In today’s challenging tech climate, can Resellers improve their margins?
IT resellers are facing smaller and smaller margins as new competitors enter the market and there is a shift from hardware to software as a service (SaaS). Digital transformation is shifting the focus from hardware and one-time licenses to pay as you go cloud services and infrastructure. Businesses can now access large storage and server power without having to invest heavily in hardware.
As one the UK’s leading IT refurbishers, we are often asked how can resellers compete in this tough market?
Let’s start by looking at the main problems resellers face:
- Shrinking margins in hardware as prices fall. New entrants to the market are offering cheaper products and agile service models. China is starting to push into the west with massive gains in market share.
- Online shopping /subscription. Consumers and tech buyers are going online, buying directly from manufacturers at discounted rates. There is also a growing trend of ‘renting’ or leasing hardware.
- Demands for added value: IT purchasers want additional value on top of the product they are buying. This may be in terms of training, after sales support or long term servicing, networking and systems integration support.
- Expertise is no longer in the hands of the experts. Expertise is no longer in the hands of resellers but with tech influencers and bloggers, expertise can now be found within seconds of an online search. Businesses are also doing their research online, reading reviews and making decisions using search first. By the time they get to speak to a reseller most of their decision making has been done.
- Traditional marketing no longer works. Consumers are adept at ignoring disruptive marketing and blanket emails. They are looking for companies that can answer their questions, solve their problems and build their trust.
- Saas: The development of Sofware as a service has radically transformed how traditional MSPs and VARs operate. For resellers, the ripple effect is that there is also less opportunity to sell perpetual licenses due to the pay as you go offerings from Microsoft 365, Azure and G-Suite. Cisco Spark, Salesforce CRM and Pure Cloud are all offering better ways of working for businesses.
Can resellers take advantage of these opportunities and make money?
Yes, we believe they can, by purchasing refurbished hardware and forming strategic partnerships with certified distributors offering products with good margins.
Businesses don’t want to keep purchasing new products every couple of years. They want longevity, top performance and peace of mind that if any problems arise they will be supported.
Your customers can get a similarly spec’d, secure, high-performance computers and laptops with the same amount of post-sale support as new. Also, secondary refurbished equipment can last up to a decade. All our machines come with a 6-month warranty with the option to extend to 3 years.
Business and IT departments also want to make savings – and are working with tight budgets. At the same time, they need good performance and reliability in their equipment.
Refurbished computers can often be up to 70% cheaper than the price of similarly spec’d new machines, giving great margins for resellers while still being able to give a competitive price for customers. This is a great selling point for organisations and individuals who are working to a budget, want to maximise what they can do with that budget, and are willing to accept cosmetic imperfections in order to achieve maximum value – in effect, anyone who values function over form!
New hardware could potentially become more expensive as the cost of components goes up due to the US/China tariff war and Brexit. This ideally positions refurbished equipment as an option of purchasing upgraded equipment with the improved performance but at a significantly cheaper price.
We also offer great margins for all our reseller partners.
Companies have established legacy software based on older systems.
With refurbished you get business model computers that can perform everyday tasks and support legacy systems. But they benefit from upgraded hard drives and RAM.
Businesses are seeing their technology problems holistically and no longer buying products separately.
Even if businesses move their services to the cloud, there will still be a demand for hardware to support that. However, the challenge will be for resellers to understand their clients’ problems and pain points and offer additional value to meet that. For government and NHS clients, this may be around security. For SME’s it may be about green credentials or productivity software. For schools, it may be able how to implement a digital strategy across school-wide, with the right tech and a rolling upgrade agreement.
But the opportunity is there – especially for budget-conscious customers and refurbished hardware can evolve to fit this new demand.
Concern about data security.
If a hard-drive is still in top working condition, we wipe them to BLANCOO standards. This is the world’s best data erasure software utilised by major governments and security forces.
The majority of IT managers, Heads of Technology and those involved with IT procurement want a relationship with a vendor. They want to know that they are getting reliable equipment, but don’t have the time to do research into what’s available.
For us refurbished IT is not a one-way street. It’s about building a relationship with customers to be able to provide a lifetime of service and hardware. That’s why we make sure you have a dedicated account manager to respond to queries, manage your purchase and provide after-sales support.
For your end-users, you can position yourself as a long-term strategic partner able to provide reliable, low-cost hardware. With so many models and variations on specifications – you can help evaluate what technical specifications are actually needed for business model machines.
Businesses also want to demonstrate their commitment to Corporate Social Responsibility (CSR), sustainability and the environment. There is increasing awareness about the social and environmental cost of mining and manufacturing the components needed to make a new PC. E-Waste has also been grabbing the headlines in the last few years too.
Refurbished provides a real environmental benefit. Researchers found that the cost of manufacturing a new computer can take as much as 3,330 pounds of water, 530 pounds of fossil fuels and 50 pounds of chemicals and 400kg of CO2. Recycling is more expensive, not reliable and has a small environmental benefit. Refurbished IT, however, extends the life of the PC, saves on your carbon footprint and saves on natural resources.
Growing interest and backing for a circular economy – as opposed to a linear one where products are made, used and disposed of.
Refurbished computer hardware is a major part of the circular economy as it ensures products are remanufactured to an as-new state, ready to be used again.
Refurbished IT provides the green credentials they companies now need.
SecondLife IT also offers a number of additional benefits that can be passed on to your customers:
- We offer great margins and we can help you sell it. (See below for our free copy of our Resellers Guide to Refurbished IT)
- We offer business-grade and high-performance hardware with the opportunity to upgrade RAM or Drives.
- We provide full transparency on our comprehensive refurbishment process – which we believe is as good if not better than the leading manufacturer’s.
- We offer fast turnarounds on equipment – Usually, 48 hours compared to several weeks for manufacturers to build their product from scratch.
- We are a Dell Registered Partner; HP Business Partner and a Gold Standard Microsoft Partner.
- We offer custom specifications as required by your customers.
- We have a team of dedicated Account Managers.
- We enable white labelling on goods with new packaging and paperwork.
- We can provide you with support for selling refurbished with our Reseller Guide.
- We also offer a 6-month warranty as standard with the option to extend to up to 3 years.
While this all sounds great, resellers can still have misgivings about purchasing stock from the secondary market. We want to challenge preconceptions about refurbished and make it the norm rather than the exception.
Find out more about our process in our FAQs and why resellers are so impressed by the quality of our products that they don’t go back!
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A Resellers Guide to Refurbished IT
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