p.p1 and Tactical Tools for E-Business Supervisor:

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Strategic and Tactical Tools – Home assignment
Case Analysis: Gazelle
Programme: Strategic and Tactical Tools for E-Business
Supervisor: Qiqi Jiang
Group 4
Martina Englbrecht, CPR: 260992 – 4090
Anna Tensil, CPR: 121194-3536
Jonas Kolk, CPR: 06091994 – 4501
Dario Cristian Gonzalez Boeck, CPR: 140594 – 3901
Submission Date: 09-11-2017
No. of pages: 8
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Introduction
Gazelle is a re-commerce platform which buys used electronic devices from individuals and resells
these items after inspecting and testing them to individuals as an eBay powerseller or through
wholesale partnerships. On the buying side, Gazelle used direct channels via the website and online
and offline retail partnerships to get access to used electronic gadgets. This written assignment
mainly focuses on the case study and situation of Gazelle in 2012 (Andrei Hagiu, James Weber,
2013).
1. Key elements of Gazelle’s business model and its success factors
“A business model is a set of planned activities designed to result in a profit in a marketplace”
(Kenneth, C. L., & GUERCIO, C., 2017, p. 326). In the following the key business model elements of
Gazelle will be described based on selected key elements identified by Kenneth and Guercio which
will be value proposition, revenue model, market opportunity, competitive environment,
competitive advantage and market strategy.
Gazelle’s value proposition or reason why customers choose to use Gazelle instead of any other
competitor is primarily based on its convenient service offered to resell used electronic devices.
This convenient service in turn is based on three pillars. First, a fair price calculator accessible
through Gazelle’s website allows users an easy and quick service to find out the price the used
device is worth reducing price discovery costs. Secondly, Gazelle facilitates transactions, as it built
partnerships on the buying side to get used electronic gadgets as well as partnerships or channels
on the selling side to resell these gadget, and connects these two sides as an intermediary. To
facilitate transactions, it also offers individuals who want to resell their used devices a free delivery
and packaging service. As Gazelle connects both the buying and selling side of used devices it builds
the base for the third pillar, which is a platform of trust and reputation for both sides, through
gadget inspections and testing which many other competitors don’t offer. Gazelle’s revenue model
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is a sales revenue model, as it buys and then resells used electronic devices. The market
opportunity on Gazelle’s business model is not limited to its market opportunity, as any individual
using electronic devices could potentially use Gazelle’s services. Indirect competitors are basically
every buying and reselling platform – online and offline – or recycling services of electronic devices
producers like Apple itself. Gazelle’s direct competitors are discussed in detail in chapter two. It’s
competitive advantage, the main factor that differentiates Gazelle’s business from its competition,
is an end-to-end ownership of all processes. Through unique partnerships on the buying side with
offline and online retailers it secured a big customer base and access to buy used devices in huge
bulks. Additional services on the buying side of devices from individuals like free shipping, packaging
and a fair price calculator as well as data deletion made it possible to buy electronic devices to a
lower price than its actual worth. through A fair and trustworthy reselling platform was created by
Gazelle’s gadget tests and inspections as well as data deletion. Thereby, it ensured a quality service
and made it possible to resell used electronic devices at a higher margin. With its market entry
strategy, Gazelle gained a high market share through online and offline retail market partnerships
and built up its brand name through these channels. In 2012, the time this case study refers to
Gazelle considered to change its market strategy from partnerships to a single lone standing brand.
The advantages and disadvantages of both options on the selling side as well as on the buying side
will be discussed in detail in chapter three and four.
2. Gazelle’s key sources of competitive advantage relative to its main competitors
While exploring the sites and business models of Gazelle’s main competitors it became clear, that
ever since the company Gazelle.com was examined in 2012 for the case study, the competitive
landscape of the re-commerce industry for electronic devices had changed a lot over time. To
provide a balanced assessment of the competitors versus Gazelle, the current business model of
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Gazelle is considered when discussing its main competitive advantages relative to other players in
the same industry. In short, Gazelle provides today an own platform -Gazelle.com- which allows
consumers to not only sell, but also buy used electronic devices.
In the following, the main competitors will be analyzed one by one. First, the business model will be
explained, as well as its strength and weaknesses. Subsequently, the main differentiators as well as
competitive advantages of Gazelle will be assessed.
As Gazelle operates in the United States exclusively, the analysis of the main competitors is limited
to this geographical market as well.
