Cascade Asset Management found that selling used electronics through e-commerce marketplaces brought substantially more revenue growth than selling to wholesalers last year. The ITAD company still joined many others in suffering an overall drop in prices.
Those were a couple of takeaways from Cascade’s recently published 2022 annual report, which provides a range of detail about the business and operations of the privately held company.
Headquartered in Madison, Wis. and with processing facilities in Madison, Indianapolis and Orlando, Fla., Cascade Asset Management received over 4.07 million pounds of equipment last year, up 11.3% from 2021. Measured another way, the company inventories 366,308 different assets.
The following are several takeaways from the annual report:
Market prices down, volumes up: Like some other ITAD companies, Cascade reported that average resale prices were down last year, even as the volumes it resold increased. The annual report noted an average 20.0% drop in resale prices in 2022, compared with the year before. At the same time, the number of devices resold or donated by Cascade’s three facilities increased by about 13.8%. The result was a net increase in device sales revenues of 6.6%.
The company noted that the year-over-year value decrease was simply the result of moving past COVID-era supercharged pricing and into a more normal market.
“Due to supply chain disruptions and difficulty in sourcing new equipment, the price paid for refurbished desktops, laptops, and monitors steadily increased during the pandemic,” Cascade’s report noted. “Now that supply chain issues are stabilizing … prices are returning to pre-pandemic levels of 2019.”
Growing in direct sales to consumers: Cascade reported that its total revenue from selling directly to end users, including through Cascade Marketplace and the company’s eBay store, increased by 78.9% last year. In comparison, revenue from sales to wholesalers increased by 1.3%. The company sold electronics to consumers in every state except Alaska and Hawaii. Overall, the company reported that only 0.34% of sold products were returned by the customer, “a testament to the quality of our refurbishment program.”
Neil Peters-Michaud, owner and CEO of Cascade Asset Management, told E-Scrap News the company’s e-commerce/retail sales were 7.4% of total sales in 2021 but rose to 12.4% in 2022. For example, the company completed 2,901 sales transactions through its eBay store last year, generating over $1 million in resale revenue, nearly double the revenue from the eBay store the year before. In 2021, wholesale sales represented 92.6% of total sales. That share decreased to 87.6% in 2022.
“When global resale prices began dropping mid-2022, we shifted more sales to direct-to-consumer online retail markets, like our Cascade Marketplace online store and eBay,” Peters-Michaud said., “This was a way to generate more margin from these products and better returns for our customers earning rebates from our revenue share program.
“It is still the case that the vast majority of Cascade’s refurbished products are sold through wholesale channels, but in 2022 we concentrated on more value-added resale and refurbishing activities to generate better returns,” he added. “We see this trend continuing.”
Strategies for expanding reach: In 2021, Cascade opened its third facility in Orlando, seeing potential for growth there. Last year, Florida supplied 10.75% of the weight handled by the company, behind only its headquarters state, Wisconsin. Additionally, Cascade said that it was able to serve additional geographies by using third-party white glove pickup services, box return programs and its own staff. “These additional service options were increasingly utilized by clients with remote work needs and enabled us to collect equipment from 52% more states in 2022 than in 2019,” the report notes.
In total, Cascade collected equipment from 344 businesses and other organizations in 47 states (plus Puerto Rico). Customer deliveries, box return programs and third-party shipping made up 12% of the total weight, with the remaining 88% collected and managed by Cascade’s staff.
Unlocking devices: ITAD companies often receive computers with remote software locks that inhibit the ability to wipe and resell drives unless the locks are removed by clients. If they remain locked, processors are forced to recycle otherwise saleable computers. Cascade reported that it worked with 44 clients to unlock 6,670 assets. As a result, Cascade was able to rebate an additional $385,000 to clients.
Operational improvements: Cascade also reported it improved the refurbishing processes at its Wisconsin and Indiana facilities.
“Activities included redesigning the work station layout in Wisconsin to improve work flow and increase capacity, and reconstructing the Indiana refurbishing process to improve testing capabilities,” the report stated.
