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Why "Flip" is a 4 Letter Word When it Comes to Your Electronic Component Excess

John Pallazola Jun 21, 2019 4:23:23 PM

This past weekend I sold my kayak. This wasn't any kayak, it was special. It's a Hobie Pro Angler 17T (Tandem) fishing kayak. I had been trying to sell it for about 3 months. My problem was that I forgot to apply what I know from work to what I was doing at home. I listed it for sale in Craigslist, Facebook, and Nextdoor. I wasn't going to try Letgo but all I had to do was take a quick picture and post it. You don't even have to write anything, it put "Tan Kayak for Sale" automatically. Well, you can guess what happened. Not taking the time to identify the special features and get the kayak in front of avid kayak fisherpeople was a big mistake! I got little interest and low-ball offers. "I can come by today with $1,000 cash!" one guy texted excitedly. Well, I had paid $3,500 and felt it was worth at least that. If I wanted to get that kind of return I had to do the work. 

1-12The world is full of "Flippers" who will give you quick cash and then do the work to flip your valuable excess for a big profit. They serve a purpose for sure. But in a cooling EMS market, profits are at a premium. That means there is little room for big losses to be had on surplus. 

According to EPSNews, "Following two years of severe component shortages, demand is weakening, and inventories are too high, a March study found. ... there’s still a lot of instability in the 2019 forecast."

Excess inventory can be a double-edged sword. In slower times when inventories swell and sales slump, it's preferred to liquidate and recapitalize with revenues from surplus sales. BUT, in a losing or slightly profitable quarter, taking a big loss on surplus electronic component inventories can further diminish results. It can change the numbers from barely black to all red. That means OEMs and EMS providers are burdened with selling that inventory for the highest possible amount they can. And when your function as a company is producing, delivering, and marketing finished goods, maximizing ROI for surplus board-level components is not an easy task. The people that buy this type of material are completely different than your regular customers. it's an entirely different supply chain. 

Matt Shafiee, Director of Excess Purchasing at Classic, states "Many OEMs have shown elevated interest in moving excess in Q2 but they have been VERY price-sensitive.”

When business slows OEMs want capital, but since profits are down they are reluctant to take big losses that can go along with flipping their excess. The best solution: Consignment with the best and highest return, powered by:

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Click the button below for a free excess evaluation

Free Excess Appraisal

 

3The key to maximizing ROI is to transform your surplus into a valuable commodity by putting it in front of a regular user of those goods. That is what the

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does at Classic.

We identify the target persona of the end-user for each commodity and use our digital infrastructure to attract interested users to the parts that they are interested in. This means that instead of flipping the whole lot to one person we may sell 20 different line items to 20 different OEMs. We do the work. It takes a lot more time but yields much higher return on investment via our consignment or hybrid consignment programs. With our flexible consignment programs we can handle anything from deferred sales (to defer loss or gain until the next quarter of FY), scheduled buybacks, inventory financing, you name it. 

This past weekend I sold my kayak. I finally listed it in several specialty social media groups where communities of fishing kayakers congregate. I sold my kayak for $4,000, $500 MORE than I bought it for 2 years ago. But the guy who bought it saved $2,500 off the cost of buying a new one. It was a win-win. That is how our targeted marketing works. Let us get you the best return for your surplus electronics, click below for a free inventory appraisal so we can give you an idea what sort of return you may expect.

Free Excess Appraisal

About Classic Components

We maintain 12 global locations with over 100K sq feet in the US, Brazil, China, Hong Kong, Taiwan, Korea, UK, and Germany which allow for extensive warehousing and logistical support globally. Classic also holds the industry’s strongest financial position, maintaining a 5A1 Dun and Bradstreet rating. Led by our seasoned management team, Classic continues to set the industry standard through our tireless commitment to customer service, high quality standards and industry-leading counterfeit detection methods.

 

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