Competitor analysis – Glyde.com
On the first look glyde.com seems very similar to Gazelle.com: consumers have the option to sell
and buy used electronic devices on the glyde.com website. Nevertheless, glyde is, in contrast to
Gazelle, a market creator. According to Laudon and Traver (Kenneth, C. L., & GUERCIO, C., 2017,
p. 343) a market creator is defined as a business that uses Internet technology to create markets
that brings buyers and sellers together. Glyde itself is therefore not directly involved in the
transaction, as it simply provides a platform and some support services to make buying and selling
for consumers more convenient such as providing packaging for easy shipping. In the process the
seller pays a percentage fee once their listed product is sold. Glyde’s unique selling point is
described as the “kind of marketplace that combines the great deals of a person-to-person online
market with the ease of a retail store” (glyde.com). From that perspective glyde has lower costs
than Gazelle as it does not provide any repair service or need an inventory. On the other hand,
glyde has very little control over the product sold on its consumer-to-consumer platform. As Gazelle
is directly involved in the transaction process consumers might perceive it more trustworthy to sell
or buy a device via Gazelle. Moreover, Gazelle provides an end-to-end value creation by recycling
and repairing broken devices.
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Competitor analysis – uSell.com
Comparable to glyde, uSell provides a platform for consumers to sell their used electronic devices
while not being directly involved in the transaction either. Besides being a market creator uSell does
-in comparison to glyde and Gazelle – not offer a C2C marketplace, but a C2B marketplace where
consumers can choose to sell their devices to third-party professional buyers. Consequently, there
is no option for other consumers to buy electronic devices (see usell.com). Even though uSell still
cannot control the products being sold on their platform, users might possibly assume that it is
more reliable to sell to professional buyers than to other individual consumers. Another strength is
once again, that uSell does not have additional costs with an inventory and repair activities. When it
comes to its weaknesses the lack of an end-to-end value creation should be highlighted. As already
mentioned Gazelle provides the latter for their users. Moreover, Gazelle offers buying and selling
options for consumers combined.
Competitor analysis – CExchange.com
Another competitor, CExchange, differs significantly from the other ones that have been introduced
so far. First of all, CExchange is a pure B2B company. Acting as a white label, an unbranded
company, CExchange buys electronic devices from branded retailers or platforms such as eBay’s
Instant Sale program. In the next step the company checks and refurbishes the products and sells it
to other businesses. One remarkable advantage of CExchange’s business model is that it saves
marketing costs by operating as a white label (see cexchange.com). Additionally, CExchange has
access to broad customer bases through partnerships with powerful companies. Still, -as
CExchange does not have an own visible brand or platform for consumers- it is dependent on its
partnerships with big retailers. Gazelle does have an own brand which makes it less reliant on
partnerships.
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Conclusion
Finally, the re-commerce industry of electronic devices has attracted other big companies.
Nowadays, it is possible for consumers to resell devices to Apple, Amazon, BestBuy and Walmart as
well. Nevertheless, Gazelle.com is still today stated as one of the best reselling channels according
to some online reviews (e.g. tomsguide.com or earthsfriends.com).
3. Discussion of Gazelle’s future focus areas with regard to their buy side
Considering Gazelle’s vision to “change the way people sell and recycle their used electronics”
(Israel Ganot), Gazelle offers customers two main selling channels. Customers can not only sell their
electronics directly through Gazelle’s website, but also indirectly via retail partners. The coexistence
of direct and indirect channels stresses the question of whether Gazelle should primarily
focus on retail partnerships or on consumer-facing initiatives.
Considering growth opportunities, it becomes clear that partnerships with retailers provide Gazelle
with an instant access to a huge customers base. Through partnerships Gazelle is able to gain a
twofold competitive advantage. While partnerships not only pave the way for a fast and
comprehensive market penetration when entering new markets, they also help Gazelle to prevent
other competitors from entering markets in which they are already predominant.
Additionally, Gazelle can offer customers a very convenient and user-friendly way to sell their used
electronics through partners while still being in charge of all customer processing data.
However, it cannot be neglected that Gazelle’s retail partnerships come with a price tag. Besides
the fact that retailers in general promote a convenient opportunity for customers to sell, Gazelle
lacks control over the quality of the customer experience, an asset Gazelle considers as one of its
main strength. Furthermore, the re-commerce platform is prohibited to run direct marketing
campaigns targeting customers who came to them through partners. Both, the lack of control over
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customer experience with partners and limitations concerning marketing activities hold Gazelle
back from increasing their own brand value. For partners this does also have the positive side effect
that it prevents Gazelle from strengthening its bargaining power towards them. Through Gazelle’s
platform partners can offer a high-quality service while having more or less no operational
involvement or financial risk in the process. However, partners are not willing to pay Gazelle a
reasonable compensation as they are aware of their dominant position which mainly derives from
their huge customer base.
Besides indirect channels through partners, customers can also sell their electronics directly
through Gazelle’s own website. By focusing increasingly on consumer-facing initiatives, such as
investing in marketing campaigns, the platform could foster its direct customer traffic and become
more independent from its retail partners.
On major advantage of directly buying electronics from customers is that Gazelle has full control
over the customer experience and service which helps them to strengthen their brand image.
