Many manufacturers and retailers have viewed refurbished products as a lesser priority. However, recent research shows that refurbished goods represent a golden opportunity for businesses. By selling refurbished goods, your business can generate revenue, improve brand perceptions, and tap into a new, growing market.
What Are Refurbished Goods and Why Do They Matter to Businesses?
Refurbished products may be unused or lightly used customer returns that are still considered to be in “new” condition. In other cases, refurbished goods may be those that have had certain internal hardware components replaced with similar parts or upgraded to newer technology. Additionally, defective products that were returned under warranty and resold by the manufacturer after repairing any defects and restoring the items to their optimal functions can also be considered refurbished.
Consumers are increasingly seeing refurbished goods as a desirable purchasing decision.
The market for refurbished electronic goods is estimated to be about $10 billion.1 This is largely because many consumers are starting to realize that buying refurbished products is a cost-effective alternative to buying the products brand new.
Recently, Liquidity Services conducted a survey to measure consumer preferences for purchasing refurbished products through online marketplaces. Our study found evidence that consumers are buying refurbished products at a high rate – 75 percent of survey respondents said they were likely to buy refurbished electronics and 94 percent stated that they have bought refurbished products in the three years prior to the survey.
Consumers turn to refurbished products to access highly regarded brands at more affordable prices. This is a great opportunity for retailers and manufacturers to expand brand loyalty and drive additional revenue in secondary markets.
What You Should Know About Selling Refurbished Products
Product manufacturers and retailers can grow their brands and generate profits with a sound strategy for selling refurbished goods. Aligning with best practices will ensure the greatest potential for leveraging the growing market. Here are some key strategies you can use when designing a secondary-market strategy for refurbished products.
- Be online. The majority of consumers who buy refurbished products do so online. Of consumers surveyed, 82 percent are more likely to purchase online than in-store. But it’s not enough to just have a website. You need to sell through multiple sales channels to reach a wide array of customers, while also offering a diverse product line if you want to maximize sales potential.
- Emphasize the deal factor. According to our survey, 96 percent of consumers say buying refurbished helps them save money. Additionally, a large majority of consumers said they liked buying refurbished goods because it gives them an opportunity to try new products without a major financial commitment. One simple way to emphasize the deal factor is by showing the original price of a brand new product side-by-side with the price of the refurbished good.
- Build trust through warranties and accurate product descriptions. Most consumers agree that accurate information on product condition is a top consideration, second only to price. Accurately communicating what features a product has, the condition of the item, warranty information, and whether or not it comes with accessories goes a long way to building customer trust.
Case Study: Comprehensive Refurbishment Strategy Enhances Brand Perception for Global Computer Manufacturer
A global computer manufacturer had been selling its refurbished products to a limited group of wholesalers and retailers through a single distributor, which resulted in decreased recovery value and negatively impacted its “A” product positioning.
Through working with Liquidity Services, the manufacturer’s recovery on surplus products increased by over 20 percent in the first six months of the program while it was also able to balance the amount of on-hand inventory in its reverse supply chain. Further, by delivering an optimal customer experience around refurbished products, the OEM’s brand is now viewed very positively within all major consumer marketplaces, creating new customer growth at higher margins.
It’s clear that refurbished goods are on the rise, and this presents manufacturers with another opportunity to impress their customers and generate sales. For more information on how to unlock the potential of your refurbished goods, contact our team of experts.
1Jim Rallo, “The Rise of Refurbished Products”, /documents/10474/13221/WP_RTCB0101_1502.pdf/4504f7d5-0759-4fdb-a7b3-9e7993f50f98