2nd Hand Office Furniture – Paying someone to take it away?
By Crispin Maby
It often comes as quite a shock when a business owner discovers that the office furniture they paid many thousands of pounds for only two or three years ago, and which is still in excellent condition, is apparently now not worth a penny. Worse still, the second-hand office furniture dealer wants to charge them hundreds or even thousands of quid for taking it away! Having charged to take it away, the same furniture pops up on the dealer’s website the very next day with an asking price of up to half the price that the product was purchased for when new. A very tidy profit you might say!….. or is it?
Are we being ripped off or is there justification in this? Is it fair that the dealer charged for taking it away (and seemingly getting it for free) and then selling it on at thousands of percent profit?
On the whole, there is money to be made out of second-hand office furniture otherwise the companies that specialise in this area wouldn’t justify their existence, but it’s also fair to say it’s not always as profitable as it first appears, so let’s look at why.
First and foremost the process of acquiring and selling used office furniture costs money, and often a considerable amount of money. To explain this, I thought I would summarise the experience that my company had when we first ventured into the second hand furniture market, and most of these issues are fairly typical of those encountered by organisations and individuals that offer office clearances and/or specialise in the field of second user office furniture.
Until this time we had supplied only new products, but when we were approached by a private equity company in central London that was closing its UK operation and wanted to clear its office of all furniture, we agreed to purchase it for a modest sum. Now you would assume that we, having been in the office furniture business for many years, knew exactly what we were getting into, but in truth we didn’t. As would become apparent later on, we had completely underestimated the time and costs involved and although we ultimately turned a profit, with the benefit of hindsight we would not have done this deal if we had known then what we know now.
We agreed to pay £2,000 + VAT for the furniture. The deal was that we had to collect it at our own expense and we had to take everything, including the items we didn’t want. Most of it was good quality from known leading brands, but it was 5 years old and some of it had a few dinks, marks and scratches but nothing major. Initially it looked really good. There were 15 high-end task chairs, 42 expensive looking (that apparently were very expensive to buy new) conference chairs, 30 other meeting chairs, 25 desks, 2 boardroom tables, 40 heavy duty lateral side-filer filing cabinets, 5 cupboards and much more besides. We estimated that the customer had probably paid in excess of £80,000 for all this furniture when new, and we were getting it for just £2,000 so we were bound to make money.
The first problem was the effort getting it out of the building. We were given just 2 days (specific dates which we had no say in) to get everything removed and we were given no time to plan ahead. The customer was very relaxed, but their landlord was completely unforgiving and insisted that we had to do it during normal working hours but they only gave us restricted use of the lift, which we had to use because the office was on the 6th floor. Parking outside was non-existent and having got items down to the basement there was nowhere to hold them so they had to go straight out onto a van. And whenever we were loading a van we had to have an extra man guarding the tradesman’s entrance we were using. Had we have been scrapping all this furniture rather than keeping it for re-sale, the process would have taken considerably less time and with far fewer men (even allowing for the landlord’s restrictions) because we would not have had to take care with the dismantling, handling and loading of the furniture in the vans, and everything would have simply been chucked into a waste cart-away truck waiting outside. As it was, we had 5 vans making multiple trips to the warehouse and 7 men working 2 extremely long days before we managed to get everything back and stacked neatly in our warehouse. Once back at the warehouse, we then had to inspect, clean and catalogue everything.
In the process of working under very difficult conditions, as best we tried to protect everything as much as we could, we still managed to scratch and devalue further a few items in transit.
Then came our attempt to sell everything. The 15 task chairs went immediately and at £130 each we probably sold them a bit too cheaply (they would have cost around £500 new) – our fault! The designer boardroom chairs, although very nice and very expensive when new (we know the customer had paid around £750 each for these), were from one of the less well known top brands which only an office furniture anorak would probably have heard of, so although their pedigree was not in question but they were not familiar to the people we wanted to sell them to and in desperation after holding them for 4 months we finally found a buyer who was prepared to pay £85 each for the whole lot. So we had now taken £5,500 having paid £2,000 for it but incurring estimated costs of £3,000 or more in labour and transport during the acquisition phase, plus the deliveries of what we had sold to the 2 customers.
So at this point we had broken even, and we still had a whole load more to sell but the problem was that most of what we had left was even harder to shift. The desks were really good, but they were the wrong size, shape and colour for most peoples offices. The filing cabinets were immensely heavy – so much so that they were difficult and uneconomical to transport for the small amount anyone was prepared to pay for them. The lime green colour of the large and stunning reception counter complete with illuminated panels was only any good to anyone if it fitted their space and colour scheme, and the other meeting chairs, although an expensive quality brand, looked a little ordinary. And there was a lot more besides which we won’t go into, but needless to say that over time we managed to sell a large proportion of this, but at very low prices and with a huge amount of effort. Coupled with this, it’s worth pointing out that much of what we did sell was to existing or new customers who had approached us for new furniture, all of whom would have bought new furniture from us had we not have offered them a fantastic deal on the second hand stuff we had simply because we were desperate to get it out of our warehouse. What I’m saying is that if we didn’t have the second hand furniture, we would still have done business and probably made better profits for far, far less effort.
