Confessions of an ecommerce wunderkind: Swapidy to relaunch with digital currency
Adam Ahmad was fed up with eBay. And though many rant and complain about different Web services, his incident cost the then-14-year-old thousands of dollars.
Ahmad had a business peddling suped up iPhones that included software that allowed users to play open-source games before jailbreaking was available. So he bought a hundred or so iPhones a week from distributors on eBay. He made a transaction with one dealer, whom he had purchased phones from a few times before, for 20 iPhones. But instead of Apple smartphones, what showed up at his door was a shipment of encyclopedias.
There’s a bit of insult to injury to the decidedly un-technological package Ahmad received as an alternative to his iPhones. After unhelpful dispatches with PayPal and numerous calls and messages to the dealer at a changed phone number and deactivated email account, Ahmad thought there had to be another way.
The young entrepreneur – now at the tender age of 18 – founded Swapidy, an alternative to eBay and Craigslist. Originally started three months ago, next week the service is re-launching in the Bay Area with a slightly different angle.
For now, the ecommerce marketplace is a straightforward device-swapping service. I want an iPhone 5, so I’ll give you my iPhone 4 and pay the difference.
But after the re-launch, the company will be introducing its own digital currency called a “honey.” Ten honeys equals one dollar. With the currency, a customer can peruse the Swapidy marketplace for new phones and devices, swap in their older models, and meet the price of the newer device by adding on more honeys. If a user doesn’t have an older device to swap in, he can buy a number of honeys and use them on the marketplace.
The draw, says Ahmad, is that Swapidy always offers more than face value to a seller, and charges less than face value to a buyer. For example, the company makes its pricing decisions based on eBay’s API and other algorithms it’s still developing. If after the conversion rate you get the equivalent of 400 honeys on eBay, Swapidy will offer you 450. Ahmad, who claims he's sold over 50,000 products online since he was 11-years-old, says part of the reason the company can do this is because of his experience with distribution channels from his old iPhone business and other businesses before that. The company also says there are no transaction fees.
For now, only new devices are available on Swapidy. Once the company builds up an inventory of used products from customers’ trade-ins, those will be available to swap as well.
Swapidy, which is for now self-funded from Ahmad’s previous businesses, also claims to minimize the risk of scams because the company serves as a third party to verify the products – clearly the result of Ahmad’s incident with the Encyclopedia Not-iPhone-ica. A seller sends the device to Swapidy, the company inspects it against the user’s description of it, and if it clears, it ships to the buyer.
There are tons of ecommerce services out there competing with bloated eBay. Gazelle offers cash for devices, but the time between transaction and delivery is a bit slow, which is especially frustrating when it means you could be without something as necessary as a phone for a few days. Glyde is another nice and well-operating alternative primarily for techie toys. But that service doesn’t offer the security of a product inspection.
The digital currency bit is fun, but it may be too confusing for mass appeal. An iPhone 4S might cost 4,000 honeys, says Ahmad. The inflated numbers seem like a bit of a distraction. Sure, the conversions are in multiples of 10, but it’s an extra thing to think about when the name of the game is simplicity in transaction. But with cheaper prices, a customer might think it’s worth getting used to.