Another Alternative

Recycling isn’t the only way companies can profit from taking in used electronics. While some generators of used electronics may prefer to have these parts scrapped, there are many others who allow the resale and remarketing of their electronic components. This can add value to a generator’s bottom line by reaching a worldwide customer base of people who are eager for these parts.

The fast rate of technological advancement, a recession that has businesses putting off making technological upgrades and use of the World Wide Web has given companies who recover components from electronics for resale a hefty amount of supply coupled with strong demand for secondary parts.

WEIGHING OPTIONS

Lindsay Landmesser, vice president of sales and marketing for AERC Recycling, which has remarketing facilities in Allentown, Pa.; Ashland, Va.; West Melbourne, Fla.; Houston; and Hayward, Calif., says remarketing is always preferred over recycling because it yields the most value.

“If there is a market for the used component and our customer allows it, we will always try to resell the item for its intended purpose,” she says. “If no market exists or the market does not meet our sustainability standards, the item will be sent for metals recovery.”

Paul Adamson, vice president, corporate development, at Austin, Texas-based Round2 Inc., says that the company is always looking for that “sweet spot” in determining whether to recycle or remarket specific components. The company will look at key indicators and weigh the recycled value vs. the re-use value. “We are a commodities business,” he points out.

A corporate video available on Round2’s website, www.round2.net, stresses that the company’s goals are simple: “promote re-use of good parts, and recycle the rest.”

RECESSION EFFECT

Technology is evolving at a record pace, making computers, cell phones and their components become obsolete or out-of-date faster than ever before. This is having an impact on electronics recyclers’ ability to remarket electronic components. At the same time, the recession of the last two years has caused many businesses to look to replace parts instead of purchasing new systems. Both situations have provoked a flood of parts into the hands of electronics recyclers and meant greater demand for used parts.

The recession has also meant less competition in the marketplace, which has given some companies greater access to supply.

Dan Martin, owner and CEO of Dan-Mar Components, an asset recovery and component resale company based in Deer Park, N.Y., says his company is getting an influx of material because there is less competition in the excess inventory market. Because of the tightening economy, companies that have been around a long time and are financially strong are the ones getting the deals right now, he says.

“That pool of [competitors] has shrunk, hence we get more deals,” he explains. Martin estimates that Dan-Mar has more than 100 billion devices under its management. While there are no major shortages of any one type of component, he says there always seems to be spot shortages.

Martin says he doesn’t see the current market conditions in the electronics sector changing much in 2011.

“I would have thought by now we would have come out of what I feel is a downturn in the electronics business,” he remarks. “In 2011, I see more of the same that we’ve seen in the last two years.”

AERC has felt the effects of the recession, which has had both an upside and a downside.

“The recession has caused a decrease in technology upgrades, which has created a larger demand for replacement parts,” says Landmesser. She adds, however, that the decrease in technology upgrades also means AERC is receiving older equipment.

Laptops have seen the most significant decrease in resale, according to Landmesser. She attributes this to the increase in new low-cost laptops, netbooks, iPads and other mobile devices.

Some of the components AERC is seeing the greatest demand for are hard drives, memory sticks and processor chips.

“We have noticed that hard drives are failing within three to five years of purchase, so they need to be replaced more often,” says Landmesser. “We have also noticed an increase in customers requesting physical destruction of hard drives, so this reduces overall supply.”

Round2 has been on the remarketing scene for the last five years. Throughout that time, Adamson says the company has sold more or less the same material mix, but he admits that in the last year and a half, “We’ve had to push and expand our markets.”

He adds, “Our remarketing for parts is always focused on desktop computers and notebook computers. We have stayed consistent on our remarketing of processors, memory, and mother boards.”

Round2 has found the most demand for 24- to 40-month old PCs and the parts that go along with supporting those, according to Adamson. He says Round2’s memory market typically has an unquenchable demand. “The world likes memory and feeds off of it constantly,” he remarks.

On the integrated component, or IC, level, Adamson says Round2’s biggest growth area from a percent dollar standpoint is related to networking components used in higher-end telecom equipment being sold in repair houses.

LCD panels have seen the greatest degradation in remarketing value on the secondary market, according to Adamson. This, he says, is because of flooded market conditions, as manufacturers had been pushing out so many during the holiday season. He adds that with technology moving ahead and the influx of LED, the prices for refurbished LCD panels will continue to decline.

Overall, Adamson says, “I wouldn’t say we’ve been dramatically impacted by the recession.” What he does attribute to the recession is consolidation of parts suppliers who deal with larger OEMs.

ONLINE IMPACT

Another factor that has increased electronics recyclers’ ability to market and sell parts is the use of the Web. Components are being sold and marketed on eBay and other websites, which has allowed companies who remarket components to increase their exposure and reach a new customer base with relatively little marketing effort.

Dan-Mar’s sales were up in 2010, according to Martin. He says sales through the company’s e-commerce site were up 25 percent in 2010 over the previous year. EBay sales are based on individual items, but what Martin says happens is that a retail buyer on eBay can be drawn to Dan-Mar’s wholesale site and end up becoming a wholesale buyer.

“It has opened up a customer base that we would never find,” he says, adding that a key to using eBay is having sufficient inventory.

“The more things that people buy from one company makes it easier for them to shop,” explains Martin.

Martin recalls how 20 to 25 years ago his company would have to mail out samples, draw pictures and take out ads. Now everything is done digitally and posted on the Internet, making it easier to gain customers. “Really without doing much marketing, people are finding us,” he says.

“It opens up a whole new world of customer base that we never had 20 years ago,” he continues. “We don’t call anybody, we just post our materials live worldwide, and people contact us, so we really don’t sell anything. People call us to buy things.”

At AERC, online marketing accounts for approximately 25 percent of its component resale activity. The majority of component sales are based on relationship sales to regular buyers, says Landmesser.

Round2 uses eBay, Amazon and a couple of private label websites as well, but they make up only about 4 percent of the company’s monthly revenue, Adamson says. “We definitely like the wholesale space,” he says. “As we expand our ability to test and certify products, those will continue to get pushed into the retail and e-tail space.”

The author is associate editor of Recycling Today and can be reached at ksmith@gie.net.