ITAD service providers were shocked to see used equipment prices soar during the pandemic. Now, they need to deal with a market stabilizing at lower levels amid recession worries. | Ari N/Shutterstock
Prices for refurbished PCs have fallen in the past year alongside ongoing uncertainty in the economy, but ITAD players said the market appears to have leveled off – for now.
Chris Ko, CEO and co-founder of electronics recycler ER2, said he’s seen a drop in demand for desktops of around 30% in the past year. The demand for laptops has stabilised, and prices have fallen by around 40%, he said.
ER2’s headquarters is in Mesa (Ariz.) and has other facilities in Sacramento, Calif. and Memphis, Tenn. Nashville and Houston.
The company’s sell-through rate in a 30-day period is around 52%, Ko said, “which means we’ll sell all our products in a 60-day period of time roughly.”
He stated that ER2 had approximately 15,000 laptops on hand and that moving that much product in two weeks shows that there is demand for the product.
“But pricing has dropped off,” he said.
The economic factors affecting the used PC market are multifaceted: inflation’s impact on consumer spending, corporate IT shifts tied to remote working and pandemic policy in Asia, to name a few.
E-Scrap News recently spoke with a handful of refurbishers to understand what they’re seeing in the market, as well as how they’re responding.
On the heels of a ‘phenomenal’ period
George Hinkle, president of ITAD and the e-scrap company Arcoa Group is located in Waukegan. The company has processing facilities in Waukegan as well Akron (Ohio) and Kenosha (Wis.).
Hinkle stated that used equipment prices began to fall in spring 2022 but had stabilized by December. He noted that the decline in used equipment prices was starting from Extremely high prices The pandemic triggered a surge in demand for computer equipment that could be used at home.
Those stellar prices drove a “phenomenal” year for Arcoa in 2021, Hinkle said.
“It dropped from something that was very unusual,” he said. Arcoa had predicted a decline in the price of used equipment in 2022. However, the decline in mid-2022 was much faster than expected, he said.
Albert Lozano, an ITAD company Digital Green Global, stated that his company sells almost exclusively used equipment through e-commerce channels on the West Coast. The vast majority of the sales are to North American customers.
All in all, secondary markets have “been stable,” he said.
Digital Green Global produced over 1,000 tons of material between 2022 and 2023, with most of the material destined for recycling. The company sold more than 25,000 used electronics in 2022. This does not include any harvested components or other recycling commodities. His company, which serves large corporate clients mostly, has facilities located in Morgan Hill, Calif. and Dallas, Texas.
Used consumer electronics haven’t been moving as fast recently, and they’ve been selling for roughly 10% to 15% lower prices than they fetched in pre-pandemic markets, Lozano said. He said that markets remain strong for server and laboratory equipment.
Recovered memory that is sold and shipped to Asia is one category that has been affected. That part of Digital Green Global’s business was once a big profit generator but came to an almost complete halt after China’s coronavirus crackdowns, he said.
Client revenue share is affected
For ER2, market changes mean that clients make less on each item.
“It’s our customers themselves who, from a revenue-share standpoint, are getting less because we’re not getting as much value back, but they’re understanding of that,” Ko said.
He said the company has also changed its parameters on what’s worth refurbishing, because even though older products still sell, the lower prices mean it’s often no longer worth the cost.
“It starts to become no longer viable to refurbish everything that could be reused and that’s the problem,” Ko said, adding that for ER2 the break even point is about $80. Any device that can’t sell for more than that is one that the company would lose money on. Right now, that means laptops that have a sixth-generation or older Intel core processor don’t make the cut, he said.
“It’s our customers themselves who, from a revenue-share standpoint, are getting less because we’re not getting as much value back, but they’re understanding of that.”
–Chris Ko, CEO and co-founder of electronics recycler ER2.
Arcoa’s roots lie in office copier/printer sales, and Hinkle stated that the dynamics of different devices have had a varied impact on Arcoa. According to Hinkle, printers as well as networking equipment have remained strong while laptops and desktops are experiencing a slowdown.
Some components have experienced major market changes. He said that processor and RAM values are significantly down, as they are closely tied to Asian markets.
