A substitute product or service is a product/service, which appears different from another product/services, but has the ability to satisfy the same need(s) as the other product/service. In the market where Gazelle operates, one of the substitute products for its hi-tech devices is Nook Color, a product of Barnes and Noble. Nook Color is an electronic device, an e-Reader tablet, which runs on Android. Nook Color enables users to run as many applications as possible, similar to those offered by iPad. Nook Color has many features, which are present in an iPad. These include long battery life, big memory capacity (built-in memory capacity of 8 GB and expandable memory capacity), wireless capabilities, and IPS screen technology, among others. Therefore, Nook Color is likely to serve as a substitute for iPad or any other electronic device that has the same capabilities as an iPad traded by Gazelle (Erickson, 2011).
Gazelle trades in upper-end market products (products made by blue-chip companies). They include electronic devices from Apple Inc, Motorola, and Samsung. Most products from these companies are expensive. However, there are other companies, which manufacture electronic devices, which serve similar needs as products from the aforementioned companies, but are relatively cheaper. These companies include Sony, Nokia, LG, and Toshiba, among others. Electronic products such as televisions, cell phones, mini computers, and tablets are the likely substitute of products that Gazelle is currently trading in. Some consumers prefer purchasing new electronic device rather than second-hand (used ones). Therefore, they may go for products from the aforementioned companies, which are cheaper, as opposed to purchasing expensive, yet used products that are traded by Gazelle.
For services, auctioneer services are the likely substitute services for the re-sale services offered by Gazelle. Auction involves sale of used items, including electronics to willing buyers in an open market. Individuals may choose to sell their used electronic devices in an auction where they get an immediate buyer and almost immediate payment, as opposed to shipping their products, waiting for Gazelle to check the product, value it, and then process the payment.