Buying refurbished, like-new products instead of new ones is better for the environment and consumers’ wallets. When products are as personal as electric toothbrushes or earbuds, however, cost savings aren’t enough to overcome consumer revulsion. Educating consumers about processes used to make refurbished products like new — a tactic almost all online sellers use — has done little to improve their appeal or move consumers to purchase them.
Huseyn Abdulla, assistant professor of supply chain management at the University of Tennessee, Knoxville’s Haslam College of Business, has a new approach to making refurbished products appealing to consumers. In a new research paper, Abdulla and his co-authors, James D. Abbey (Texas A&M University), A. Selin Atalay (Frankfurt School of Finance and Management) and Margaret G. Meloy (The Pennsylvania State University), find that exposing consumers to refurbished products in a real, physical sense, such as an in-store environment, heightens both the items’ appeal and consumers’ willingness to pay for them.
A Sales Touch
The researchers evaluated the reactions of 612 test subjects to different degrees of exposure to refurbished products, from merely reading about a product to handling them in a 360-degree, 3-D visual simulation. They found that “touching” the products, even in their packages, increased subjects’ perception of the items’ quality and value and decreased the disgust factor. Based on previous, related research, they attribute this effect to products’ physical presence activating a Pavlovian consummatory process.
“The physical presence of products creates biological responses, their closeness increasing a sense of familiarity,” Abdulla says. “Mere physical presence, even if you don’t smell or taste anything, increases your willingness to pay for products.”
These results challenge the common wisdom of selling refurbished products exclusively online. These findings also align with various firms’ decisions to bring refurbished products into physical stores, such as Walmart and Nike.
The Win-Win-Win-Win Scenario
If more retailers adopt this “show, don’t tell” approach, it could promise immense financial, environmental and social benefits. If consumers are persuaded to buy more refurbished products, then retailers could, theoretically, increase shelf space for refurbished items and manufacturers could create more products to meet demand. Abdulla says the discount to consumers for refurbished electronics ranges from 10 to 40 percent.
In this hypothetical case, consumers get products comparable in quality to new ones at a lower cost, and retailers and manufacturers increase their profit margins with greater sales volumes. The environmental benefits of making and disposing of fewer products is a win-win-win-win scenario.
“Every year, 15 million kilograms of headsets are thrown away and end up in landfills,” Abdulla says. “If there could be a healthy market just for refurbished headsets, think about how much you could reduce emissions and how much landfill you could avoid.”
Refurbishing the Future
If for-profit companies are slow to sell refurbished products in-store, there are other options to increase demand.
“There are some public policy implications for this, such as helping schools get those refurbished electronics,” Abdulla says. “Tech-to-School offers highly affordable refurbished technology to schools, and the PATINS initiative in Indiana matches [companies that refurbish products] with schools that are behind in technology. Helping students adapt these sustainable product solutions at an earlier age could have a long-lasting effect on their product choices in the future.”
It may take another generation for the refurbished product market to see major growth. Despite the economic and environmental positives of refurbishing, a common problem Abdulla identified in this area is the “elusive green consumer phenomena.”
“What consumers say — even the green-minded ones — and what choices they make are usually misaligned,” he says. “One reason for that is we have primordial responses, such as disgust or contagion effects, like, ‘Oh, this was owned by somebody; I don’t know anything about that somebody. Maybe this is cursed or something.’”
Luckily, a new generation more sensitive to environmental issues is coming of age. According to a recent Forbes article, around 75 percent of Gen Z and millennials prefer buying green products. Abdulla’s research reflects this trend.
“Among consumers in the experiment, younger-generation people tended to be more receptive of these types of products,” he says.
“Show, Don’t Tell: Education and Physical Exposure Effects in Remanufactured Product Markets” was published in Journal of Operations Management.
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CONTACT:
Scott McNutt, business writer/publicist, rmcnutt4@utk.edu