Refurbishing Consumer Electronics and the Secondary Market

Now is a great time to enter the secondary market as a repair technician, especially if you love tinkering with old computers and newer cell phones. In this article, we’ll cover many of the biggest topics facing consumer electronics and mobile phone refurbishers and how R2 is shaping the industry. This should serve as a good introduction on the terms and methods used to resell computer and mobile products. You’ll also learn how and why refurbishers buy and sell to and from one another, and how networking plays an essential role. Finally, we’ll talk about operating systems and what Microsoft considers pirated software.

In this article:

Refurb training is OJT

Sourcing secondary market consumer electronics

How the refurbishing industry works

Buying and selling to and from each other

Reselling consumer electronics to end-users

The difference between repair and refurbish

Learning about operating systems

Learning R2 Requirements for reselling

Learning R2 Requirements for recycling

Discovering ITAD

Advocating for end-users

Refurb training is OJT

If you’re brand new to repair and refurb work and want to get into the business, looking for a training class on how to refurbish computers could prove difficult. A Google search on ‘computer refurbishment training’ will return search results, but most of them are either for refurbishment companies or courses that you can take online. Computer refurbishment is not normally a class you can take at a local school and it might be very difficult to find an independent training class. There are online courses available, but they won’t give you hands-on experience. The good news is that a large, registered refurbisher network does exist, so it’s usually not too hard to find a refurbisher company in any major area; and a lot of them offer on-the-job (OJT) training. Also, many refurbishers are nonprofits and some of them have volunteer programs that will provide training.

One example of OJT is learning how to image computers in bulk. There are software packages available for both Linux and Microsoft that allow a refurbisher to image computers in bulk, meaning, they can install operating systems (OS) on many computers at once. For those interested in technology, this is a great way to get started with the basics.

Sourcing secondary market consumer electronics

If you already work as a refurbisher, or you’re ramping up your business, then you need to source product, that is, you need to find inventory for your business. To do so, networking at conferences becomes essential to source product. For example, B-Stock has been a sponsor of the Electronics Reuse Conference for many years now; this is where a lot of business happens face-to-face. During these conferences, many times people will walk around with Excel sheets to show what product they have available. As a whole, the industry is not yet fully automated and many players still work off spreadsheets to collect bids for their inventory.

Usually, refurbishers tend to buy in bulk. For instance, if a refurbisher has an opportunity to purchase 10 or even 100 broken iPhone 6s, they will buy those, fix them, and then sell them individually to customers in their stores. In many cases, refurbishers operate out of brick-and-mortar stores where they also offer repair services such as replacing broken screens.

Source consumer electronics on B-Stock

How the refurbishing industry works

In the industry, refurbishers specialize in certain skills and will repair products that fall within their scope. They in turn resell the repaired products to end-users (as compared to selling to another refurbisher). In most cases though, refurbishers tend to buy bulk lots (a ‘lot’ is a group of inventory that is available for sale) from each other where the product still needs some sort of repair or refurbish work. For example, if a refurbisher has an opportunity to buy 100 iPhone 7s with broken screens, but they don’t do screen repair, but they know someone who does, then they will buy the lot of iPhone 7s, turn around and sell them to the refurbisher that does screen work, and they in turn fix the screens and then finally resell the repaired phone to an end-user (an end-user is the person or persons who will actually use the equipment).

Buying and selling to and from each other

Most of the people that attend conferences are all buyers and sellers from and to each other. For example, let’s say a computer refurbisher has 100 ThinkPad laptops, but he may not have the time, the space, or the market to sell them as refurbished. He might know how to refurbish the laptops, but he might not have time to do the work. In that case, he might choose to sell those ThinkPads in bulk to another refurbisher who does have time to do the work. Selling large lots of inventory like this also helps refurbishers clear space from their warehouse while at the same time they can make a profit.

For some refurbishers, this is the only type of selling they do. Sarah Cade from the Electronics Reuse Conference explains it this way, “There are cases where some companies have certain expertise and they don’t do all types of refurbishing; in that case, it’s better to resell to another refurbisher who does have that specialty. Or, they choose not to sell to end-users because they don’t want to have customer service, or return policies, so there are some business decisions that come along with deciding who and how to sell product. But usually at the end of the day what refurbishers are trying to do is fulfill the needs of their customer. And they do that within their network.”

Refurbishers buying and selling to each other is so prevalent within the industry that often times refurbishers will act as bulk wholesale brokers of equipment to other refurbishers they normally compete with.

Reselling consumer electronics to end-users

Reselling refurbished devices to end-users isn’t always about setting up an Amazon FBA account or reselling through NewEgg or eBay to sell individual or small amounts of items to consumers. Rather, selling to end-users could mean selling to businesses or schools in large quantities.

Sometimes refurbishers get requests from end-users. Take for example a refurbisher who was looking for 200 desktops. His end-user was a school that was required to have all the same make and model of computers for the students. To be cost-effective, the refurbisher needed an older generation of computer, and the only way he could purchase that many of the same computer was through the secondary refurbished market. So, that refurbisher had to go out and find all of these computers, make sure the specs on each computer were correct, and then image them so he could provide them to the school. The point of that story is, when you’re a refurbisher, your customer might not always be someone looking for a single cheap computer; sometimes you are doing good things for the community by working with a school (or simply fulfilling a custom order).   

