A car isn’t the only major purchase that depreciates greatly in value directly after you purchase it. Hardware and electronics depreciate quickly after they are purchased new as well, and few products become outdated as fast as electronics can.
That’s where the secondary-market resellers of hardware and other tech equipment come in. The technology aftermarket for resellers offers an opportunity to compound on the idea that while the original purchaser of an item pays full — and often overpriced — MSRP, the second person to purchase it pays a much lower price and is still able to get good use out of it. For that reason, the secondary market for hardware and other electronics is quickly gaining in popularity.
Many organizations have realized that they can’t (or will not) sustain the near-constant stream of buying new tech equipment whenever the need arises. They are turning to — and relying on — the secondary market to furnish their technology needs at a rate that will not break their IT budget, and many require knowledgeable installation and support services as well.
These needs amount to a huge opportunity for hardware resellers, but with that opportunity comes inherent risks and disadvantages when the products aren’t coming straight from an OEM.
Introduction to the Tech Reseller and Secondary Market
The technology aftermarket consists of active resellers and buyers of secondary (used) technology. This aftermarket can consist of various levels of used, refurbished, and “like new” hardware, electronics, and tech equipment, typically purchased at a fraction of the original cost.
Not all of the hardware and equipment are old, however. Some of them are the resultant items of canceled projects, overstock, defunct departments or bankrupted businesses. And because OEMs can’t sell returned equipment at the new price, resellers and buyers are able to get a good deal on them.
Advantages and Disadvantages to the Reselling Game
The biggest advantage to reselling technology is the monetary value behind the transactions. It’s nearly always going to be cheaper to buy from the aftermarket when compared to new.
Another advantage is the ability to acquire specific products — and to always have the ability to acquire them whenever they’re needed. Product availability equates to greater output. As a general concept, OEMs “refresh” their product lines once every 6-12 months or so, liquidating the older units. Thankfully, hardware in particular can outlast this system of constant refreshing and retain raw value (in that it’ll still continue to work for much longer than the refresh rate), resulting in a great amount of availability for resellers. Certain hardware can often stay relevant for five years, and some can even remain relevant for upwards of 10 years.
Even greater value can be added to buyers of secondary-market products when considering the quicker shipment times. While OEMs can take three to six weeks to manufacture and ship purchased items, resellers can ship within just a few days. Warranties can also be provided on all used products to ensure quality and to ease the mind for the buyer.
But there aren’t only advantages to the tech aftermarket. Certain potential disadvantages, such as little to no OEM support, can arise. Certain manufacturers do not provide support for their products to resellers because they figure they will not obtain much of an advantage out of the exchange.
Moreover, any manufacturer software updates that may be recommended or required — updates that normally come packaged with certain items as OEM maintenance — will not be available. Resellers can be left with the responsibility to obtain the updates or provide quotes for newer versions of software.
More Reseller Challenges
Potential issues that have already been covered aside, resellers are faced with two other likely challenges as well: public reputation and reliance on OEMs for growth. Sales numbers can often slow down or stall for resellers, making it difficult to reach the multi-million dollar numbers year after year. According to expert insiders, resellers will often hit a plateau and will not be able to exceed $10 million in yearly sales.
Huge Potential for Hardware Resellers
If a reseller can overcome these challenges, the potential profits can skyrocket. The experts at UNEDA once tried to estimate the total market share of networking equipment alone in 2007, and came up with an impressive number: $2 billion annually. Buying and selling used, like new and refurbished tech products just makes good business sense on both ends of the spectrum. Many people — organizations and end users alike — are discovering that they don’t need to purchase brand new hardware and equipment to accomplish the tasks at hand. Buying at the optimum point in the lifecycle of the hardware or equipment can result in big savings, and it can substantially reduce overall investment costs in IT products. It will allow organizations and end users alike to purchase more of what’s needed when it’s needed, while still maintaining the budget.