeat on its future. Gazelle, a United States-based recycling broker for used electronics gadgets, has recently received an investment of US$22 million in venture capital. Its model is similar to Aihuishou except for logistics.
"We could have asked consumers to mail us their used gadgets themselves, just like Gazelle does, but that would have undermined their initiative because people here are less trusting about that sort of thing," Chen said.
Aihuishou's solution is to trade cash for gadgets at the consumer's doorstep. The service covers most districts in Shanghai, with each team member responsible for an area near his home. Before the transaction is completed, team members check to make sure the gadget measures up to its questionnaire specifications.
"Three years of field work all boils down to this," Sun said. "A copycat website could probably be built up in a month, but our market experience certainly could not."
Sun and Chen have paid numerous visits to Shenzhen, a city in Guangdong Province, which is home to the electronics recycling industry in China. Experts there have accumulated valuable knowledge about assessing a gadget's worth.
Relatively new and high-end models are either resold or refurbished, while those outdated or malfunctioning are cannibalized for valuable components and then melted down to recover metal and plastic that can be used to create new products.
Many of the discarded machines were in use for less than 12 months. There's a special section for Apple products because of their current popularity in China.
"People in big cities chase the latest in electronics so they can look chic and tech-savvy," Sun said. "But there are many others in this country who haven't yet entered the digital age and would be happy to have just a simple mobile phone."
Hundreds of thousands of mobile phones are given out free each year by Chinese telecommunication operators to promote their prepaid phone cards, but few are ever used because most consumers consider them uncool.
Sun said prices for recycled gadgets rarely exceed 10 yuan and Aihuishou is set to hold a campaign to gather them up and make a donation to fulfil those modest dreams.
The company also acts as a voluntary agent in a government-sponsored trade-in program, where the consumers can get a new-purchase discount for turning in their unwanted electronics.
"Running a business aimed at promoting resource efficiency makes us feel we are something more than just ordinary businessmen," Sun said. "We are looking for investors who can help us expand, especially those who understand who we are and why we are here."
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