A Deep Run High graduate who is now a college freshman is creating his own crash course in business management.
Richmonder Will Engels, 19, in November launched PeakFlip, an online service that offers to exchange cash for unwanted smartphones.
Through the company’s website, PeakFlip users can enter information about their smartphones and get a quote for the unwanted gadgets. If they like the price, Engels will send them a prepaid shipping box. After Engels receives the smartphone as it was described, he either cuts the seller a company check for the agreed amount or sends the money via PayPal.
Engels then ships the devices to a buyer in China, who distributes them to retailers in Beijing. Engels estimated that in the United States a used iPhone 4 with 16 gigabytes of memory would typically sell for about $140, while overseas the same device sells for about $220.
It all began at his parents’ West End home and now operates out of Engel’s dorm room at Roanoke College.
“It started as a hobby,” Engels said of his new company. “In high school, I’d buy and sell electronics in Richmond on Craigslist.”
That hobby eventually led to $5,000 in savings, which Engels used while a senior in high school to finance the development of PeakFlip’s website.
In launching the company, Engels had to learn his way into the growing reverse commerce industry. Reverse commerce, or recommerce, capitalizes on the surplus of unwanted gadgets created each time tech companies roll out the newest versions of their devices.
“Everybody is trying to get the latest and greatest device,” Engels said. “People don’t know what to do with their old devices.”
He reached out to big-time recommerce companies to see how to break into the industry and posted on the Craigslists of Ukraine and China in search of a secondhand-phone buyer.
Over the summer, someone from a bigger recommerce company referred Engels to a buyer in China with whom Engels eventually signed a one-year agreement to do business.
Engels said that he has purchased more than 250 iPhones from across the United States and that PeakFlip did $59,000 in sales in its first two months. Engels goes after lower profit margins and higher volume. The strategy, and the fact he has no labor expenses, lets Engels offer quotes for secondhand smartphones that are competitive with larger companies.
The plan seems to be working: after little more than two months of doing business, Engels said he’s just about broken even. This summer he plans to launch buy-back services for different phone models and iPads. He also wants to hire at least one employee to help with operations and open an office either in Short Pump, where his parents live, or downtown.
The recommerce industry doesn’t lack for competitors, though, or even those trying to make it harder to resell phones. In November, it suddenly became much more difficult to “unlock” AT&T phones so the devices could be used with different carriers. The new hurdle makes the phones harder to resell to would-be secondhand-smartphone buyers.
Engels admits that people might be able to command higher prices through Craigslist but said recommerce remains appealing.