Will used goods fly at Walmart?

Everything old is new again, or maybe everything that’s been refurbished is new again.

walmart (WMT 0.82%) is getting into the refurbished consumer electronics game, and it’s a smart move because it fits in well with its price-conscious consumers. While almost everyone is price-sensitive in this time of high inflation, high energy costs and rising interest rates, the refurbished-as-new market seems right in the wheelhouse of the retailer.

Image source: Wal-Mart.

Like new

Walmart recently launched Walmart Restored as part of its website, where it lists consumer electronics and appliances from its preferred third-party sellers and suppliers that have been refurbished to like-new condition. Prices are said to be “a fraction of typical costs” and once the products have been inspected, tested and cleaned, they will also have no visible imperfections when viewed from a short distance. They also come with a 90-day free return guarantee.

The program will initially only be available on the walmart.com website, but will roll out to select stores later this fall. Among the brands included in the program are Apple, resumeKitchenAid and Samsung.

While Walmart isn’t alone in offering refurbished products, the inflationary era people are going through means this is a timely introduction of the program. It’s back-to-school season, which is a great time to shop for laptops, tablets, TVs, mobile devices and other consumer electronics – and it’s kicked off long enough before shopping begins. holiday season, providing an opportunity to get a head start on the rush of goods.

A growing need to unload goods

Walmart is the world’s largest retailer, but it has been hit by slowing sales and recently announced it must unload a shipment of merchandise at discounted prices to eliminate inventory that hasn’t moved.

It also provided a business update indicating that profits would be significantly affected by rising prices and expenses, and more recently announced that it would lay off hundreds of staff in its offices.

The restored Walmart program was likely a consequence of this developing financial reality. Although apparel is where the retailer is experiencing a buildup of inventory that they need to reduce, their sales associates and suppliers are obviously inundated with a lot of product returns that they also need to move.

A sea of ​​refurbished products

This isn’t the first time Walmart has experimented with resale items. A few years ago, the retailer partnered with returns company goTRG to sell refurbished Apple products on its website. goTRG works with a number of major retailers including Home deposit, Lowe’sand Amazon.

Amazon has actually launched its own refurbishment program, Amazon Renewed, to sell used goods that have been restored, like others like Apple, best buyand eBay.

Although it took some time for refurbished consumer products to be accepted by the market because people feared receiving damaged goods, the whole second-hand market took on a life of its own, especially at the start of the pandemic.

Customers now have their choice of second-hand clothes, sneakers, consumer electronics and home appliances. In many cases, there was no appreciable upgrade in product design or innovation, but prices continued to soar. Consumers are therefore more inclined to buy refurbished products. And because retailers stand behind the used products they sell, it gives customers the confidence to buy them.

A good start

The program won’t do anything to help Walmart’s margins in the short term, but it could increase website traffic, which could eventually lead to increased sales elsewhere.

It’s a realization that buyers are under more pressure today than they have been in years. Since Walmart is already associated with everyday low prices, the program should be successful in moving goods. This can save its customers a lot of money, while increasing website traffic and customer loyalty.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Rich Duprey holds positions at Lowe’s. The Motley Fool has positions and recommends Amazon, Apple, Best Buy, HP, Home Depot and Walmart Inc. The Motley Fool recommends Lowe’s and eBay and recommends the following options: long calls of $120 in March 2023 on Apple, short calls of $130 in March 2023 on Apple, and short calls of $50 in October 2022 on eBay. The Motley Fool has a disclosure policy.