Interview with PayMore a fast-scaling electronics resale franchise (100+ locations open, 600+ in development) that’s quietly transforming secondhand retail with proprietary POS software, real-time pricing, and a secure, data-wiped resale process.

This conversation on the Retail Tech podcast features Stephen Preuss, CEO and co-founder and Erik Helgesen, President and co-founder of PayMore, an electronics resale company. They discussed Paymore's history, business model, technological foundation, rapid growth, and future vision.

Here's an overview and key takeaways from the conversation:

 

1. Origins and Evolution (The "Secret Sauce")

•Long Partnership: Stephen and Erik have been partners for 21 years, starting in 2004 with a general secondhand store in Long Island, New York. This initial venture, though marked by mistakes, provided crucial experience in the secondhand industry.

•Shift to Electronics: Around 2009-2010, they narrowed their focus to electronics due to high volume, evolving consumer needs (smartphones becoming a necessity), and customer interest in optionality for buying, selling, and trading devices. They observed that electronics were people's most expensive commodity outside of housing and vehicles.

•Elevating the Secondhand Experience: A core thesis for Paymore is to remove the stigma associated with secondhand stores (often perceived as pawn shops) and create an "elevated experience". This means clean, safe, and secure stores where customers can comfortably buy, sell, or trade electronics and get cash quickly.

•Rebranding and Corporate Store: Paymore was officially rebranded in 2011, opening its corporate store in Maspeth, New York, which remains active today.

 

2. Technology as a Core Differentiator ("The Moat")

•Proprietary Technology Stack: Erik, with his coding background, developed PayMore's entire technology stack from scratch because no off-the-shelf solutions met their needs. This customized system, refined over 15 years, is a "full-serving operating system" and the "spine" of their operations.

•Dynamic Pricing and Data: Their technology includes a vast, live database that continually prices and reprices items, enabling quick, fair valuations for customers. This data-driven approach allows them to offer competitive prices, dynamically change in-store prices via iPads, and ensure customers get the best deals.

•Efficiency and Speed: The technology streamlines transactions, allowing customers to complete a buy, sell, or trade in 6 to 8 minutes, significantly faster than the industry average of 45 minutes to an hour.

•Security and Trust: The system ensures data wiping for customers' devices in front of them, addressing privacy concerns. It also enables them to offer warranties on pre-owned items, fostering trust.

•"Our Own Marketplace": PayMore is building the "biggest marketplace out there for electronics," with unique cash values for all types of electronics, continuously strengthened by data from every new store.

•AI and Machine Learning Integration: PayMore has had AI infused into its systems for several years, relying on machine learning internally for scaling and efficiency. They are developing customer-facing bots and emphasize that their proprietary data is key to truly leveraging AI, unlike companies that merely buy data.

 

3. Growth and Franchising Model

•Organic Growth and Patience: PayMore experienced phenomenal organic growth from its first store, demonstrating high repeat customer rates and no outbound marketing expenses initially. This patient, organic growth allowed them to achieve product-market fit before scaling.

•Franchising Expansion: Recognizing a nationwide opportunity with no clear competition, they chose the franchising route in 2020. They have rapidly grown from one store to opening their 100th store, with another 400+ signed for the next four years, including international expansion into Canada and the UK. They aim for 150 stores open this year, opening one every two to three business days.

•Franchisee Selection: They are highly selective, meeting every franchisee in person to ensure they are "good people," have experience scaling, and are willing to follow Paymore's proven systems and processes. Franchisees do not need technical skills, as the technology handles the heavy lifting, allowing for a small in-store employee base.

•"New Age Retail": PayMore combines customary brick-and-mortar locations with complete infusion of data, technology, and e-commerce, which they see as the "new balance of today's retail".

 

4. Impact and Future Vision

•Reducing E-waste: PayMore acts as a recycling drop-off center, taking in any electronic item, even broken ones, and recycling them responsibly. They've already recycled millions of pounds of e-waste and have a roadmap to "take over the e-waste industry".

•Sustainability and Accessibility: Their vision is to be one of the biggest recyclers and a major force in promoting sustainable outcomes by making pre-owned electronics accessible and affordable, saving consumers money, and reducing emissions.

•Customer Loyalty: Their customer-first approach, combined with efficient technology and pleasant store environments, has resulted in a 70+% repeat customer rate, significantly outperforming the secondhand industry's less than 8%. They believe once people experience Paymore, they won't revert to less reliable methods.

•Future Branding: They anticipate that within 12-18 months, Paymore will be synonymous with secondhand electronics, much like Dunkin' Donuts is with coffee.

•Challenges: Steven's main concern is the race to educate the public about PayMore's services and the benefits of elevated secondhand electronics retail. Eric's concern is ensuring they are moving fast enough with technology updates and development to capitalize on opportunities.

 

Key Takeaways:

•Proprietary Technology is the Foundation: PayMore's success is deeply rooted in its 15-year development of a customized, data-driven technology stack that handles dynamic pricing, inventory management, and customer transactions with unparalleled efficiency and accuracy.

•Elevating the Secondhand Experience: They have successfully disrupted the secondhand market by providing a professional, clean, trustworthy, and rapid retail experience for electronics, removing traditional stigmas.

•Customer-Centric Approach: The entire business model, from fair pricing to quick service and data privacy, is designed to empower customers and build loyalty, evidenced by their exceptionally high repeat customer rates.

•Strategic and Patient Growth: PayMore's organic growth, careful selection of franchisees, and measured national and international expansion demonstrate a deliberate strategy that prioritized getting the model right before scaling aggressively.

•Pioneering "New Age Retail" with a Sustainable Mission: They embody a modern retail model that integrates physical stores with advanced data and e-commerce, while also making a significant environmental impact by facilitating responsible recycling and repurposing of electronics.

•Data is Key for AI: They highlight that owning and continuously collecting proprietary data is crucial for effectively leveraging AI and machine learning, setting them apart from other companies merely using publicly available APIs.