TigerDirect and CompUSA Q&A: PC Buy-Back Program

(MoneyWatch)  Starting tomorrow, TigerDirect and CompUSA (both owned by Systemax Inc.) expect to start offering a guaranteed price trade-in program for PC and television buyers. A customer can purchase a buy-back plan from financial services company TechForward, Inc. The buyer will be able to send the original unit in for a guaranteed percentage of the original price. The idea sounded like something different on the computer retailing front, so we spoke with Bruce Matthews, vice president of business development for both companies.

BNET: How does the program work? Bruce Matthews: They come to us and buy a computer, then they buy the TechForward package and register it with them. [When they're done with the computer], they call TechForward, get a shipping box, and send off the computer. TechForward will send the customer a TigerDirect or CompUSA gift card to drive business back to us, or they can get a check. The amounts are set amounts ?€" 50 percent at six months, and then they go down from there. You don't have to wonder what my computer is worth in two years. You know exactly what it's worth, which is 20 percent. We buy [the TechForward participation] at let's say wholesale and sell it for retail price. We'll be making a little bit of money on the front end and hopefully driving people back to us on the back end.

BNET: Sounds like the idea is to increase repeat sales. Have people been less likely to do that? BM: It's almost like leasing a car. We have had in the past options to help people trade it in or donate it. With TechForward, we try to move it more forward to talking about it and discussing options at the point of sale rather than two years down the road. Someone wants a new laptop, "But, should I spend a thousand dollars, and what if Intel comes out with the latest and greatest next year and I need that?" We say for a little bit more [than the purchase price] you'll be covered. If customers are on the fence and worried a little about whether they should buy today or wait until next year, this may push them a bit. Who knows what that number might be, maybe a few percentage points of those who buy today?

BNET: Have you tested the program yet? BM: I believe TechForward has other partners, but we haven't done the test at Tiger or CompUSA just yet. We'll do a soft launch to make sure everything is doing fine, but then we might bundle it with notebooks or TVs or PCs. There are a lot of different options we can do once we get this up and running.

BNET: What sort of result do you need to make this worthwhile? BM: On the front end we think we will be able to persuade some of those people on the fence, and on the end of the day, we're looking for somewhere between 5 and 10 percent [of our PC buyers to purchase one]. Hopefully it's a cycle that never ends.

BNET: How does TechForward afford to do this? BM: I think at the end of the day, what they're looking to do is sell it on eBay or the secondary markets. Obviously I think they're hoping to sell it for at or about what they're giving the end user customer notebook.

BNET: Even a few percent would be significant. BM: Absolutely. Whether it's the retail salespeople or the telephone sales people, it's one more tool to help close the sale.

U-turn sign via Flickr user noraxx, CC 2.0.