Moreover, the re-commerce platform would be more flexible and open to potential changes of the
business model due to the declining dependence on partners’ customer base.
However, focusing on direct buying from customers will force Gazelle to address the challenge of
building up its own customer base. Additionally, Gazelle needs to be aware of potential threats of a
new market entry. In case Gazelle ends partnerships, other competitors might quickly fill their spots
and possibly take over Gazelle’s former customer base.
All in all, both direct and indirect channels for customers to sell electronics have their pros and
cons. While partnerships provide instant access to a huge customer base, they also mean a huge
dependency on those retailers for Gazelle making it more difficult for them to control their
customers’ experience and build up a strong brand image.
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Therefore, we argue that Gazelle should keep its retail partnerships but increasingly focus on
consumer-facing initiatives, to excel customer experience and increase brand value as a competitive
advantage. Thereby, the re-commerce platform is able to secure its customer base and at the same
time improve its bargaining power towards partners.
4. Discussion of Gazelle’s future focus areas with regard to their sell side
On the sell side, the market is characterised by fierce competition and transparency. The question
rises whether Gazelle’s approach to sell second-hand devices is adequate to ensure and to
strengthen their market position. For this purpose, the advantages of the wholesale approach and
the direct-to-consumer (DTC) approach will be weighed against the respective disadvantages and a
conclusion will be drawn.
In 2012 Gazelle sold 60 % of its inventory to wholesalers around the globe (Andrei Hagiu, James
Weber, 2013). This approach has a positive impact on the running expenses, on the revenue and on
the scalability opportunities. First, marketing expenses which are required to engage new
customers are dramatically reduced, while transportation costs are also cut since the wholesalers
assume the burden to reach out to the end-consumers. Moreover, bulk selling has a positive effect
on the liquidity of the firm since capital is less tied up and the internal inventory movements remain
manageable. On the revenue side, the wholesale approach entails the chance to close long-term
collaborations with specific clients. This is desirable since it would ensure a steady cash flow.
Furthermore, it would be easier for Gazelle to expand the consumer market potential in terms of
geographical locations via partnerships as the barriers to entry would be low. Nonetheless, focusing
entirely on partnerships has some major disadvantages. Above all, Gazelle would lose the absolute
autonomy in its value chain as the dependency on wholesalers increases. On this account, the
dependency on third parties might negatively impact Gazelle’s profit margin if the wholesalers push
for a lower buy-price and/or their demand for further supply decreases. Even though, collaboration
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with third parties entails scalability opportunities Gazelle will not have the customer touchpoint
and, thus will not be able to create any brand awareness among the end-consumers.
On the other hand, the DTC approach would allow Gazelle to bypass the middleman and connect
directly to the end-consumer. Therefore, Gazelle would gain control over pricing against the
wholesalers and eliminate the bargain power of these in the value chain. Furthermore, a DTC
approach would allow access to the data of the end-consumers and, as a result Gazelle could
enhance both the customer experience and the value proposition. For instance, Gazelle could
leverage the customer behaviour data and offer targeted bundle products to its customers as well
as integrate chat bots to enhance the customer journey. However, the DTC approach requires a
significant capital investment: Gazelle would need to build a strong online presence to generate
leads as well as to readjust its inventory management and assortment planning.
Based upon the previous assessment of the wholesale approach and the DTC approach, it can be
concluded that Gazelle should embrace a “barbell-strategy”: in markets in which Gazelles does not
have a strong position compared to its peers or a presence at all, a wholesale approach should be
adopted while in markets in which Gazelle has a dominant role a DTC approach should be
considered. A wholesale approach is desirable especially for new market entries since Gazelle does
not have to build up a customer base on its own nor focus on new assortment planning capabilities.
However, relying too much on third parties has negative implications for Gazelle’s business.
Therefore, the long-term strategy should be a fully-fledged proposition, in which Gazelle enjoys
from complete autonomy in its value chain. Above all, an end-to-end proposition has the inherent
potential to give Gazelle an edge compared to its competitors as they could improve the current
value proposition with added services.
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Literature
Kenneth, C. L., & GUERCIO, C. (2017). E-commerce: business. technology. society.
Andrei Hagiu, James Weber (2013). Gazelle in 2012, Harvard Business School
Online Sources
? https://glyde.com/about
? www.usell.com
? http://cexchange.com/landing/PressThree.aspx
? http://cexchange.com/landing/Contact.aspx
? https://www.tomsguide.com/us/ipad2-reseller-glyde-risky,review-1736-3.html
? https://www.earthsfriends.com/nextworth-vs-gazelle-vs-usell/
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Figure 2.1 Overview of competitors
Appendices
Question 2 – Gazelle’s key sources of competitive advantage relative to its main competitors
The main competitors can be put in
order along two competitive
dimensions as displayed in figure 2.1.

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