Hinkle did note that since the late-spring/early-summer time frame, when there was a lot of pricing volatility, the market has calmed.
“From what I can tell, I think the markets have leveled off for us,” he said.
A changing industry
The decreasing demand for desktops will continue, ER2’s Ko predicted, because of the rise of remote work.
Businesses aren’t bringing as many employees into the office now, he said, “and if they do it’s not going to be via a desktop.”
“Those are going to be less and less in the workplace, but I think there’s an interest from schools and worldwide marketplaces,” Ko said. “In Dubai, India, the rest of the world where they’re not as concerned with mobility because a lot of people don’t necessarily have home internet, so they’ll be viable there.”
Although desktops are still desired by computer labs in education and international markets for their use, they have seen a decline in pricing and demand.
Resellers will also be available in June This should be mentioned Rising shipping costs are causing a decrease in demand on international markets.
“From what I can tell, I think the markets have leveled off for us.”
–George Hinkle, president of Arcoa Group.
Robin Ingenthron (founder and CEO of Good Point Recycling in Vermont) said that overseas buyers of used equipment were suffering right now. A couple of them aren’t placing orders for computers at any price, and some have placed orders but Ingenthron is not keen to ship equipment to them because they still owe Good Point Recycling money for past orders.
He suggested that stimulus money given during the pandemic might have helped to boost the market earlier and contributed to the current decline in demand.
“People might have purchased two years of new equipment in one year,” he said, “which is part of what they blamed for the inflation – the overheating of the economy. All that stimulus money.”
He is receiving more calls for desktop monitors that are used, even though the prices being offered are fairly low. He believed the market for desktop computers was shrinking, so the recent rise in demand has left him confused.
How to weather the next storm
Companies are being warned by economists that they could be in deeper recession if inflation continues to rise and consumers have concerns about their ability to meet basic needs.
HP CEO Enrique Lores announced recently that HP intends to cut 10% of its workforce. Telling The Wall Street Journal that “we think that at this point it’s prudent not to assume that the market will turn during 2023.”
How can ITAD businesses weather market changes?
Ko said he’d love to see the ability for certified refurbishers to sell partially repaired items to people interested in making their own modifications, but that’s currently not an option under most certification requirements. It could help keep older models that don’t otherwise make the price cut in circulation, he said.
“Being able to potentially say, ‘Hey, this has been completely tested, the components work, it just needs a battery,’ and then someone might actually be willing to buy that and they would put their battery in and do whatever they want,” he said.
Ko said that he believes prices for laptops will remain at their current levels for a long time. “I don’t foresee it coming roaring back at all,” due to some remaining supply chain issues. Businesses are cutting back on spending due to recession fears.
“A lot of our clients are Fortune 100s and they really have decided to be more conservative on their hiring, and also the same thing on their overall business itself,” he said.
“All downturns, starting with the 2008 financial crisis, showed that ITAD companies have also struggled to sustain business and suffered.”
–David Daoud of Compliance Standards.
David Daoud, of ITAD industry research company Compliance Standards stated in a recent podcast Inflation and rising labor prices have caused some severe impacts on PC demand. This will definitely impact the ITAD sector.
“The number of PCs shipped in 3Q this year was down from last year, confirming that demand overall is shrinking,” he said, calling it “perhaps the most alarming piece of information because the seasonal trend of back-to-school has been broken.”
Although many people claim that when economic growth slows down, demand for used equipment rises, Daoud said there’s no empirical evidence to back that up.
“All downturns, starting with the 2008 financial crisis, showed that ITAD companies have also struggled to sustain business and suffered from the downturns, resulting in subsequent consolidation of the sector,” he said. “There is also the fact that the price difference between a refurbished device and a new system has been shrinking and is not so substantial, making it more challenging to convince buyers to endorse used equipment.”
Lozano stated that he believes a deeper recession is imminent, but he is confident Digital Green Global will be able to withstand it. He’s been in business for over three decades and has experienced several market downturns in the past, he said.
“You just have to be safe, play smart and ride the markets,” he said. “Be realistic.”
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