How Does Decluttr Make Money? Business Model of Decluttr


How Does Decluttr Make Money

Decluttr is a popular online eCommerce platform that sells used goods, and you might be wondering how it manages to make money.

Decluttr primarily makes money by reselling consumer technology. The company also makes money from the sales of media and books.

Founded in 2014 as the US offshoot of UK-based musicMagpie, Decluttr was created to offer consumers an easy way to make money from unwanted goods. MusicMagpie was founded by Steve Oliver and Walter Gleeson in 2007. In its early stages, the company was based out of Oliver’s garage and only sold CDs.

MusicMagpie sells to both retail customers and businesses who buy its inventory in bulk. In 2017, the company was estimated to have an annual turnover of £100 million. It was also the first company to hit five million ratings on eBay.[1]

What is Decluttr & How Does It Work?

Decluttr is a service that allows users from the US and UK to buy or sell used tech and media. For buyers, the platform offers a 12-month limited warranty on all tech products with free tracked shipping. They also have a 14-day ‘no questions asked’ return policy.

This allows customers to request full money back and return if they aren’t satisfied with the functionality or condition of their purchase. Sellers on Decluttr get a free instant valuation on all of their media and tech items if they install the app and scan the bar code. They can also send items for free by printing out the shipping label that Decluttr sends to their email.

Decluttr broadly deals with two categories of items: tech, and media. Tech includes things like phones, wearables, tablets, MacBooks, and game consoles. Media is comprised of books, CDs, DVDs, and Blu-Rays.

Collectors of movies, TV shows, and films can find bundle offers on Decluttr for used media. With these offers, they can buy packs of discs for a discounted price. Decluttr also offers a 10% student discount through its partnership with Student Beans.

The platform even has a buy now, pay later option for easy checkouts. This is done in partnership with Klarna and allows users to easily buy a phone or tablet even when they’re short on cash. Because of its flexible buying options, free shipping, and return policy, Decluttr is an excellent choice for anyone looking to buy used tech and media.

To provide users with a high degree of quality assurance, Decluttr has its own ‘certified refurbished’ badge. It uses this on items that have successfully passed through their refurbishing process. First, Decluttr checks global lost and stolen databases to ensure that it isn’t selling a legal liability to unknowing users.

Then, it uses specialized software to wipe the phone of all personal data. This is especially important because oftentimes sellers will send over old phones without wiping the data first. After the phone data is wiped, Decluttr does a battery health checkup to determine if it needs replacing.

The company also checks all sensors and equipment on phones to make sure they are working as intended. This includes checks on the gyro, camera, display, microphone, GPS, Wi-Fi, and other important items. In total, there are 90 checks for each phone and only after passing all these will it get Declutrr’s ‘Certified Refurbished’ badge.

A similar process is applied to other tech items like tablets, speakers, and laptops. Decluttr will often scavenge parts from certain units that are either too expensive to restore or damaged beyond repair. This allows them to extract maximum value from each piece of tech and deliver functional products to buyers while also minimizing their environmental footprint.

For sellers, Decluttr streamlines the process of getting a quote and shipping items to its service centers. Anyone can log into the app on their phone and scan a QR code for discs to get an instant quote. If the item is a piece of tech, the seller can simply enter its make, model, and condition to get a quote.

While Decluttr may not always offer the best rates on used media and tech, it is extremely convenient. Finding buyers for large collections of music and movies can be quite difficult these days. Other platforms often charge a shipping fee.

Decluttr makes the entire process simple. Users don’t have to upload photos or answer a series of questions. The platform acts as an intermediary between buyers and sellers.

This way, people who sell their items to Decluttr never have to worry about the buyer. They don’t have to convince another person to buy their phone or game disc. All they have to do is give some basic information to Decluttr, who then provides an instant quote and offers a free shipping label.

Sellers will get paid within a day of their item arriving at the processing center. Decluttr claims to provide 33% more money for phones compared to carrier buyback programs. Payment is sent through one of three methods: PayPal, direct bank deposit, and cheque.

In addition to individual sellers, Decluttr also provides its services to corporations who wish to sell off their tech in bulk. Once the corporation has agreed on a price, Decluttr will organize the collection of the items for free. Corporations can also ask Decluttr to donate the proceeds from a sale to a charity on their behalf.