The difference between repair and refurbish

When talking to a refurbisher, the term repair is usually in regards to cell phones and tablets. For these smaller devices, the work is more complex. For example, phones and tablets could have screws that need to be replaced, or parts are glued into them and need to be removed and fixed; basically, when the hardware needs to be fixed, it’s considered repair work.

The term refurbish is more about computers and laptops that usually require work with the OS. Computers and laptops are easy to take apart, and the parts can be interchangeable, which isn’t considered difficult work, so the real expertise is installing the software onto the system.

Learning about operating systems

When you work as a refurbisher, one of the most important aspects is learning how operating systems work. And, of course, Microsoft and Apple computers are different enough to warrant their own sections. Microsoft even has rules for their OS and how licenses can be transferred from machine to machine.

Knowing your OS options for refurbished computers

When a refurbisher is sourcing his product, meaning, he is looking for inventory to buy, refurbish, and then resell, they have to be cognizant of what they are buying and the state of the OS on the machines. This is especially true if he is buying product off Amazon, or eBay, or even B-Stock. Buyers should always carefully read product descriptions and know what they are buying before making any bulk purchase.

Basically, secondary market computers will come in one of three ways:

• The computer is completely wiped with no OS at all.
• The computer has an old OS. If the OS is Windows 8 or lower, then Microsoft might consider that ‘pirated’ software. Mostly, that’s because MS doesn’t support those older operating systems anymore, which means they don’t allow such old computers to be put into the market by their partners.
• If you want to buy a refurbished computer that has a legitimate OS, then you can buy a Linux system, which is open source, or you can buy something produced from an MS refurbisher (more on that in the next section). If you buy through an MS refurbisher, that will ensure that you’ll get a genuine license from Microsoft, which means updates will be pushed and MS will offer support for the computer.

Having a legitimate OS is a big deal when you’re talking about the refurbished computer world.

Helpful resource links for refurbish programs

(RR = Registered Refurbisher)

• Main Microsoft Refurbished PCs page
• Microsoft Registered Refurbisher Program (RRP) Main and Log-in Page
• RRP Program Agreement for 2018
• RRP FAQ
• RRP Program Guide
• RRP Directory
• International List of MAR partners (large refurbishers and ITAD companies)
• Many more program related details can be found by searching the Device Partner Center website

How Microsoft handles licenses for refurbished computers

Microsoft has two refurbishment programs: one is called the Microsoft Registered Refurbisher program and the other is the Microsoft Authorized Refurbishers program. The registered program has thousands of registered refurbishers around the world while there are dozens of Microsoft Authorized Refurbishers—they refurbish tens of thousands of computers a year.

A Microsoft Authorized Refurbisher is a company taking part in the official Microsoft program for licensing Windows and other software on refurbished computers.

Per Microsoft, “The Microsoft Registered Refurbisher program is for small and midsize refurbishers across the globe who want to supply refurbished PCs preinstalled with genuine Microsoft software to local consumers and businesses, as well as qualified charitable organizations, academic users, and specially approved recipients. The program makes available Windows and Office for refurbished devices.”

Both of these MS programs give refurbishers access to discounted legal licensing in order to put a new OS on old equipment. They can basically buy Windows 10 at a discounted rate and then install it on an old piece of equipment.

Apple OS is a bit different

Apple is different in a couple ways from MS because its OS is free. If you have Apple’s equipment, you can download its OS as long as your hardware is compatible with what the OS requires. The caveat to Apple’s OS is that if you have an older Mac without enough RAM, or it has the wrong processor, then it’s (nearly) impossible to update that computer.

Learning R2 Requirements for reselling

R2 is the responsible recycling standard for electronics and it contains a series of requirements for reselling on the secondary market. R2 Requirement #6 deals with Reuse, as in, reuse all products first and if you can’t then you need to recycle responsibly.

Read more about the R2 Standard

R2 Requirement #6 outlines criteria and specific naming of how and what needs to be done by recyclers and refurbishers when operating through the secondary market. The next series of sections provide a description of the three ways to test reusable equipment: Ready for Reuse; Ready for Resale; and Ready for Repair.

Ready for Reuse

Ready for Reuse primarily relates to computers that are ready to be sold to end-users. In this case, a series of requirements have to be met. These requirements include:

• Computer has full functionality
• Computer has legally licensed software installed (see above about operating systems)
• Computer passes a number of different tests, and those records have to be maintained
• Computer is clean of any major defects
• A Quality Assurance plan is in place
• A product returns plan is in place
• The product meets the requirements of the recipient

In regards to having a return policy, each refurbisher can create his own, you don’t have to follow Amazon’s 90-day return policy for example, you just need to have one in place. Some refurbishers even offer as long as three to five years to return a purchase.

Honesty and integrity go a long way in a community that runs on networking and word-of-mouth advertising. When reselling refurbished computers, always be upfront about what exactly is included with the purchase.

