Evolving ITAD economics contributed to Arrow Electronics’ decision to jettison that segment of its business, according to company leaders.
Arrow, an electronic components distributor, announced on July 15 it would be ending the ITAD portion of its business, and the company stopped accepting all used devices on Aug. 5. On Aug. 1, company leaders hosted a conference call to discuss second-quarter financial results.
During that investors call, executives were asked about the closure of the ITAD part of the company, Arrow Sustainable Technology Solutions. CEO Mike Long said changes in the ITAD business landscape were key to the company’s decision.
When Arrow entered the ITAD space about a decade ago, Long said, “it was a business that really benefited customers, to get rid of their old assets, and we could refurbish and resell those in other marketplaces.”
Long explained that early on, Arrow implemented a profit-share program with its customers. Arrow would retire assets from enterprise customers and pay the customer a portion of revenue derived from reselling the assets. That model, however, has changed.
“What it’s evolved to is customers having a warehouse full of products and wanting one cash check for them,” Long said.
Meanwhile, during the 10 years the company has operated in the ITAD sector, e-commerce increased and became a competitor to Arrow’s business model. The prices Arrow would charge when reselling assets became “readily available on the internet,” Long said, “so it became harder and harder to make a profit from the buy to the sell.”
The company put measures in place as this trend became evident, Long said, although he didn’t expand on what those were. Despite those efforts, “it became very clear that this value proposition for the customers was less interesting to them than when it started, and we didn’t see the benefits going forward in our strategy.”
At the same time, Arrow saw its other business segments bringing in greater revenue. Eventually, Long said, company leaders reached a point where they “didn’t want to have a non-ancillary business around that wasn’t really driving the strategy and driving the future growth.”
Long also said the company can continue to offer the same services provided by the asset disposition segment of the business without having an in-house ITAD operation.
“I view it as totally unnecessary because we can now partner with different people and different marketplaces and have exactly the same effect,” Long said.
Competitor scramble continues
In the wake of Arrow’s ITAD closure, competitors have been aggressively pursuing former Arrow customers. E-Scrap News tallied at least 40 companies that have issued releases, taken out ads or posted on social media networks about the closure, seeking former Arrow clients.
Additionally, U.K. news site ChannelWeb reported that a U.K. ITAD firm, Restore Technology, approached Arrow about purchasing its ITAD division. According to ChannelWeb, the would-be buyer contacted Arrow on the day of the ITAD closure announcement, “was told ‘thanks for the interest’ and has heard nothing from the distributor on the matter since.”
According to the R2 certification database, Arrow’s U.S. R2-certified facilities are in Gahanna, Ohio; Windsor, Conn.; and Reno, Nevada, and its European R2-certified facilities are in Belgium, the Czech Republic, France, Germany, The Netherlands and the U.K.
In its initial announcement, Arrow said it would wind down all ITAD operations by the end of the year.
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