B-Stock Channel Control in the CE Industry

This paper will explore the necessity and importance of B-stock channel control in
the consumer electronics industry. It will additionally cover the roles and
responsibilities that an authorized, contracted, reverse logistics company should
play in the managing the refurbishment, remarketing and channel protection
strategies associated with B-stock.

TABLE OF CONTENTS

I. Introduction

A. Definition of B-Stock
B. The importance of Channel Control in the Consumer Electronics Industry
C. Purpose of the Paper

II. The Risks of Uncontrolled B-Stock Channels

A. Brand Image and Reputation
B. Product Quality and Safety
C. Price Erosion and Profit Margin
D. Channel Conflict and Loss of Sales

III. The Benefits of Controlled B-Stock Channels

A. Cost Savings and Revenue Generation
B. Sustainability and Environmental Responsibility
C. Positive Impact on Brand and Customer Loyalty

IV. The Role of an Authorized Contracted Reverse Logistics Company

A. Definition and Importance of Reverse Logistics
B. Expertise and Infrastructure
C. Customized Solutions for B-Stock Management
D. Channel Segmentation and Control

V. Best Practices for B-Stock Channel Control

A. Strict Inventory Management and Tracking
B. Refurbishment and Quality Control Standards
C. Consistent and Transparent Pricing Policies
D. Channel Segmentation and Control

VI. Conclusion

A. Recap of Key Points
B. Call to Action for Consumer Electronics Industry Stakeholders
C. Future Outlook for B-Stock Channel Control

I. INTRODUCTION

B-stock, also known as refurbished or reconditioned products, are products that
have been returned or previously used, should have been restored to a like-new
condition and are resold at a discount price. While B-stock can provide
significant cost savings and revenue generation opportunities for consumer
electronics manufactures and retailers, it also presents a number of risks and
challenges that need to be managed effectively.

This paper will explore the necessity and importance of B-stock channel control
in the consumer electronics industry. It will additionally cover the roles and
responsibilities that an authorized, contracted, reverse logistics company should
play in the managing the refurbishment, remarketing and channel protection
strategies associated with B-stock.

II. THE RISKS OF UNCONTROLLED B-STOCK CHANNELS

Uncontrolled B-stock channels causes significant, negative impact to the
consumer electronics industry, including harm to OEM brand image and
reputation, product quality and safety concerns that cause price erosion and
profit margin loss, channel conflict and cannibalization of A-stock sales.

A. Brand Image and Reputation
Selling B-stock products through uncontrolled channels can result in lower
quality products being associated directly to a brand. Under these conditions
damage to the brand image and reputation negatively impact customer trust
and loyalty along with future sales volumes.

B. Product Quality and Safety
Uncontrolled B-stock channels can result in the sale of products that have not
been properly refurbished or tested, resulting in potential safety risks to
consumers. This can lead to product recalls, lawsuits couple with negative media
attention, further damaging the brand image, reputation and financial health of
a company.

C. Price Erosion and Profit Margin
Uncontrolled B-stock channels frequently lead to price erosion, as B-stock
products are often unnecessarily sold at significantly discounted prices.

D. Channel Conflict and Loss of Sales
Selling B-stock products through uncontrolled channels can create channel
conflict with authorized retailers and distributors, leading to a loss of sales and
potential legal issues.

III. THE BENEFITS OF CONTROLLED B-STOCK
CHANNELS

Controlled B-stock channels can provide a number of benefits to consumer
electronics Manufactures, Distributors and Retailers, including cost savings and
revenue generation, sustainability and environmental responsibility, and positive
impact on brand and consumer loyalty.

A. Cost Savings and Revenue Generation
Controlled B-stock channels can provide significant incremental cost savings
and revenue generation opportunities for manufactures and retailers by
optimizing the value of returned or previously used products. A tightly controlled
and formulaically (pricing) crafted remarketing process will generate
incremental sales at the highest recovery possible, without replacing A-stock
sales or placing pressure on A-stock pricing.

Additionally, an OEM’s distribution and retail customers A-stock purchases will
not be placed at risk due to market contamination, thereby stabilizing ongoing
purchase pricing and sales thruput.

B. Sustainability and Environmental Responsibility
Controlled B-stock channels can also promote sustainability and environmental
responsibility by reducing waste and extending the lifecycle of products.

C. Positive Impact on Brand and Customer Loyalty
Controlled B-stock channels can help to maintain brand image and reputation
by ensuring that B-stock products are refurbished to high quality standards and
sold through authorized sales channels. This in turn will positively impact
customer loyalty by providing affordable options for customers to purchases the
brand’s products and increasing overall customer satisfaction. Eventually, many
of these same customers will become A-stock customers of the same brand they
originally purchased as B-stock.

IV. THE ROLE OF AN AUTHORIZED CONTRACTED
REVERSELOGISTICS COMPANY

An authorized contracted reverse logistics company can play a critical role in
managing the refurbishment, remarketing and channel protection of B-stock
products.

A. Definition and Importance of Reverse Logistics
Reverse logistics refers to the process of managing the return of goods from the
point of purchase (retail, distribution) back to the point of origin (OEM). Reverse
Logistics is a vital process as part of the overall supply chain for any OEM. The
proper management of returned products ensures customer satisfaction,
efficient credit reconciliation, comprehensive product handling, OEM spec level
quality refurbishment, focused and strategic remarketing of the inventory,
protection of the A-stock channels and the associated resellers (Disti and Retail),
the mandatory adherence to all environmental legal standards regarding
inventory scrap disposition and finally, the structuring and execution of KPI’s that
ensure that returned products are properly handled and processed.

B. Expertise and Infrastructure
Authorized contracted reverse logistics companies have the expertise and
infrastructure needed to efficiently manage the refurbishment and remarketing
of B-stock products, including product testing, cleaning, and packaging.
Preferably all areas of the RL process are managed under one roof to ensure
100% compliance, accountability and to ensure the most economical and cost-effective results.

C. Customized Solutions for B-Stock Management

Authorized contracted reverse logistics companies can provide customized
solutions for managing B-stock channels, including inventory management,
quality control, and channel protection.

D. Channel Segmentation and Control

Channel segmentation and control ensure that B-stock products are sold
through authorized channels and do not create channel conflict with authorized
retailers and distributors.

VI. CONCLUSION

In conclusion, as a result of highly increased online selling, returned products are
averaging from 15-30% within the computer and consumer marketplaces. This
mandates that B-stock channel control is essential for consumer electronics
manufactures and retailers to effectively manage the risks and opportunities
associated with B-stock products. Many profit dollars are tied to this amount of
inventory and improperly managed, can devastate the financials of any
company. An authorized contracted reverse logistics company can play a critical
role in managing B-stock channels and ensuring compliance with industry
regulations and ROI. Best practices for B-stock channel control include strict
inventory management and tracking, adherence to refurbishment and quality
control standards, consistent and transparent pricing policies, and channel
segmentation and control. It is important for all stakeholders in the consumer
electronics industry to recognize the importance and need for effective B-stock
control and take action to implement best practices in their organization.

THE SEGUE DIFFERENCE

As an industry vetted, multi-faceted,
dedicated forward/reverse logistics
supply chain company, Segue delivers
a comprehensive menu of
customizable forward/reverse and 3PL
options and services that provide
organizations the ability to tailor
solutions that best fit their business
needs and goals. Segue will provide
everything you need to optimize your
time, money and personnel, providing
your organization more time. Money
and energy to focus on the vital and
necessary profit centered areas of your
business.