Renewed items are having a moment

With demand for refurbished, pre-loved and renewed products increasing, marketplace sellers need to maintain high inventory levels more than ever.

Long payment terms mean having to wait for cash to restock, but the Storfund service can get you paid on the day you sell. This could mean halving your cash cycle and therefore doubling your annual sales.

This isn’t traditional retail anymore

After successfully running their two pawn shops in Spain for five years, Jorge and his son Manuel decided to follow the trend and expand to selling pre-owned devices online.

Specialising in the sale of refurbished iPhones, they initially started out as a seller on international marketplace Back Market in 2019, before expanding to Amazon Renewed, Shopify and Refurbed last year. Now, their customers are based all around the world with the majority of their sales in France, Spain and Germany.

Aside from now reaching customers around the world, one other big difference to their new business model was cash flow. Previously used to receiving customer payment at the point of sale and able to buy new items immediately, they were now faced with the challenge of having to wait for the marketplace to release their funds, this led to them finding themselves out of stock by the third day, and having to wait at least 10 days to restock again. Manuel says “We couldn’t get the money promptly, we had 10 days of billing and 10 days of waiting”.

Payment terms on marketplaces differ (14 days on Amazon, 20 days on Back Market), but this can mean a cash cycle of up to 25 days; the time it takes from paying your supplier for stock to receiving payment from the marketplace after you have made a sale. In other words you need your own capital to fund a growing business. Jorge and Manuel initially bridged this gap using their own savings and loans, but to really grow and expand they knew they needed to find more capital. “We were limited by our working capital and were looking for a solution so we could grow our business at a steady pace.”

Problem meet solution

In the spring of 2021 the sellers met with Daniel Hermoso, part of the growth team at Storfund. He recalls “we were introduced through the client’s account manager on Back Market who explained that this business had the potential to grow by 20-40% but were struggling to get the capital to do so, and thought this could be a good fit.”

Manuel particularly liked that Storfund were partners with Back Market, and that the service was integrated with the marketplace’s platform, “we found this a trustworthy and attractive solution to our turnover problem. By receiving payment as soon as we sold our products, we didn’t have to wait to restock. No delay meant we could sell more inventory quicker.”

In the following months Jorge and Manuel were able to increase their sales in Europe by 135% and expand to Amazon’s Renewed marketplace. “Thanks to Storfund’s support on Amazon since day 1, we were able to expand to Amazon Renewed much more easily than if we had done it ourselves.”

“We did try another service before we knew about Storfund, but because they were in the experimental stage the payments were often late, and they had no API integration, they were not partners with the marketplace and that made everything much more manual”.

Since using Storfund, Jorge and Manuel have grown their annual sales by over €2M.

“With Storfund it was an immediate change, the Storfund product is really spectacular because while trying to grow not all companies have the option to go to the bank and be given liquidity.

“The big change was that we were able to start making daily purchases. We used to buy products only every 10 days. Now we look for the opportunity to buy daily batches from suppliers.

Manuel says having a profitable product to sell is key. The advantage of selling refurbished iPhones is that they “sell themselves, there is an insatiable demand. On Back Market we have been selling 1300 units a day.

“This is not a temporary trend, a ‘one-off’ – buying pre-owned is here to stay. Not only for phones, but across more categories and marketplaces that work with refurbished products”.

In addition to the right product, finding the right marketplace is important too. “Customers buy from the platform, the trust is in the platform. People enter the website because of what they want to buy and the quality. And of course price is a determining factor.

If your product is profitable, Manuel believes Storfund “has room to double your initial volumes. The main factors of success are to have permanent stock, a good line of financing and not limiting yourself to local suppliers only. Tight sales margins don’t get you profits. The biggest difference is that we can make frequent purchases from suppliers. And we need to in order to meet demand.

If you have a profitable product, I recommend Storfund without a doubt.”