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Getting the Most from the Used Equipment Market

15 Jun, 2003 By: Alicia Ellis imageSource

Getting the Most from the Used Equipment Market

For anyone involved
in the office equipment arena, the used copier and printer markets may prove to
be a lucrative area to explore. According to Jay Wallus, President of Street
Smart Training Institute and a former copier salesman, margins in excess of 40
percent can be made by offering used machines. Used machines have a lower
acquisition cost and a higher margin, but often compare well to the total
profits generated by sales of higher cost new machines that are sold at a lower
margin (typically on the order of 10 percent).

Dealers often find
themselves with used machines when they become the new supplier of a company.
Dealers find themselves having to take a copier or printer "off the
hands" of a client when they outfit a new company. Dealers find themselves
in possession of unwanted and unneeded equipment which is often scrapped or
stored indefinitely. These machines are treated as surplus, but are valuable
assets from which new capital or profits can be generated.

The used equipment
market for copiers and printers adds value to a dealership with disposal options
through the sale of unwanted equipment. Should a dealer choose to sell used
equipment, he/she will find value pricing for customers who otherwise may not
find new equipment affordable. "Offering used equipment drives sales for
the dealership and give salespeople an alternative to new," said Peter
Resnick, President of the International Copier Exchange (I.C.E.).
"Salespeople are able to sell used equipment with the speed and options a
customer wants instead of having to down sell new equipment to the

Because the quality
and service of equipment today allows machines to perform well beyond a typical
lease period, top-notch copiers and printers, with a variety of options and low
click counts, are fueling the fire for pre-owned machines. Where once leases
were available only for new equipment, many leasing companies have seen the
value of used equipment and are offering attractive leasing options on used

There are a number
of different techniques that are employed by dealers who are looking to bring
used copier and printer sales into their marketplace. "The options and
depth into the market are up to the dealer," said Wallus. "Dealers can
sell used copiers to wholesalers and other dealers or they can embrace the
entire used copier/printer concept and refurbish machines for resale


There are a large selection of used equipment wholesalers who are specialists in
used copiers and printers. These wholesalers purchase equipment from a variety
of sources including dealers, large corporations and leasing companies. Only a
handful of wholesalers will remanufacture copiers and offer them for resale.
Most wholesalers act as more of a clearing house-bringing machines in, testing
them to ensure they work, and shipping them out.

"Selling and
buying used copiers can be a major source of added revenue for dealers,"
said Rick Andersen, Vice President of CopEx, a Providence, RI wholesaler of
pre-owned copiers. "The margins that are available to dealers make the
market very attractive." Anderson noted that buying machines from
wholesalers for eventual resale or lease not only keeps service departments busy
but gives sales reps an alternative to selling new. Dealers can buy machines in
good working condition for immediate resale or, depending on the cost
effectiveness, choose to refurbish a machine to like new condition, thus
bringing a higher resale price.

Wholesalers find it
difficult to refurbish copiers given the high demand and technical expertise.
"CopEX tests and evaluates each machine and passes on the information to
the dealer," said Andersen. "Logistically it is impossible to repair
every machine, but we do our best to represent the condition of each copier

Explaining the need
for inventory, Fred Nitsos, President of AllCopy, LLC, a Danbury, CT wholesale
distributor of used copiers, printers and faxes, sid the market for used
equipment is larger than ever. "There are no bad copiers anymore,"
said Nitsos. "Used copiers are in large demand, especially in rising
foreign countries, where almost 75 percent of our inventory goes." Nitsos
went on to say that the most important thing for dealers to know is that there
is an outlet available for used equipment. "From the largest to the
smallest machines, we are moving them out faster than we can get them in,"
said Nitsos. "We can't get enough." AllCopy prides itself on its wide
selection of equipment for resale, with pickup in the 48 contiguous states often
within 24 hours.

Equipment that is
not sent off to foreign lands is scooped up by many dealers with the desire to
offer their customers more and to get more in return. At any given time,
wholesalers will have thousands of machines available for resale to dealers.
While some wholesalers will take all different makes and models of machine,
there are wholesalers who are more selective about their choice of equipment.
"Ninety-five percent of our inventory is made up of digital machines,"
said Resnick. "I.C.E. hand picks equipment with a three page procedure list
that includes testing and repairs, if necessary, to bring a machine up to a good
working condition. This allows dealers to achieve quality margins from 40 to, at
times, 200 percent."

Madison Office
Machines in McFarland, WI is unique because they do not offer used copiers, but
instead focus their attention on the used printer market. Specializing in
refurbished Hewlett-Packard printers, Madison's Jamie Bellanger explains that
because margins for new printers are small, Madison can reap the remanufacturing
rewards by purchasing truckloads of surplus printers, refurbishing them to like
new condition, and reselling them or offering them wholesale to dealers.
"Forty percent of our business involves selling to dealers," said
Bellanger. "Dealers have the opportunity to make margins of 50 to 60
percent with used printers."

The most important
thing a dealer can do when considering the used market is to develop a good
working relationship with wholesalers. Explaining your plans and goals for your
dealership to the wholesaler will allow them to supply you with the best
machines with the fewest clicks.

Do It Yourself

While dealers often do not know the condition of copiers and printers that have
been obtained through new clients or wholesalers, machines that become available
through leasing programs are often those serviced directly through the dealer.
"These are the ideal types of machines for dealers who want to begin
refurbishing and reselling themselves," say Wallus. "The dealer knows
the machine and its service history."

