Segue Case Study - Major Retailer

Case Study #2 – Major Retailer

Maximizing Recovery Value for At-risk Inventory without Channel Conflict

OEM Profile: Major retailer, consumer electronics. Fortune 3 retailer with a well-known and respected brand image, majority market share and a well established national presence. Segue engaged with retailer, managing several different types of consumer electronics including cameras (30% of purchases). Other products included gaming consoles, gaming devices, DVD players, portable cd players, mp3 and hard drives. Three year relationship.

Issues and Challenges

Customer Returns, excess and obsolete inventory was being sold via auction-based model. OEM suppliers and distributors were expressing dissatisfaction with the inventory being sold to brokers and remarketed at low prices.
OEMs were forced to choose between shouldering the cost of customers calling in to customer service with illegitimate warranty claims or angering the customer by refusing support, causing more friction between the retailer and the OEM
Return against COGS for retailer were low due to method of selling to broker based buyers without the technical expertise on product management to offer better returns
Retailer was managing the cost of auctions and the complexities associated with engaging a variety of brokers due to wide mix of product types, payments, etc.

Desired Outcomes/Key Performance indicators

Increase return vs. COGS
Reduce friction between Retailer, OEM and Distribution Channels
Provide better customer service without increasing costs
Simplify the entire process

Segue Solution and Deliverables

Segue targeted higher end products where retailer was receiving unnecessary revenue returns against COGS
Took fiscal and physical ownership of all selected returns inventory
Reduced retailer carrying costs by establishing automated purchase price and flow of inventory to Segue (guaranteed % vs. retail price)
- Reduced monthly management negotiating issues
- Provided the retailer the ability to forecast asset recoveries/set reserves

· Established inventory processing operations increasing yield and quality of customer returned product resulting in increased asset recovery dollars

· Leveraged closed, authorized sales channel maximizing recovery

Premier buyers are attracted to a controlled, authorized channel
Product margins stabilized over extended period of time
Segue provides self-managed warranty, relieving retailer of responsibility

Value Delivered by Segue

Increased returns on targeted products by 40% on average
Simplification of process reduced expenses for retailer
Friction between OEM and retailer decreased
Segue managed entire warranty process reducing retailer customer support costs
Reduced pressure on retail A-stock margins as B-stock is more strategically managed