Ready for Resale

Ready for Resale includes tested products that you know are in good shape. These products also require a quality assurance plan, a product policy, and a return plan like Ready for Reuse, but the big difference is that Ready for Resale includes products where something might not work properly, or there might be some cosmetic defects. In those cases, those defects need to be disclosed in writing. Ultimately, for Ready for Resale, you know the product works but there’s something obviously wrong with it, like it might have a big scratch across it or the USB port doesn’t work. A computer like that as a whole can still be used, but those defects have to be disclosed in writing so that the end-user knows what they are buying. Again, it’s all about being honest with your business.

Ready for Resale products are generally sold in bulk from one refurbisher to another. This happens when a refurbisher does some basic testing and they find something wrong but they don’t have the time or capacity to fix it. In those cases, they will sell to another refurbisher who fully realizes there is more work that needs to be done before it can be sold to an end-user (ready for resale could also be sold to a savvy end-user who knows what they are getting and how to install their own OS, or they don’t mind a scratch or two and can do some of the repairs themselves.

It’s good to remember that selling refurbished consumer electronics is about the needs of the end-user, so, if I’m a refurbisher and I have a customer that needs, for example, 200 desktops, then I have to go out and find 200 desktops of the same make and model. Through networking, I might find another refurbisher who has the correct 200 desktops, but each machine needs a new hard drive, for example. In that case, I’ll buy the 200 desktops as Ready for Resale, replace the hard drives, image them, and then resell to the end-user as Ready for Reuse.

Ready for Repair

The R2 Standard is not only for the repair/refurbish side, it’s for recyclers as well. What Ready for Repair does is allow recyclers to 1. Save equipment from being shredded and going into a landfill; and 2. They can make a profit from selling refurbishable equipment to a refurbisher who will refurbish it (say that 10x fast).

Ready for Repair is geared toward recyclers who might get a product that she knows is refurbishable, but she doesn’t have the capacity to refurbish the product herself. In that case, she can sell or send the computers to a refurbisher who will do the work. Ready for Repair is favorable over considering a product is ready for material recovery. Material recovery is when a recycler pulls out all the precious metals from an electronic device. This includes gold, silver, copper, etc. When the materials are pulled out of a device, that’s considered recycling. The next section discusses recycling in more detail.

Learning R2 Requirements for recycling

Provision 5 of the R2 Standard is managing your downstream and your focus materials—focus materials include PCBs, mercury, CRT glass, batteries, and circuit boards. Circuit boards and batteries are the most common focus materials in today’s electronics, because, really, if you think about it, anything electronic has a circuit board in it. Your keyboard has one, your mouse has one, even wired devices have circuit boards in them. That’s why R2 is so important to follow and to make sure everything winds up in the right place. You want to make sure that you can follow the product until end-of-life to ensure the focus materials are being handled properly so they don’t end up in landfills or places they shouldn’t be.

Read more on recycling consumer electronics in the secondary market.

Discovering ITAD

On the flip side to recycling, there are products that are still valuable, like that unused iPhone 6 or 7 that is sitting in your nightstand or kitchen junk drawer. Products like that can be resold for a profit. For businesses with large quantities of older phones that need to be updated, an ITAD company (a company that manages unwanted equipment for a business) can help. ITAD is about taking assets out of companies, that are usually three to five years old, and reselling those in order to recover the costs, but mostly those are being sold for reuse purposes (to extend the life of the product and to keep them out of landfills). An ITAD may refurbish the older equipment or sell it Ready for Resale and then profit share with the company who wanted to get rid of it, minus the handling costs, etc.

Advocating for end-users

As you’ve discovered, being a refurbisher means wearing many different hats. Refurbishers do a lot more than just replace a hard drive or install a legitimate OS or fix a cracked screen. It also extends past the networking that is required to find new inventory or offload existing inventory. Being a refurbisher also means being an advocate for your end-user, especially if that end-user happens to be someone’s grandma, or if it’s the principal of a school looking for computers. For example, let’s say a customer calls you up and explains they are looking for a refurbished tablet so that grandma can scroll through Facebook and see pictures of the grandkids. A responsible refurbisher might ask if a tablet is the appropriate form factor for a senior, will she be able to read the screen, does she need a bigger screen, will she need a keyboard for typing? It might be better for grandma to have a refurbed laptop instead of a tablet.

It’s important for refurbishers to think about their customer, the end-user, and what and how they are going to use your product. This type of information can help you advise them on the appropriate tool for the job, so to speak.

One of the biggest issues with end-users is over buying. Not in the sense of over buying in quantity (like you bought 20 computers when you needed 2), but in the sense of over buying on the specs. Does your 5th grader really need a computer with 2 TB of storage? Are they storing videos and pictures or are they just researching and learning how to type? If so, they might need that extra storage, but the modern user saves their images in the cloud, so you could save your customer a bit of money and not include that extra TB of storage on a PC.

Advising the right specs to satisfy your customer’s needs is important in keeping costs down. Your customers will appreciate the savings and will become a repeat customer and will provide good word-of-mouth advertising for your business.

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