EcommerceBytes-Update, Number 296 - October 09, 2011 - ISSN 1528-6703     4 of 6

What Sellers Should Know about Refurbished Goods and 'Newfurbs'

By Brian Cohen

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It is important for buyers and sellers to understand terminology when considering purchasing and selling goods that fall in between "new" and "used." There are differences between remanufactured and refurbished products, and both sellers and selling venues (eBay, for one) could do a better job communicating this distinction.

Some original equipment manufacturers (OEMs) and third party (re)sellers have been taking advantage of these terms and employing a gray area of semantics that buyers may not be aware of.

In addition, there's a class of goods that manufacturers don't talk about that are growing thanks to daily deals sites - items that I call, "newfurbs." Every seller will want to read about newfurbs, as they could provide product-sourcing opportunities.

Refurbished, Remanufactured and New...What's the Difference?
New product is referred to as "A Stock." If a product is not new it is a form of "B Stock." Popular forms of B Stock are remanufactured and refurbished products.

In the case of remanufacturing, the OEM or an authorized representative performs the remanufacture. With refurbishing, an "unauthorized" (aka third-party) company performs the refurbishing.

Keith Bryant further explains these differences in Examiner (Green living) in a piece called, "The difference between remanufacturing, refurbishing, reconditioning and recertifying."

According to Hewlett Packard (HP), "The distinction between remanufactured and refurbished equipment is not always obvious. … remanufactured…(are)…the equivalent of new and (may, depending on the vendor) carry the same warranty and service options as new products. Refurbished or used equipment is generally not fully tested and or certified to meet like-new standards."

HP gives a detailed description of their remanufacturing program including where they come from, when remanufactured is "better" and what to look for when buying remanufactured on the HP website.

A Look at Refurbs and Remanufactured Listings on eBay
eBay, of course, is an active marketplace for buying and selling remanufactured and refurbished products. A search of active listings conducted on eBay on September 1, 2011 provides a breakout of the categories:

Refurbished: 803,939 results found
Inclusive of the Top 6 Categories
Category & Listing Numbers Matching Search:
Computers & Networking: 379,537
eBay Motors: 294,231
Business & Industrial: 48,434
Consumer Electronics: 27,764
Cell Phones & PDAs: 22,467
Home & Garden: 15,629
Suggested Related Searches by eBay: refurbished iphone, digital camera, refurbished tv, refurbished iphone 4

Remanufactured: 693,858 results found
Inclusive of the Top 6 Categories
Category & Listing Numbers Matching Search
eBay Motors: 329,207
Computers & Networking: 283,451
Business & Industrial: 35,290
Cell Phones & PDAs: 14,554
Consumer Electronics: 13,358
Home & Garden: 7,465 Suggested Related Searches by eBay: Remanufactured

Combined (Both Remanufactured & Refurbished) as a Percentage of Category
Computers & Networking: 14%
eBay Motors: 3.24%
Business & Industrial: 2%
Consumer Electronics: 1.77%
Cell Phones & PDAs: 1.25%
Home & Garden: Negligible

Note that "reconditioned" (approx. 2,150 listings) and "recertified" (aprox. 250 Listings) are seldom used/offered on eBay.

The first stat that should grab your attention is the large percentage of Computers and Networking listings that are Remanufactured or Refurbished - 14% compared to the next highest category, 3.24%. However these numbers don't tell the whole story. Searching for remanufactured but including a search operator that excludes refurbished from the search (remanufactured -refurbished) yields only about 69,000 auctions. This confirms my initial statement that sellers and venues could be doing a better job of describing B-stock.

Curiously the Suggested Related Searches by eBay for refurbished includes the entire category for digital cameras rather than refurbished digital cameras.

eBay offers Item condition tags including "Manufacturer refurbished" and "Seller Refurbished." Here's how eBay defines those item condition tags.

Manufacturer refurbished
An item that has been professionally restored to working order by a manufacturer or manufacturer-approved vendor. This means the product has been inspected, cleaned, and repaired to meet manufacturer specifications and is in excellent condition. This item may or may not be in the original packaging. See the seller's listing for full details.

