It’s Time for Brands to Rethink How They Value Refurbished Goods
September marked 1 full year at Verdi Commerce, and after 20+ years in technology distribution, my first at a reseller. I’ve learned a ton, developed incredible relationships up and down the supply chain, and am more eager than ever to continue Verdi’s mission.
At the heart of our mission is a commitment to enable leading Consumer Electronics & Housewares brands to make a meaningful step towards the circular economy by giving a second life to customer returns instead of contributing to landfills. If you want to learn more about Verdi’s mission and the circular economy, you can do so here, but that’s not the purpose of this blog post.
Instead, I want to set the record straight when it comes to something I’ve heard repeatedly from manufacturers since I joined Verdi, “refurbished goods cannibalize our new product sales.” Let me be clear: this statement is not accurate.
It’s time for brands to rethink how they position refurbished goods. Refurbished products can enable brands to reach new customers and create incredible value when marketed effectively. The first step towards doing so is acknowledging 2 simple facts about refurbished goods. First, refurbished electronics consumer behavior has shifted dramatically over the last decade. Refurbished goods are now in high demand, specifically by Gen Zs and Millennials. Second, refurbishing and remarketing returns makes a tremendously positive impact on the environment.
Not convinced? Allow me to share comprehensive insights from industry leaders, analysts, and the academic community.
Sizing Up the Refurbished Consumer Electronics Market
To comprehend the scope of the refurbished consumer electronics market, let’s turn to recent market research conducted by Market Research Future. In 2022, the global refurbished electronics market was valued at a staggering $85.9 billion, with projections indicating growth to over $262 billion by 2032. To put this into perspective, the refurbished consumer electronics market is expected to surpass Samsung’s 2022 global revenue of $233.13 billion within the next decade. Now, let’s delve into why this burgeoning market presents unparalleled opportunities for brands.
Expanding Markets | Challenging Misconceptions
The idea that refurbished products cannibalize new sales is zero-sum thinking! The reality is that refurbished products are not a piece of the same pie, but rather an entirely new one.
Contrary to the widespread belief that refurbished goods siphon market share from new equivalents, they actually pave the way for brands to tap into new market segments. Their reduced-price points can help brands connect with budget conscious consumers who might not have considered their products otherwise, often selecting lower priced competitors instead. I recently reached out to our friends on the Amazon Renewed Team to get their take on this age-old debate. I mean, who would be better to ask than the company that sells billions of dollars’ worth of new and refurbished consumer goods?!?
“Based on our customer research studies, Renewed [items] allows you to reach out to new groups of customers that are specifically looking to buy refurbished products and would not pay the price of the new equivalents. These populations of customers (price- and environmentally-conscious) will largely be incremental to your business, with limited risk of cannibalization (Amazon Renewed, 2023).”
The Intersection Between Environmental Consciousness, the Circular Economy, and Shifting Customer Behavior
In the face of escalating environmental challenges, consumers, particularly Gen Z and Millennials, are more attuned to environmental concerns than previous generations. They seek avenues to make a sustainable impact on a personal level. Refurbished goods are emerging as the most accessible path for these consumers to align their purchases with their environmental values. The idea of a consumer electronic—a physical, tangible product—going to landfill is for many the epitome of unsustainability…and refurbishment offers a very clear alternative!
“There is also potential for a segment of environmentally conscious customers who prefer remanufactured products since they are perceived to be more environmentally friendly. Recent reports show that between 15 and 46 percent of the consumer market are interested in some form of green products (Atasu et al., California Management Review, 2019).”
Make no mistake, this is the beginning of a seismic shift in how consumers perceive brands. One that led to Bank of America’s Global Head of Research, Haim Israel, predicting that Generation Z will be “the most disruptive generation ever.” In a follow-up article from the World Economic Forum, additional research illustrated that 75% of Gen Zs think sustainable purchases are more important than brand names.
The Bottom Line | Embracing Sustainability & Circularity for Business Value
The message is clear, to resonate with younger generations of consumers, brands must embrace the intersection between environmental value and business value. Fortunately, you’ve found your way to this blog post, and in doing so you’ve been introduced to Verdi Commerce and our commitment to help brands capture value at that intersection point.
Let’s connect to explore how our team can assist you in transforming customer returns and refurbished goods into a focal point of sustainability and business value!
- Refurbished, Renewed, Used…What’s the difference? A guide to understanding labels on pre-owned products
- Is Amazon Renewed Reliable? A complete Buying Guide
- Verdi.com | Your Destination for Tech that Helps Your Wallet and the Environment!
- Embracing Sustainability on Earth Day | Verdi Commerce Leads the Way
- eBay Certified Refurbished Program
- Walmart Restored Program
- Target Refurbished & Pre-Owned Program
- Reebelo | Refreshing the way we all consume tech
- Back Market | A global marketplace for reborn tech
- National Retail Federation (NRF) – 5 ways retailers are building the circular economy