With all of the “special deals” being offered during the holiday shopping season, is it safe to buy electronics that have been refurbished?
The demand for electronics during the holiday season tends to generate the lowest prices of the year, but there are a few things that you need to keep in mind when trying to find the ‘best deal’.
The profit margins in the electronics business are very thin on a year round basis because of demand and competition, so understanding this relatively thin level between the cost and selling price is very important.
It’s not uncommon for retailers to sell electronics at 8 to 10% above cost, so when you see a 30% or 40% off sale for anything electronic, you should immediately be suspicious.
Buying refurbished electronics is one way of potentially saving money, but not all refurbished products are the same.
I generally refer to refurbished electronics as ‘pre-broken’ because you will never actually know the circumstances that led to the device being ‘refurbished’.
In some cases, the device was simply returned as defective, but the reality was that the user didn’t understand how to use or setup the device and there was nothing wrong with it.
In other cases, the device was exhibiting intermittent issues that the refurbishing process wouldn’t necessarily catch, which means the next owner will experience the same random, yet unrepeatable issues when they try to explain what the problem might be.
Remembering that the profit margin for brand new products is very thin, there isn’t much room for any real deep discounting.
The two primary variables that you should contemplate when considering the purchase of refurbished electronics are: is the price substantially lower than buying new to make the gamble worth the risk and does the device have any moving parts.
If a refurbished device is 10% to 20% cheaper than its comparable new alternative, the only situations that I would consider are when the item has no moving parts (HDTV, solid state laptops, iPads, etc.) and is a higher ticket item.
Whenever there are moving parts involved (mechanical hard drives, power supply fans, etc.), your risk increases exponentially because moving parts have a much higher rate of failure.
And a 20% discount on a $200 device is much less attractive then a 20% discount on a $1500 device.
Another critically important factor to consider is who is offering the refurbished product.
A manufacturer’s refurbished product is much less risky than a third-party that offers a refurbished device.
For instance, buying a refurbished iPad from Apple (one of the few scenarios that I would be comfortable with) is much less risky than buying a refurbished iPad from ‘Joe’s Online Emporium of Refurbished Electronics’.
Another huge consideration is the associated warranty. If a new product comes with a 1-year warranty, often times the refurbished alternative only comes with a 90-day warranty.
The salespeople of refurbished devices will be fast to offer up an extended warranty, but by the time you spend the extra for the warranty, you may as well purchased a factory sealed version with the full warranty.
Having spent most of my life servicing consumer electronics, I can tell you that the horror stories from folks that bought a refurbished device are not uncommon, so as with any alternative purchasing scheme: buyer beware!
Ken Colburn, President
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