In recommerce, especially in resales, profit isn’t just about what you buy—it’s about how long you hold it.
In this clip from the ReCommerce Podcast, Tuomo Laine (CEO of TWICE Commerce) explains why shelf value and inventory turnover are critical to any secondhand or refurbishment business. Whether you’re flipping iPhones or vintage guitars, the question is the same: how long can you afford to store it?
We explore:
Tuomo: If you are making your business in selling it second hand or maybe refurbishing it then selling it is that how well does the item hold its shelf value? So what is your assumption that once you get an item in how quickly you can sell it out? So let’s keep using a phone example if I buy phones, but my business would be such that I end up selling it in three years. So even that shelf value is kind of eating out the margin also. So you are trying to find, especially if you are an aggregator, so for retailers I think it is a little bit of different ball game. But if you are trying to kind of enter the market with a niche buying old music instruments, reselling them, it is a question of how well does that instrument hold its value if you have to store it for a year or a year. So I think that is also a big part of the equation there.
Karri: Absolutely and I assume in warehousing that it is pretty similar to actually like linear retail businesses. So fast are you able to get rid of the existing inventory and of course the size once again like if it is TV that is worth 400 bucks and you have a bunch of them it is quite different than if you have iPhones that are.
Tuomo: Exactly so and let’s say if you have Apple products that you refurbish, Apple products tend to hold their value really well, they tend to be quite small. So it is an excellent product for refurbishing. But that is the kind of the equation there.