 

Business Model of Decluttr

Decluttr presents itself as a ‘re-commerce’ platform that handles the acquisition and reselling of used goods. The company focuses primarily on media and tech items. Which includes include phones, tablets, speakers, game consoles, books, TV shows, movies, and music.

The company combines recycling and refurbishing with eCommerce. It specializes in both business-to-business (B2B) and business-to-customer (B2C) operations. First, Decluttr acquires an item from a seller who is willing to sell it off for a relatively cheap price.

Then, this item is processed at Decluttr’s service center to get rid of defects and imperfections. After it has been processed, Decluttr’s eCommerce site hosts a listing for the item. Users are provided with a rating system that gives them an idea of the item’s condition.

The more sellers that Decluttr can attract, the more buyers it can sell to. By managing logistics and item sorting through a proprietary AI-powered software suite, Decluttr reduces its operating costs and optimizes quality control. Decluttr’s parent company musicMagpie uses an algorithm called ‘ALIVE’ to judge the quality of each item being offered by sellers.

This algorithm allows Decluttr to provide instantaneous quotes, taking into account things like shipping and refurbishing expenses. On top of this, Decluttr also has a proprietary sales algorithm that generates dynamic pricing in accordance with changing market conditions. Decluttr’s sales algorithm provides buyers with the best offers based on their transaction history, location, and interests.

By using an advanced software-driven eCommerce platform, Decluttr is able to offer better rates than competing platforms. It generates more leads, since a higher percentage of visitors turn into paying customers thanks to personalized offers. Decluttr also differentiates itself from other platforms that sell refurbished tech by offering a 12-month general warranty on all goods.

The industry standard is 90-days for refurbished items such as phones and tablets. Decluttr’s comprehensive certification process allows the company to lower failure rates in refurbished items. For that reason, they are able to provide better value and satisfaction to buyers who prefer Decluttr’s 12-month warranty over everyone else.

Decluttr’s parent company musicMagpie claims that it resells 95% of the products that it receives.[2] Any item that cannot be sold due to extensive damage is stripped for parts. This is a testament to the quality of the company’s proprietary software suite and optimized refurbishing process.

Over time, Decluttr has been diversifying its operations by expanding into new markets and offering innovative services to existing users. The company now offers cellphone recycling services. It even accepts completely broken phones with smashed frames and water damage.

Decluttr’s biggest rival is Gazelle, a company which offers a similar service. According to web traffic data, Gazelle got 735.1k visits in August of 2022, which makes it the most popular direct rival to Decluttr.[3] However, Gazelle is far more limited as a re-commerce platform since it primarily deals in the purchasing and reselling of phones.

Gazelle has a superior money-back guarantee with a 30-day time limit for returns. However, its 30-point inspection program is inferior to Decluttr’s comprehensive 90-point inspection. And gazelle has nothing to rival Decluttr’s excellent 12-month general warranty.

There is no data on the financials of Decluttr, as it is a private company. It is hard to speculate on Decluttr’s operating costs. The parent company musicMagpie doesn’t provide any data on the revenue streams or valuation of Decluttr.

However, in its 2021 annual report, musicMagpie revealed that it made £29.2 million from its US division.[4] This is referring to Decluttr since that’s the operating name of musicMagpie in the United States. Their US division accounts for 20.1% of total revenue, which was £145.5 million for the fiscal year of 2021.[5]

While an annual revenue of £29.2 million is sizable, Decluttr also has significant operating costs.[6] These include transportation and shipping costs, warehouse costs, refurbishing and reparation costs, employee costs, and technology costs.

Due to the lack of data on Decluttr’s financials, it is unclear how profitable the company’s business model is.

 

How Does Decluttr Make Money?

Decluttr makes money from three different revenue streams. These are by selling consumer technology, media, and books.

Decluttr’s parent company musicMagpie doesn’t release details on how much money Decluttr makes from each revenue stream. However, most of musicMagpie’s revenue for 2021 came from the sales of consumer technology. That accounted for 59% of the group’s total revenue of £145.5 million.[7]

Of the £86.1 million that the group made from sales of consumer technology; the US market brought in $20.5 million. The group also made £50.7 million from disc media sales and £8.7 million from book sales.[8] But it doesn’t publish US-specific data for either of these revenue streams.

