The Australian retail industry may be witnessing a substantial pullback in discretionary consumer spending but rather than waiting for a return, online retailer Harris Technology (ASX: HT8) has offered low-cost alternatives to brand new products with its refurbished tech products surpassing $1 million in sales.
Harris Technology is best known as a tech retailer that became a pure-play online only retailer when closing its retail shopfronts in 2018, emerging to become one of the biggest marketplace sellers for tech and IT products since.
Like most of its peers, Harris Technology has battled against macroeconomic conditions over the past two years where Australians have pulled back retail spending.
The $1 million milestone came just 7 months after Harris Technology identified an opportunity to leverage its tech product supply chain and in-house experience to refurbish tech products that could be offered at lower price points than their brand new equivalent. Entry into the category was welcomed by customers that were able to purchase products at discounts up to 50% for a product that was only a few years old. Such products had no performance wear based on Harris Technology replacing components, such batteries and screens which are the most common forms of wear and tear, enabling them to perform as if new.
“The past 12 months have again been challenging for Harris Technology but we have remained disciplined in our prudent cash management strategy and allocated resources towards our product categories that return higher margin,” said Harris Technology CEO, Garrison Huang.
“The strategy has enabled Harris Technology to maintain cash reserves while identifying an excellent opportunity in the refurbished tech category that is proving very popular among customers keen on high quality tech, without bearing brand new product prices.
“We have been able to grow our refurbished product sales that has now surpassed $1 million in total sales and kept going up.”
Complementing their higher margins secured from refurbished products, Harris Technology has also sustained sales of its Household category. This range of Household products expands beyond just items likely found in home offices, to the entire house and less impacted by the tough retail environment that has impeded new IT product sales
Highlighting the value of entering the Household and Refurbished categories, Harris Technology’s average gross product margin across the Company in FY24 was 29%, almost double the 15.5% in FY23.
Refurbished tech products offer a compelling alternative to brand-new items, combining quality with affordability. These products undergo rigorous testing and refurbishment processes to ensure they meet high standards of performance and reliability with Harris Technology being an authorised seller of refurbished products on major marketplaces like Amazon and eBay with excellent customer reviews.
The cost of living crisis in Australia has been driven by a combination of factors, including rising housing costs, increased utility bills, and higher prices for everyday goods. In this challenging economic environment, consumers are prioritising essential purchases and seeking ways to reduce expenditure on non-essential items.
In addition to cost savings, the environmental benefits of purchasing refurbished tech have also played a role in their growing popularity. Refurbishing and reusing electronic devices help to reduce e-waste, which is a significant and growing concern globally. By choosing refurbished products, consumers are contributing to a more sustainable and eco-friendly approach to technology consumption.
For the quarter ended 30 June 2024, Harris Technology reported $3.5 million in sales across all their product categories – IT, Household and Refurbished. Focussing its efforts towards its higher margin products, the Company logged just $192k in net operating cash outflow for the year, staying disciplined in their prudent cash management through extremely difficult trading conditions for retailers.
As the cost of living crisis continues to affect household budgets, the demand for refurbished tech products is expected to remain strong.
Mitch Korver is a Business Writer focused on high-growth companies listed on the ASX in the small and medium cap space.
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