Kevin Winneroski, vice president of secondary markets for Best Buy Co. Inc., may be leading one of the retail giant’s few growth opportunities in a recessionary climate.
In a keynote presentation at the Reverse Logistics Association 2009 Conference, Winneroski remarked that while Best Buy and other retailers have traditionally looked at returned products as a burden to be minimized, the Minneapolis-based national retailer has re-considered that approach.
“We believe this is an under-served marketplace that is ripe for growth; there are real opportunities for us to capitalize on,” Winneroski said of the refurbishing and resale of returned merchandise.
Winneroski compared the “old ways” that retailers have considered product returns with a new objectives being put in place by Best Buy. For the old ways, Winneroski listed:
· an attitude of making returns difficult for customers
· a goal to “make distressed product go away as quickly as possible”
· limited-to-no interest in re-selling returned products
· a willingness by retailers to “let OEMs worry about” returns.
The Best Buy VP contrasted those traditional views with the “new world” open to the retailer:
· optimizing asset recovery for cost reasons
· exploring new retail opportunities and concepts for returned products
· reaching new markets, including consumers who “never like to pay full price” as well as those looking for lower prices in a difficult economy
· partnering with OEMs on the best reconditioning/resale opportunities.
Winneroski cited Consumer Electronics Association estimates that cite the secondary or resale market as making up a $13 to $14 billion portion of the overall $177 billion retail electronics market in the United States.
That market is an opportunity for Best Buy, says Winneroski, both because it has virtually no presence in that segment right now and because with a difficult economy, it could gain a larger share of the overall market.
Among the moves Best Buy has made that put it in a position to take a greater part in refurbishing and resale was the purchase of www.DealTree.com. DealTree describes itself, on its Web site, as a provider of “auction management, logistics and returns processing services and software for manufacturers, distributors and retailers, [providing] a full-service, single-source solution that efficiently moves goods and information through the reverse supply chain.”
Best Buy has also established the Best Buy Outlet Center portion of its Web site as a way to sell returned, reconditioned and overstocked merchandise. The retailer also works with established Internet auction sites, added Winneroski.
In the short-term, Winneroski said there could be a “flood of products” hitting the reverse supply chain and that “it is a great time to be in liquidations.” In the longer-term, he believes OEMs and retailers will continue to manage to keep their inventories lean.
The 2009 Reverse Logistics Association Conference & Expo was held in early February in Las Vegas.