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Radio Shack

Radio Shack. $4.2B public electronics retailer Operates approx 6,000 stores (4,500 company owned/1,500 franchised) and 1,500 kiosks across the US Currently liquidates all returns through Free Flow web site Data wipes all returns except those sent back to vendor

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Radio Shack

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  1. Radio Shack • $4.2B public electronics retailer • Operates approx 6,000 stores (4,500 company owned/1,500 franchised) and 1,500 kiosks across the US • Currently liquidates all returns through Free Flow web site • Data wipes all returns except those sent back to vendor • Wants to improve recovery values – believes current process does not bring the most value • Asset Recovery Services (Canada) • GENCO to liquidate all returned product – currently $350MM per year of which 10% is salvage • Product categories include all electronics with heavy emphasis on cell phones • Current recovery (against cost) approximates 21% before expenses (per RS) • Revenue projection below is based on data provided by Radio Shack • Revenue (Steady state projected) • $8.05MM (assumes $25MM net returns (ex accessories) bought at approx 28% and resold with 15% markup) • Margin Mark Up Percent • $1.05MM Net Margin: 15%

  2. Assumptions Competitor Information • Issued open bid September 2010. No vendor awarded the deal. • Still only selling via web based auction site – B2B exclusive • Taking to GENCO ATC only at this time. • GENCO can offer blended rate approximating 28% (excluding accessories) • RS responsible for testing, data wiping and sorting by category • GENCO has appropriate facility to store goods • Merchandise Sellable at 15% markup HomeGoods Solution • GMP purchases all liquidation product at agreed to % of cost (based on category) • Product delivered to GENCO site tested, sorted by type and data wiped • Sorted at GENCO facilities, palletized and sold OR sold “as is” • GENCO will use existing facility in Nashville or other location (ATC if possible) Win Strategy/ Game Changers • Commitment to purchase all product categories (ex accessories) • Favorable pricing that increases overall recovery for RS • Willing to pay cash as product received (not dependant on resale) • Understanding of RS business model and needs • Good software, item tracking and customer visibility into recovery • Outstanding customer support and service GAPS • Pricing model that increases overall recovery • Ability to handle additional electronics products at this time Competitive Position • Key Points: • Submitted unsuccessful bid September 2010 (phones bid at 15%) • Radio Shack maintained status quo using Freeflow • Uses R-Log for data processing and inventory information • Does not believe current “freeflow auction” process gets the most recovery available • Data wiping critical for all return product before salvage

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