As mentioned, we did eventually manage to sell off most of this, but the last 3rd was the greatest effort as it was sold as single items or very small batches. Our warehouse is unmanned much of the time, so we had to arrange to meet buyers there on numerous occasions, simply for them to inspect and/or take away a couple of desks, or a single filing cabinet. Often they didn’t turn up, and often they would be late and all in all it was generally uneconomical for us. Finally, a year on from acquiring this furniture, we had to load up 3 vans to the brim and cart all the unsellable items of to the local recycling centre.
In the end we turned a profit but not without an immense amount of time and effort, many times more than we would have had to go to in order to sell the equivalent amount of new products. So, to answer the question I asked in the second paragraph of this article, yes, in many cases I think it is fair that you would have to pay someone to collect your unwanted office furniture, even if they might then re-sell it. To summarise, here are the key points:
- It’s worth less than you think: A second-hand piece of furniture is only worth what someone else is prepared to pay for it, and the price you paid for it when it was new is normally quite irrelevant. With one or two exceptions, it’s likely that someone is probably not going to pay more for a second hand ‘quality’ desk than they would pay for a brand-new economy desk. So if the quality desk was £800 new, and the economy desk was £100 new, then expect to get no more than £100 for the quality desk when sold 2nd hand.
- Disposal: The dealer often has to take everything you don’t want anymore, including what he doesn’t want either, and he therefore has to take into account the cost of disposing of the unwanted items. Although he might be paid a very small sum for scrap value on the metal components, he still has to pay for the manpower to remove it from your building, take it to the recycling centre, van and fuel costs, and he will still have to pay the commercial waste centre a fee for scrapping all other elements (chipboard etc). All in all, this can be expensive.
- Additional processes & costs: Compared with supplying new furniture, there are a number of additional processes, each incurring costs, mainly manpower and transportation. If we were selling new desks, we’d place an order with the factory and they’d ship it out all nicely wrapped and protected either to our warehouse or, quite often, directly to our customers’ office. All we then have to do is arrange for our fitters to meet the lorry outside and carry the furniture into the building and put it together. Compare this with 2nd hand furniture. Additional process 1: Dismantle it at first user’s office. Additional process 2: Carefully load it into van and transport back to warehouse. Additional process 3: Unload at warehouse, clean it, stack it and catalogue it. Additional process 4: Re-load it onto van and transport it to new user’s office.
- Matching Sets: When buying second-hand furniture, the purchaser is most likely to need a reasonable quantity of matching desks, chairs, pedestals and cupboards to furnish their office. The dealer therefore needs to stock good quantities of matching units, and indeed selling in quantities rather than in ones and twos is the only way the dealer is going to turn a profit. Selling single items is generally uneconomical, particularly if they have to be driven into central London and installed in an office, and as often as not the buyer might as well buy a new desk or chair because the overall cost isn’t going to be that much different. Given this, if you have second hand furniture you want to sell, then you need to have matching sets in reasonable quantities if you’re going to have any chance of a dealer buying them from you. The exception to this is if you have highly desirable designer items such as Herman Millar Aeron or genuine Vitra Eames chairs which do have a good second hand value even in small quantities.
- Quality: Regardless of how many you have and how good the condition is, if you bought budget desks or chairs for less than £100 each when they were new, you should not expect a dealer to pay you anything for them 2nd hand. On the contrary, you should expect to pay them to take them away and if they do it for free you should probably consider it lucky. The reason is quite simply this. By time the dealer has gone through all the additional processes I’ve identified in item 3 above, it is quite simply completely uneconomical for him to take these low value items as he wouldn’t be able to sell them for a sufficient amount to even cover his costs.
- Warehousing: Secondhand furniture has to be stored. The cost of renting, owning or running a warehouse can be considerable and this must be factored in.
- Speculative buying: Even when taking what appear to be decent products, the dealer can never be absolutely sure he is going to find a buyer for them so he has to factor in the possibility that he might have to scrap it all. Even if he does sell some or most of it, he might then be left with odd numbers or quantities of desks and chairs that are too small to make up a sellable bundle, and he might end up having to scrap this element.
- I want to see before I buy: Just like when you buy new furniture, you probably want to go to a showroom and take a look. The facility and the staffing are all overheads that are built into the final selling price of the product. Likewise, if you buy second hand furniture, you are most likely to want to go to a showroom or a warehouse and the sellers time, and any facilities they might have to enable this process to occur, are costed overheads which find their way into the price you ultimately pay for the goods.
Hopefully this article has given you a good insight into the complexities but if you have office furniture to sell and you’re still not happy with what you’re being offered for it, you might want to explore the end-user to end-user approach by visiting our page on 2nd hand office furniture.