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Walmart is Getting Ready for a Refurbished Holiday Season

The COVID-19 pandemic severely damaged the global supply chain, and it’s still working hard to recover. As we head into the holiday season, the news has been flooded with stories about anticipated difficulties for both gift-buying shoppers and the companies that rely on strong holiday season sales.

But dwindling supplies aren’t the only problem. As supplies fell, prices began to quickly climb. Inflation soon became a major concern, reaching its highest level in nearly 40 years. Shoppers are questioning how they can check everything off their Christmas shopping lists without breaking the bank, and sellers are looking for creative options to entice buyers.

Walmart is taking a multi-prong approach to the holiday shopping season. In addition to trying to fill shelves and provide additional sales staff, Walmart is expanding its online presence and its sales of refurbished items. In this article, we’ll cover how Walmart is preparing for this unusual holiday season and why (and how) they are coming to rely on refurbished products.

Walmart Prepares for an Unusual Holiday Season

Walmart remains the primary competitor for brick-and-mortar holiday sales. The company held this position throughout Black Friday this year, accounting for nearly 60% of in-store sales. So unsurprisingly, Walmart invested heavily in its in-person shoppers.

To try and overcome supply chain issues during the holiday shopping season, Walmart spent the third quarter of 2021 building inventory. Indeed, they increased total inventory by more than 11% heading into the end of the year. They also added 200,000 staff in the third quarter to help assist buyers in the store.

But Walmart also is well aware that online sales continue to outpace in-store sales  during the holidays. Buying online is often simpler, and buyers get to avoid in-person shopping hurdles like dealing with crowds and finding parking at stores. 

Online shopping is a natural choice for people who remain concerned about COVID transmission in crowded environments. Moreover, consumers have come to increasingly trust online payment options. According to recent statistics, over 70% of customers favor shopping with a credit card for completing their online transactions, and Black Friday sales numbers reflect this shift to online buying. 

To better position itself against its primary online competitor, Amazon, Walmart is also working to increase its online sales. Presently, Walmart’s online sales are only about $75 billion, roughly 14% of its total global sales of $520 billion. Walmart is improving its online shopping experience by making its sites more user-friendly and ensuring security with PCI-compliant payment systems so customers can be confident in the safety of their online transactions.

One product line Walmart is trying to promote online is refurbished electronics. And with consumers looking for both bargains and product availability this holiday season, Walmart’s best option may be to expand that line. Third-party sellers on Walmart Marketplace can further build this sales channel.

The Rise of Refurbished

Refurbished electronics are finding increasing acceptance among shoppers. In 2020, the total global market for refurbished electronics was over $80 billion. For this season, more than 60% of buyers are considering refurbished electronics for their gift-giving needs.

There are many reasons for the rise in popularity of refurbished electronics over new products: 

1. Increased availability

Availability is one key benefit refurbished products have over new products. Since the onset of the supply chain crisis, the consumer electronics category has been hit hard. Computer chip supplies dwindled due to strict lockdowns in Asian countries, particularly China. Then, in an unfortunate coincidence, catastrophic weather systems hit many chip manufacturers who had not fully shut down their operations.

As a result, shipping times for products like computers and cellphones drastically increased. Unfortunately, the chip shortage remains an issue, constraining supplies of new electronics. For holiday shoppers accustomed to making purchases between Thanksgiving and Christmas, eight-week or longer delivery times are not an option.

Refurbished products suffer less from supply chain problems. Turning previously owned electronics into acceptable gift options frequently doesn’t rely on scarce replacement chips. And there is an ample supply of used electronics available, often in fairly good condition given the tendency of consumers to upgrade early and often.

2. Cost-efficiency

Cost is an obvious benefit of refurbished products. Refurbished computers typically sell for 10-25% less than their newer counterparts—the lower end of discounts consumers can find. Indeed, it is not uncommon to find reductions of 50% or more, even from the most reputable providers.

Inflation is putting a lot of pressure on shoppers’ pocketbooks this holiday season, making them on the hunt for discounts and bargains. So refurbished electronics are a cost-effective option for gift giving.

3. Sustainability

If there is an issue that has gained more attention than COVID itself and the economic chaos it caused, it is climate change and the green movement. The recent United Nations COP26 Conference highlighted the concerns of many world leaders and citizens about the impact of manufacturing on the environment. Follow-up events, particularly by the younger generation, highlighted their desire to focus on green consumption and sustainability.

Electronics and electronics manufacturing are major contributors to environmental contamination. In 2019, the U.S. alone generated nearly 7 million tons of e-waste. But it only recycled about 15% of that waste. Europe is somewhat more effective at dealing with e-waste, recycling approximately 40% of its 10 million tons a year of e-waste.

Refurbished electronics not only help reduce the amount of e-waste disposed of, they reduce the carbon footprint of electronics manufacturers. This makes them a valuable option for green consumers.

4. Reliability

The reputation of refurbished electronics has increased rapidly in recent years. No longer are these “buyer beware” products that consumers take a tremendous risk when purchasing. Instead, refurbished electronics are now highly reliable and often just as good as new.

Much of the increase in quality of refurbished electronics comes from the fact that well-known brands such as Apple and IBM have recognized the potential of the resale market. Apple has built its own closed-loop system, buying back used products from its customers at substantial discounts and then selling them again after cleaning them up and repairing them. Because Apple knows that the quality of these refurbished products affects its reputation, it has every incentive to make sure they work as good as new. 

Other resale companies must follow suit, so the overall condition of refurbished products has increased. In a further effort to overcome consumer resistance to refurbished electronics, most companies now offer at least limited warranties when selling refurbished products.

Conclusion

The evolution of consumer buying preferences during the COVID pandemic heightened the shift towards online shopping, and forward-thinking, traditional brick-and-mortar businesses like Walmart are shifting with their shoppers. By integrating more refurbished items into its product lines, Walmart is able to give shoppers more economical and environmentally friendly options in financially trying times. Look for them to continue this trend in the future.

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