“Concierge” ITAD Services, An Exciting Alternative to Traditional ITAD Acquisitions
This week’s Industry Voices was written by Michael Schuler of Veterans Alliance Resourcing, Inc.
Over the last decade, the ITAD, data destruction and product remarketing industry has seen millions of investment dollars pour into the IT asset disposition (ITAD) community through strategic acquisitions and personnel hires. These investments have been both from the top-down (mergers and acquisitions from companies that sell new products and want to expand their client services portfolio) and from the bottom-up (projects undertaken by recyclers, investment firms, and existing ITAD companies).
Top-down examples include Arrow Electronics’ acquisitions of Converge, Intechra, Flection, Redemtech, TechTurn, US Micro and others; Ingram Micro’s acquisition of Cloud Blue; and Smith Electronics’ expansion of its ITAD program.
Several bottom-up examples include eCycle Solutions’ acquisition of Refreshtek; the formation of Quantum Lifecycle Partners; Clover Wireless’ acquisition of MaxBack; the acquisitions of ITAD USA, Teladvance, and CExchange; Tech Defenders’ acquisition of Device Renew; Regency Technologies’ acquisition of GEEP USA; and an investment firm’s acquisition of HiTech Assets.
There are two major drivers for these investments. First, organizations across the product lifecycle see the profitability in traditional ITAD. Operating on gross margins that range from 45% to 65%, it’s a lucrative industry that often finds customers more focused on service than value recovery. In addition, these investments are low-hanging fruit because companies already have the client base, and customer acquisition is the biggest challenge for most ITAD companies. Making ITAD an additional service offering makes sense, as “owning the customer” means being that single point of contact.
‘Better to Date Before You Marry’
However, those investments don’t always translate to profitable business decisions. For example, Arrow Electronics spent hundreds of millions of dollars acquiring several ITAD companies before deciding to suddenly exit the business in 2019.
Buying an ITAD company or launching your own ITAD division doesn’t necessarily solve the challenge of cobbling together a cost-effective network of ITAD service providers to offer a national (or global) footprint. Aside from the client base, the real value of most ITAD operations is the product remarketing and operations executives. If, and when, these key players move on, they often leave investors with a shell of a company. The traditional model of acquiring an ITAD division doesn’t necessarily mean acquiring the skillsets, resale channels, and institutional knowledge needed to succeed in product remarketing.
These are the problems that my company, Veterans Alliance Resourcing, Inc. (VAR), aims to solve, with a business model that offers concierge ITAD and product remarketing services (www.ITADVets.com). An R2v3 and ISO:9001:2015, 14001:2015, and 45001:2018 certified company, VAR is led by two industry executives with decades of experience in reverse logistics, product audit, repair, remanufacturing, ITAD, and product remarketing. A Service-Disabled Veteran Owned Small Business (CVE, NVBDC, and NaVOBA), VAR leverages its ITAD depot services in the U.S. (Texas), and alliances with an extensive network of logistics and field tech organizations, to facilitate the ITAD portion of its solution.
For the Product Remarketing component, VAR utilizes a network of over 2,500 dealers worldwide that they’ve cultivated over four decades to secure strong recovery values for both contract and transactional ITAD engagements. Through our bid process, we’ve learned that the high bidder on one offering is rarely the high bidder on the next. Focused on cultivation of our resale channel and fairness shown to all bidders, we’re able to consistently garner maximum recovery values and accurately predict the market – posting a Quarterly PC & Laptop Resale Guide to our Clients. The company makes its margin for concierge services in the added recovery value and cost-savings from VAR’s ITAD services.
“Like any business, it’s important for remarketers to position themselves for success. In this business, we serve as the expert, guiding recyclers and other clients on their ITAD engagement opportunities with VAR doing all the heavy lifting on RFPs and bids.”
Serving a Variety of Clients
Hiring an outside company to provide concierge ITAD and product remarketing services makes sense for many types of companies. Case Studies include:
VAR worked with a global technology-as-a-service company with 100,000 computer assets in over 60 countries. VAR won this multi-million-dollar engagement two years ago in response to an extended RFP solicitation process. By leveraging VAR’s experience, market knowledge, and global resale channel, we showed much stronger returns at resale—deeper into the product lifecycle—than the global asset recovery services division that had held the contract. VAR’s efficiency in fast processing and resale also reduced the client’s costs for ITAD, positioning them for more wins in IT Product Lifecycle Management.
Last summer we worked with a major scrap recycler that had just landed a large (initial) engagement with the U.S. government to process over 10,000 laptops. Looking to immediately compete against other recyclers with robust ITAD divisions, the recycler contracted with VAR to bid the engagement. Though the condition of the material was much rougher than anticipated, VAR’s channel absorbed this C-grade product while still getting competitive recovery values that covered the contract pricing originally negotiated. The recycler is expanding its engagement with VAR to a long-term contract.
VAR also engaged with another major electronics recycler that already had an ITAD division and remarketing team. For that engagement, VAR’s pitch was simple: Give us an opportunity to resell the product and we’ll make our margin, while still outbidding your channel. With no risk, the recycler took the offer. In the first two transactions, VAR outbid the remarketing team’s recovery numbers, while still covering its target margin for the service.
Concierge ITAD and product remarketing service presents a strong alternative to the traditional ITAD acquisition model that’s dominated the industry. Compared to that traditional model, VAR recovers more dollars at resale, handles a wider variety of products and conditions, goes deeper into the lifecycle, and takes no time to muster its service solution, whether direct or under a client’s banner. VAR offers no financial risk to a potential client or investor that wants to respond to ITAD opportunities quickly, bolting on a world-class solution that is already R2v3 certified, extremely capable at remarketing and nimble in response.