"A dealer will
incorporate the costs associated with the acquisition of the old machine into
the client's new lease, essentially securing the old machine for free,"
said Wallus. "The box is then taken to the dealership, refurbished and
leased or rented out to a new client." As an example, Wallus would secure a
used machine for $2,000. He would then have the service department refurbish the
machine at a cost of $1,000. The machine would then be ready to rent, lease or
sell to a customer at a cost of $10,000. "That's a profit of $7,000,"
said Wallus, who touts the importance of complete refurbishing as a key factor
in producing high quality, used equipment. "Our dealership found that over
time, the cost factor associated with refurbishing a machine was well worth the
time and expense. The cost of in-house labor is much less expensive than that
cost of service calls on a used machine that has not been remanufactured."

OEM Woes

One concern often faced by dealers selling used machines is addressing the needs
and expectations of the OEM supplying new machines to the dealership.
Wholesalers understand this concern and concede that in order to successfully
offer both new and used machines, dealers must keep up their quotas and maintain
their dealer status. The revenue generated by the sale of new machines through
margins and service contracts is the life blood by which the dealership thrives.

"With a
combination of both new and used, dealers should have no problem moving both new
and used machines. Your used equipment wholesaler should be an extension of your
dealership. They should be there to discuss issues, offer advice and be
available to discuss options and alternatives," said Resnick.
"Dedication to your OEM will assure their continued support as a supplier
of the primary source of income for your dealership."

Wholesale Resources
All About Electronics, LLC


International Copier Exchange (ICE) 888.ICE.COPY



Madison Office Machines




Midwest Copier Exchange


Copier Brokers


Remarketing Solutions International (RSI) 800.332-2946

Copier Remarketing


Ross International


Greater Philadelphia Equipment Company 215.778.7111




Selling Strategies -
Ten Questions to Ask Before You Sell to Wholesalers

1. What types of machines do you purchase? (Find out if the wholesaler will buy
strictly copiers, or if they also purchase printers, multifunction machines, fax
machines, etc.)

2. Are there any machines that you will not buy, and why? (This is important to
keep in mind if you come across a variety of different manufacturer's machines.)

3. Does the condition or age of a machine play a factor in whether or not you
will purchase it? (While not often, there are machines on the market that are so
old, they may not even be worth the time to retrieve from a customer.)

4. What do you base the purchase price for a used copier on? (Get a detailed
description of exactly how a wholesaler figures out how much they are willing to
pay for a used machine. Are there straight fees for selected machines? Does the
condition of the machine, the age of the machine of the number of clicks play
any role?)

5. What exactly are done with the machines upon purchase? (According to one
wholesaler, the majority of machines are sent to foreign countries for resale.
These countries pay pennies on the dollar for shipments of used machines.
Wholesalers who profit from this type of business may not be willing to pay as
much for machines as those who market in the U.S.)

6. Are there a minimum number of machines that I am required to have before you
will come for pickup? (While some wholesalers will pick up anytime, anywhere
while others prefer to wait until you amass a few machines. Checking will ensure
you don't wind up having to find room for storage.)

7. Are there any charges for picking up machines? (While most wholesalers today
offer free pickup often within 24 hours, others have been known to charge a fee.
Check first.)

8. Can I have a few references? (References are always a good idea in business
and every good business will be happy to give you the names of a dealer or two
who has developed a good relationship with the wholesaler and can vouch for
their business practices and professionalism.)

9. Are you willing to help me to dispose of other equipment should the need
arise? (Would the wholesaler help you to dispose of other machines such as
faxes, printers, collators, or other office equipment that your client does not
need but hopes you will take off their hands?)

10. Are there any added benefits to using your service as opposed to others?
(Because the demand for copiers is so high, some wholesalers have taken to
giving dealers incentive gifts for supplying them with machines. Sell them four
copiers and receive a free DVD player. When the demand is there, you'll find the
competition between wholesalers can be great.)

Buying Benefits -
Ten Questions to Ask Before You Buy from Wholesalers

1. What types of products do you offer for sale? (Some wholesalers only offer
specific lines You may need more than one wholesaler to cover the spectrum of
machines you want to offer.)

2. What are your biggest selling products and how many of these do you typically
have in stock at any given time? (Use this information as a guide to the
services this wholesaler has to offer.)

3. What percentage of your inventory is made up of analog vs. digital machines?
(Odds are, you have a good idea about what your clients like. For many an analog
model will suit their purposes, but digital machines may be the only choice for
most of your customers.)

4. Is it possible for our dealership to maintain a stockless inventory or do you
recommend that I stock up on particular models? (While the idea of stockless
inventory is possible, used top-selling machines do not stick around long so it
may be wise to grab a machine while it's available. On the other hand, if a
wholesaler tells you that there is an excess of a certain type of copier or
printer, you may be able to hold of on the purchasing decision until your
customer has committed. Talk with you wholesaler about your goals and plans.)

5. How much of your inventory is shipped outside the U.S. and are you selective
with the machines that you choose to keep for resale to dealers? (In most cases,
you will find that dealers shipping outside the U.S. will retain many of the
hottest products for resale in the U.S.)

6. Is there a minimum quality level that you strive to meet on your machines for
resale? (While some may tell you they just check to see if it passes a copy,
other wholesalers will more thoroughly inspect a machine and will have their
inspection results ready with the machine for your approval.)

7. What is your return policy should this machine be a lemon? (While some sales
are made "as is," the majority of wholesalers have return policies
that support the dealer.) 8. Are the products listed in your flyers or dictated
on your website the only products available or should I call with any machine
requests? (Wholesalers will often keep a list of dealers and particular products
that they are interested in.)

9. As a supplier of products to you, what benefits do I have if I decide to buy
from you? (As the old saying goes, I'll scratch your back, if you scratch mine.
Maintaining business relationships help in this business.)

10. How many dealers do you have and do you have any references? (Too many
dealers and you'll never get the cream of the crop; too few dealers and there
may be a problem. Get a few references, preferably from a different territory,
and talk to the dealers to see if they are happy.)

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