The lifespan of industrial assets within an organization goes beyond its initial usage. Equipment, machinery, and MRO that has been used (or is now surplus to operations) still has value. The process of recovering value from industrial assets is known as “asset recovery”. One of the most popular methods of recovering value from MRO is selling it in the second market. In this article, we will share several selling options for your used & surplus MRO.
What Is MRO?
MRO (Maintenance, Repair, and Operations) is a broad term used to define parts and machinery used to help ensure larger and installed machinery continues to operate. MRO becomes obsolete or surplus to an organization in several different ways:
Newer parts are ordered with existing parts still in the inventory
Larger equipment or machinery is taken out of production
Production shifts and there is no longer a demand for the machinery
MRO as a product category can consist of several different types of assets including:
At first glance, you might not believe your spare parts and MRO have value but there is a strong demand for these types of assets. Selling your surplus MRO is a good way to recover value and generate revenue back to your organization’s bottom line; however, the challenge is selecting the best-selling method for your MRO.
Selecting the Best Method for Selling Used & Surplus MRO
There are many ways to sell MRO. The time to sell, amount of engagement (or management) required, prospective costs (advertisements, inspections), and ultimately the estimated recovery value on the transaction are some of the most crucial elements. Below are some of the options to consider when selecting the best-selling method for used & surplus MRO.
General Online Marketplace
If you’ve ever listed or sold anything on eBay or Facebook Marketplace, you should be familiar with how online marketplaces operate. You list each item you want to sell on the platform manually, and you wait for buyers to come across your listing to place a bid or an offer.
Benefits of Online Marketplaces
Large platform with built-in traffic, which means you don’t need to worry about promoting the sale to find buyers.
Higher book value compared to other selling options.
Challenges of Online Marketplaces
Creating and managing your listings can be very time-consuming, especially if you have a large selection of items you’re looking to sell.
While the marketplace may have built-in traffic for buyers this does not guarantee they have the right buyers for your assets; this could result in the sales process going on for a long time.
Consignment Selling
Consignment selling is the process of hiring a third-party company to sell the MRO on your behalf. These companies take possession of the materials you wish to sell and will handle all aspects of the selling process. Once an item is sold, you will receive a portion of the value of the item sold, with the consigner keeping the rest as a fee for selling the assets.
Benefits of Consignment Selling
Quickly remove used and surplus MRO from your facility, allowing you to recover valuable storage space.
Since the consigner manages all aspects of the sale, very little work is required, allowing you to focus on the core aspects of your job responsibilities.
Challenges of Consignment Selling
When an item is sold with a consigner, you get only a certain percentage of the selling value back. This percentage changes per agreement with the seller but the recovery value could be between 5-10%.
Upon releasing your assets to the consigner, you lose the ability to control the sales process. Since the consigner gets paid only when the item is sold, they will look to sell quickly which could result in your MRO being sold to competitors, or into an undesirable geographic region.
Private Treaty Sales
Private treaty sales refer to the process of selling the MRO without the usage of any third-party vendor or marketplace. This is when the owner of the assets seeks buyers directly for the items they are selling. This can be done in a variety of ways such as reaching out to known buyers in the community or sending out RFQ (Request for Quote) emails.
Benefits of Private Treaty Sales
you remain in complete control and have visibility into all aspects of the sale. You control what you sell, to whom you sell, and the final price at which you will sell.
you don’t incur any costs or invoices from third-party vendors, allowing you to keep 100% of the selling value within your organization.
Challenges of Private Treaty Sales
Selling MRO requires certain expertise to ensure you get the maximum value back.
Managing the sales process is time-consuming and requires the seller to be aware of several different factors including removal, taxes, invoices, and collecting payments.
Attracting buyers for MRO can be a challenge. This requires the seller to either invest large amounts of time into properly understanding buyers or paying to execute marketing campaigns to attract the right buyers.
Hiring an Auctioneer
Another option for selling MRO is to hire an auctioneer. Auctioneers will help relocate your assets to one of their facilities. The auctioneer will then take on all the responsibility of hosting a sale on your behalf. They will attract buyers and host an in-person auction for your MRO allowing bidders to submit bids in a competitive format.
Benefits of Hiring an Auctioneer
You’re hiring someone who has experience selling your assets. They have experience in conducting these types of sales and know-how to promote the sale, manage buyers and collect payments.
You’re able to sell in a time-based model, meaning that all the MRO will be sold by a specific date or time. This creates competition and demand across buyers, allowing you to recover value quickly compared to other selling methods.
Challenges of Hiring an Auctioneer
Auctioneers work best when they’re selling a large volume of MRO. In many cases, auctioneers require you to have a certain number of lots available (or even a minimum selling amount) before they work with you. This results in MRO staying in your facilities for a longer time, taking up your valuable warehousing space.
As auctioneers tend to conduct auctions in person, this limits the potential reach for buyers to those only available to make the trip to the auction location. This can result in less buyers compared to other selling methods, which may tap into a global base of buyers.
Fees range from 20-40%
Online Auctions Platforms
The final selling option for used and surplus MRO is through an online auction. In an online auction, you select an auction platform and provide your list of assets that you wish to sell. You can then set the details of the auction such as the removal terms, payment terms, and end date. Once the auction goes live, your items will be sold on the end date you set to buyers on the platform.
Benefits of Online Auctions
You are selling in a time-based model, meaning that the assets will be sold by a specific date or time. This creates competition and demand across buyers allowing you to recover value quickly compared to other selling methods.
You control the entire sales process to ensure the sale goes the way you want while minimizing risks. You ensure all the buyers agree to your sales terms – and you can even control whether to allow some buyers to bid.
Some platforms operate on a buyer-funded model, meaning you keep 100% of the asset sale price
Challenges of Online Auctions
You may be required to set up your auction online. This can sometimes be a bit time-consuming, especially if it is your first time selling on that platform.
Many auction sites are not suitable for all types of MRO. You want to choose a platform that is quick and easy to use, has experience selling your assets, and does not cost you anything to sell on.
Choose Aucto for Selling Used & Surplus MRO
Aucto is an online platform for businesses to sell their used MRO. Our easy-to-use web-based platform simplifies the selling process, allowing you to spend less time worrying about selling your industrial assets. We connect our sellers to qualified buyers in over 70 countries and seamlessly deliver the highest net recovery rate. The Aucto Marketplace has over 10,000+ industrial categories, allowing you to sell any industrial assets you may need to get rid of.
Ready to learn more about selling your used & surplus MRO with Aucto? Click the link below to schedule a meeting with one of our Asset Recovery Specialists.
Clayton Arnold is the Marketing Manager at Aucto. Clayton has 10 years of experience working in traditional and digital marketing campaigns. A Mohawk College graduate, Clayton believes in leveraging the latest technology & analytics to foster long-term relationships with clients.