Seller refurbished
An item that has been restored to working order by the eBay seller or a third party not approved by the manufacturer. This means the item has been inspected, cleaned, and repaired to full working order and is in excellent condition. This item may or may not be in original packaging. See the seller's listing for full details.

Manufacturer refurbished is really a misnomer and they should consider changing the category to "Remanufactured" or "Manufacturer Remanufactured." The "Manufacturer" prefix would be a redundancy, but for the general eBay bidder who might not be savvy enough to appreciate these nuances, the prefix would in fact convey additional descriptive information. If eBay considers the use of the terms remanufactured and refurbished to be interchangeable then they should let this be known.

eBay does automatically provide search results based on Item Condition Tags using a search term entered by a prospective buyer. (I'm waiting for confirmation from eBay on this point.) However when I searched for "remanufactured" (see below) which is not offered by eBay as a Condition Tag, I was provided with listings that appear to be seller refurbished. This may cause confusion.

Do "Newfurbs" Exist, and Why Should you Care?
I have been a longtime advocate of friends and family of buying refurbished and remanufactured products. The reason for this advocacy is that they were often received in "as good as new" condition. Conspiracy-minded, I began to wonder if some of these products were in fact actually new and what incentives companies might have in selling/advertising new products as refurbished or remanufactured when in reality they have been "rebranded" as such.

Perhaps companies were being creative by avoiding "exposing" a product to a reduced price that can later be used as a basis of comparison by a consumer? A consumer might hold out for a price of a product ("Willingness To Pay") if they saw that is was sold for a lower price previously.

Moreover, high-end products sold as new for a "discount" would be perceived as having less value. Is it possible that manufacturers are selling new-refurbs (let us call them "newfurbs") to prevent cannibalization of sales of A Stock? Rather than subject their products to the stigma of a discount, they might sell their product directly as remanufactured or move it through third party vendors as refurbished - even if they are not.

This is not conspiracy theory but conspiracy fact:

Tiger Direct states that "if a retailer has an overstock of a particular item,... (it) can be labeled as refurbished" (to liquidate it).

HP states, "HP Factory or reseller overstocks - Items that are returned by the seller to make room for newer product lines" (may be designated Remanufactured).

This strategy may backfire for those who are loyal to a product and closely follow the brand (think Apple fanboys) as "perceptions that an OEM is remanufacturing because it is receiving failure and warranty returns due to the low quality of new products" if newfurbs are introduced too quickly (See, "The Effect of Remanufacturing on the Perceived Value of New Products" - link).

One can't help but wonder if the "refurbished" tablets (Motorola Xoom via Woot!) and ebook readers (Barnes & Noble Color Nook via Daily Steals) that went on sale at the Daily Deal websites right after Amazon announced the Kindle Fire tablet and Kindle Touch e-reader are in fact newfurbs.

Coincidence? I think not. As Joe Wilcox at BetaNews declared, "Let the tablet price wars begin"!

"Bait and switch" is when a seller falsely advertises a low price for a product to entice a consumer (dupe) into a transaction - The dupe finds the good is not available and the seller "upsells" a more expensive (i.e. different) product. Putting semantics aside, it feels a bit strange if not downright bizarre calling manufacturers unethical for offering a product for sale that is actually in better condition than they are advertising,...so we won't.

Additional Reading

Subramanian, R., Subramanyam, R. (2008), Key Drivers in the Market for Remanufactured Products: Empirical Evidence from eBay - link to paper

Agrawal, V., A. Atasu, K. Van Ittersum. (Under Revision 2011), The Effect of Remanufacturing on the Perceived Value of New Products - link to paper

New Or Used? A Study on Consumer Purchasing Decisions and How They Fit Into a Company's Remanufacturing Strategy - link to article

Reference: Ovchinnikov, A. (2011), Revenue and Cost Management for Remanufactured Products. Production and Operations Management. doi: 10.1111/j.1937-5956.2010.01214.x


About the author:

Brian Cohen has been an active member of the eBay community since May 1998. He currently trades under the member name Bidofthis.com. His first AuctionBytes article was published in May 2002. Brian can be contacted through his website at http://www.bidofthis.com where he always has a "little Bid of This and little Bid of That."


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