Benefiting From Refurbished Products, Industry Today

November 7, 2018

By Alex Blaker

At Apple Inc.’s launch of its latest iPhone and watch, its largest event in 2018, company executives stepped onstage and touted Apple’s pledge to work toward using all recycled materials in the manufacturing of its products.

The executives’ speech was more than a public relations stunt for Apple, a trillion-dollar technology company which has sold over a billion mobile phones in the past decade. Apple, Microsoft, and other manufacturers of consumer electronics are acutely aware of the importance of taking an environmentally-friendly stance on their products.

That’s because of the escalating number of old mobile phones, laptops, printers, and other electronic devices piling up in landfills. These tech giants realize they can’t turn a blind eye to this growing problem or they may face regulatory enforcement action, consumer backlash, and other consequences.

How bad is it? According to U.S. Environmental Protection Agency data, more than 3.4 million tons of e-waste is generated each year, while the recycling rate is only 40 percent for small consumer electronics.

Besides the reduced impact on the environment, manufacturers can also gain better control of their brand, boost their bottom-line, and find new customers by selling refurbished or used products on-line and in physical stores, or to third-party vendors.

Increasing demand for refurbished products is being driven by consumers seeking cheaper options to ever-increasing prices for electronic devices. Refurbished smartphones grew by 13 percent in 2017, compared with flat growth of new phones during that same period, an industry report said.

Consumer electronics OEMs would be remiss if they pass on this growth opportunity to fatten their bottom-line. A case in point: a 2017 Persistence Market Research report said the global used phone market will be valued at an estimated $390 billion by 2025, a CAGR of 9 percent.

Manufacturers with established brands can benefit the most from selling refurbished devices. Consumers are more likely to buy a pre-owned phone or other devices from well-known companies rather than those which have little or no brand recognition. One industry survey found that 57 percent of the respondents said the brand-name of a refurbished product is a key consideration in their purchase decision.

Selling refurbished devices directly to consumers or trusted third parties also provides manufacturers greater brand protection because it gives them increased control over how and where their products are sold. Manufacturers can seriously harm their brand integrity by selling pre-owned products to unscrupulous companies who resell them to unsuspecting consumers as new goods.

When it comes to selling refurbished devices, forward-thinking manufacturers have made this practice an integral part of their business. Rather than absorbing significant losses by selling returned devices for recycling, these companies will offer their refurbished products at cheaper prices, often with a one-year warranty, on their website or to a third-party.

This allows them to sell devices to consumers who want their products but can’t afford to pay the hefty price tag of new ones. It’s a win-win situation for both the companies’ brand and their customers. Companies get the highest recovery value for their products and provide their customers with the best possible experience.

Some may think that selling secondhand smartphones and laptops will cannibalize new-product sales. But, in reality, the consumer-buying public is segmented into two camps: those who will always buy nothing but brand-new products and those who don’t mind going the refurbished route if it saves them a few dollars.

As consumer demand soars for technology used for work and play, it’s a sure bet that the amount of returned devices will continue to grow in lockstep. Selling older or slightly used devices can help manufacturers minimize the growing threat of e-waste, bolster their bottom-line and customer base, and retain and perhaps improve their brand reputation.

Benefiting From Refurbished Products, Industry TodayAlex Blaker is president of Tech Supplier Inc., a Hackensack-NJ-based company that remarkets refurbished. B stock and overstock inventory.

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