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What Innovation in Electronics Means for Retailers this Holiday Season

Jim Rallo- December 07, 2015

Consumer electronics are a staple of any shopper's holiday season, and consumers are always looking for the latest and greatest in smartphones, tablets, and appliances. In total, holiday sales make up roughly 20 percent of retailers' yearly revenues, and electronics always comprise a major portion of consumers' shopping carts during the end-of-year frenzy.1 But many of these businesses do not see the opportunity for additional profit after the holiday season is over.

In this blog, we'll examine how retailers and OEMs can salvage their surplus inventory of unsold electronics for maximum recovery value - even during the post-holiday slump - by working with a trusted reverse supply chain provider.

Smartphones are quickly commoditized, and older models quickly become obsolete.

New Electronics Take Center Stage During the Holiday Season

New models of gadgets and home goods occupy prime real estate on any consumer's wish list, and electronics manufacturers know it. For example, tech giants like Apple and Samsung come out with new models of smartphones and tablets every year. Industrywide, product development cycles have sped up considerably, and this is especially so in categories with short replacement cycles like phones and wearables.2

Throughout the year, sales of consumer electronics spike whenever a new model is released, and often fall dramatically once the initial fervor dies down.3 The rapid commoditization of consumer electronics often leaves retailers with surplus inventory of older models no longer in demand, which typically forces them to eat the financial loss on these unsold goods. This is especially true during and after the holiday season, when sales of these products increase dramatically during the shopping frenzy and plummet immediately afterward.

Essentially, consumers go for new products during the holiday season at the expense of older models. This leaves retailers with piles of surplus that will either take up valuable storage space or end up in a landfill, to say nothing of the losses incurred by producing more units than could be sold.

Retailers can find post-holiday opportunities for profit by selling surplus goods on the secondary markets.

How a Reverse Supply Chain Partner Helps Retailers Manage Surplus

Many retailers will see a boom in their business during the holiday season, but very few will take full advantage of the post-holiday profits available to them by selling their surplus consumer electronics. After the explosion of holiday sales dies down, retailers will need a way to sell and manage the remaining items in a timely and sustainable fashion.

While most retailers have strong supply chain management practices, they may not have the manpower or time to manage an effective reverse supply chain that can help them achieve the best possible recovery. Here are some ways a reverse supply chain partner can help retailers prepare for the post-holiday season:

  • Flexible pricing models. To help you maximize recovery while achieving your strategic goals, an expert partner will offer models like traditional purchase agreements; consignment options in which vendors receive a percentage of the sales revenue, incentivizing them to maximize return for the surplus product; and revenue-sharing models that pay you in advance and then share a percentage of the recovery gained through sales.
  • Variety of sales methods. A partner will help you go direct to consumers or facilitate bulk sales of surplus by the palletload or truckload. For high-value items in good condition, you'll likely be able to get the most value out of them by unbundling them and selling them directly to individual buyers. Bulk sales are a great way to sell large volumes of similar items all at once, either through an auction or a "buy it now" deal on an online marketplace.
  • Online marketplaces. By using online marketplaces to attract a wide array of buyers in a short time, a reverse supply chain partner will be able to maximize your chances of finding the perfect buyers for your surplus.
  • Adherence to RTV/RMA agreements. Whether your surplus is slated to return to the OEM or to you, a professional partner will be able to ensure that you meet all of the requirements in your agreements with your suppliers.
  • Expert refurbishment of older products. A trusted partner will test, service, or refurbish electronics as necessary to improve their condition to ensure customer satisfaction.

Just because customers aren't pouring into stores after the holidays, it doesn't mean retailers can't find opportunities for additional profit. Working with an expert reverse supply chain partner ensures that surplus becomes a benefit rather than a burden.


1 http://research.nrffoundation.com/Default.aspx?pg=55#.VgGDJdJViko

2 http://www.eulerhermes.com/mediacenter/Lists/mediacenter-documents/Industry-Report-Consumer-Electronics-Dec14.pdf

3 http://www.businessinsider.com/electronic-store-sales-during-apple-product-releases-2015-5

Jim Rallo, President, Retail Supply Chain Group

Jim Rallo leads Liquidity Services' Retail Supply Chain Group which helps hundreds of the world's top retailers and consumer OEMs unlock strategic value in their reverse supply chain. Jim brings more than nine years of experience at Liquidity Services and over 25 years of professional experience in operations and finance. Mr. Rallo holds an M.B.A. from the Smith School of Business at the University of Maryland and a B.S. from Washington and Lee University.