Liquidation vs Refurbishment – What’s best for your returns?
The total value of retail returns in 2017 was around $400 billion USD, a near 53% increase from just 2 years before it. The rise of online liquidation marketplaces has provided an easy hands-off method for manufacturers and distributors to deal with these returns. You simply have your returns listed on the liquidator’s platform, as-is, and bidders from all over the world will buy them by the skid load. No management, operational or sales involvement is required from your end and you get quick incoming cash flow to offset your loss from the returns.
Seems like a great deal, right? Not even close. There’s a reason premier brands, like Apple and Dyson, refuse to liquidate and instead opt to refurbish their returns and tightly control the resale of the resulting B-Stock inventory. Here are some of those reasons:
1) Brand Image
When you sell your returns through liquidators, you have no control over where they will ultimately end up. Your products will often end up into the hands of buyers with no quality control who will flood the market with untested, dirty and poorly packaged items with your brand name on them. The fact that they are aftermarket and didn’t come from you or your retailers will mean little to customers of these products. Once they receive these items and have a bad experience with your product, that will affect your brand perception going forward.
Apple refurbishes all of their returns in house, with custom packaging and strict like-new criteria to ensure that a Certified Refurbished customer is just as satisfied as new one. Microland provides the same high standard of functional and cosmetic refurbishing to our customers to ensure that their Certified Refurbished customers have their expectations exceeded.
2) Market Opportunity
The global market for refurbished smartphones increased at an incredible rate of 13% in 2017, much faster than the general smartphone growth of 3%. In terms of total sales volume, this gives refurbished smartphones 10% of the total smartphone sales volume. This trend is not limited to smartphones either, as along the electronics industry consumer demand for quality refurbished items continues to explode with high standards being set by industry leaders.
By using a trusted partner to convert your returns into Certified Refurbished product, you can tap this large and growing market and capture all of this margin yourself. The consumer looking for Certified Refurbished, who is almost entirely price focused, is not same one looking for Brand New so the risk of overlap is minimal. By ignoring the Certified Refurbished market, you risk letting your competitors take a leading position in fast growing market.
3) Increased Revenue from Returns
Simply put, the yield on ‘as-is’ liquidation is paltry. After all fees and shipping is taken into account, the yield from liquidation is meaningless to most bottom lines. In this sense liquidation serves as a way to simply get the returns off your books. By using a low cost refurbisher like Microland, with minimal per unit cost, you can increase the value of returns significantly and reap meaningful cash flow for your business. By offering your Certified Refurbished product to select dealers and distributors only, you can control pricing and availability to prevent any cannibalization of your Brand New product and to keep your brand image strong.
Microland is the low cost Reverse Logistics and refurbishment provider of choice for many of world’s top electronics brands in Canada. Our highly trained technicians and quality team will restore your returns to ‘like-new’ condition, often indistinguishable from new. Our sales team can help you get your Certified Refurbished product into the market so your sales force can continue to focus on your A stock.
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