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August 2013

Want to buy liquidation electronics? Get environmentally compliant first.

One of the most attractive corners of the liquidation market for buyers can be consumer electronics. Although it can be extremely competitive, the higher average price point versus other product verticals, like apparel, mean there is the potential to make more absolute profit per transaction.  For example, if you can squeeze out 5% profit on a $500 item (or $25), it is considerably more than making a 50% profit on a $10 item ($5).  If the time required to sell, pick, pack and ship doesn't change, you'd be better off making $25 for that effort vs. $5.

Other factors that make consumer electronics a compelling secondary market category include the depth of demand for these products worldwide and the limited sku breadth.  Clearly, the demand for certain products is off the charts.  For example, if you can get your hands on resellable tablets, you will have no problem selling them very quickly.  And, while there are different brands, models and configurations, it isn't like apparel where you might have 6 colors and 10 sizes and 4 widths for each model shoe. This promotes capital efficiency in terms of the required inventory you have to hold. 

So, what is the downside in the consumer electronics liquidation market? Primarily it revolves around environmental compliance. There is considerable concern among reputable retailers about where their returned e-waste winds up. No longer is this considered OK:

Roadside-e-waste-dump-in-lagos-nigeria-basel-action-network-sml

It is becoming more and more important to be able to demonstrate that you will responsibly dispose of any e-waste you acquire when buying liquidation inventory.  It is inevitable that you will wind up with some units that are either irreparable or cannot be economically refurbished.  You can't simply throw this e-waste in the dumpster out back.

In order to get approved to purchase these products from some retailers, it is becoming more important that you be able to demonstrate that you have a relationship with a certified e-waste recyler.  There are two primary certifications for these companies:  R2 and e-Steward.  Both are considered top notch certifications and suit the needs of most retailers and manufacturers.

By entering into an agreement with any one of the hundreds of companies certified by these two groups, you will put yourself in the upper echelon of liquidation buyers in terms of compliance and this will make you a more attractive buyer to those large companies worried about their inventory winding up in that roadside dump in Nigeria.