Sale of Consumer Technology

This revenue stream accounts for electronic devices like phones, tablets, MacBooks, wearables, and game consoles. The sale of consumer technology is likely to be the largest revenue stream for Decluttr, mirroring the trends of its parent company. Each individual item in this category also costs significantly more than books and disc media.

For that reason, there is a much higher ceiling for profit even with similar margins. Decluttr takes used phones, refurbishes them after inspecting for defects, and resells these phones. The company offers free shipping and a 12-month warranty, in addition to a 14-day money back guarantee.

Accounting for shipping, warranty claims, and other service costs, Decluttr should be able to make a profit on the sale of each item. The margins on Declutrr’s sales of consumer technology aren’t known, but they are likely to be slim.

 

Sale of Media

This category contains disc media. It includes Blu-Rays, DVDs, and CDs for various music artists, TV shows, and games. Media sales are likely to have lower margins compared to consumer technology like phones and tablets. Decluttr also offers significant discounts on bulk purchases of collections.

 

Sale of Books

Decluttr accepts college books, schoolbooks, children’s books, and various other types of books. These aren’t sold directly to customers on the eCommerce site. Instead, Decluttr either recycles them or sells them to bookstores.

 

Decluttr Funding, Valuation & Revenue

Decluttr is owned by musicMagpie (MMAG), a publicly traded British company. MusicMagpie is traded on the London Stock Exchange (LSE). The company’s stock sold for £15.0 in September 2022. That price values the company at £16.1 million.

In 2021, musicMagpie launched its IPO on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange. The company launched its shares at a price of £193 with an estimated market valuation of £208 million.[9]

It also raised £20 million in the 2021 funding round, just days after announcing its IPO.[10] The company has gone through two private equity rounds with an undisclosed amount of funds raised. Notable investors include NVM Private Equity and LDC.[11]

While there isn’t publicly available data on how much Decluttr makes, musicMagpie releases annual reports as a public company. In 2021, musicMagpie generated £145.5 million in total revenue. After accounting for the cost of sales and operating costs, it had a net loss of £14.8 million.[12]

However, the company turned a net profit of £6.9 million on net revenue of £153.3 million in 2020.[13] It seems like the company’s increase in operating expenses was due to a focus on growth in 2021.

YearTotal RevenueNet Income
2019£131.5 million£4.6 million
2020£153.3 million£6.9 million
2021£145.5 million(£14.8 million)

 

Is Decluttr Profitable?

Decluttr is likely not profitable. The company has significant operating costs and is currently focused on growing its business by expanding into new markets and offering new services. Its parent company had been turning profits until recently, but it incurred a net loss of £14.8 million in 2021.[14]

Total revenue for musicMagpie dropped 5% between 2020 and 2021, from £153.3 million down to £145.5 million. However, this was accompanied by an increase in sales of consumer technology from £83.5 million in 2020 to £86.1 million in 2021.[15] Given that consumer technology is their largest revenue source, musicMagpie could be heading towards a more profitable future.

 

Conclusion

There you have it! We hope this article has helped you understand how Decluttr makes money, and also why you might want to use their service. If you’re looking for a way to get extra cash by selling your old tech, Decluttr is definitely worth checking out.

If you want to find out more about Decluttr, you can check out their website: Decluttr.com. They also have a Facebook page here and a LinkedIn account here.

We’d love to hear your thoughts about the company—what do you think about them? Do you use them? Are there any other sites like them that you know of? Let us know.

If you found this article helpful, please share it on social media! If there’s any way we can improve our content or make it more relevant to your needs, please feel free to reach out.

Thanks for reading!

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Sources

  1. Manchester Evening News
  2. MusicMagpie
  3. Similarweb
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  7. MusicMagpie
  8. MusicMagpie
  9. Evening Standard
  10. City A.M.
  11. Crunchbase
  12. MusicMagpie
  13. MusicMagpie
  14. MusicMagpie
  15. MusicMagpie