Discount flat screen computer monitor

Attention, bargain shoppers: Retailers and manufacturers have got a deal for you. How does a 17-inch Dell flat-screen LCD computer monitor for just $228 grab you? Or a KitchenAid 5-quart stand mixer for $179.99, almost half off the list price and cheaper than many listings for the same item on eBay? Does a Sharper Image Ionic Breeze air purifier for under $150 strike your fancy? That's $200 off the advertised price.

OK, there's a catch. This stuff might not be technically "brand new." But in many cases, these items are like new. And at these prices, you'd still be interested, right? Of course.

For years, the retail economy has largely hidden its dark underbelly: the tens of billions of dollars of merchandise that gets scratched or dented or is returned by consumers for any number of reasons. By some estimates, more than $50 billion in retail goods--not counting grocery store items--is sent back to retailers or manufacturers every year. "This market is so big, no one really knows its true size," says Dan Eisenhuth, president of value-added services for the Pittsburgh-based liquidation firm Genco.

Every little bit. Some of these items need to be repaired or refurbished. Others just need to be repackaged. In years past, a good deal of this so-called B merchandise was destroyed or sent abroad, where it wouldn't pollute the main distribution channel of pristine, brand-new goods. But scratched or dented goods sent overseas or sold off to old-fashioned jobbers, or liquidators, garner only a fraction of what it costs to make these products. In some cases, companies may recover only pennies on the dollar. Yet in the ever competitive universe of the retail economy, every penny counts. "Most retailers and manufacturers operate on very, very thin margins," says Mark Zandi, chief economist with Economy.com. "Anything that can boost sales is critical to their success."

This explains why a lot of this merchandise is now getting recycled back into the mainstream domestic market, which has major implications for the retail economy. Certainly, consumers stand to benefit, as these items generally go for 25 percent to 50 percent off the original list price. Moreover, any increase in the supply of B merchandise is also likely to keep prices of new goods low as well. "This is one of those examples where the Internet is facilitating a very healthy relationship between buyers and sellers," says Jack Gillis, director of public affairs for the Consumer Federation of America.

You can certainly thank the success of auction giant eBay, which allows sellers to hawk refurbished goods alongside new items and collectibles, for demonstrating the demand for the lower-priced recycled items. But today, retailers and manufacturers, many of whom sell some of their second-life merchandise on eBay, are beginning to experiment with a different approach. Some are trying to control their brand image--while forging closer ties to their customers--by also selling merchandise directly through their own websites. "If you sell directly, you're not forced to share your customers and their loyalty with the eBays of the world," says Carrie Johnson, retail analyst with Forrester Research. Another advantage for these retailers and manufacturers is that they can often offer extended warranties on refurbished goods, a benefit that an individual seller of used goods on eBay may not be able to provide.

Companies selling spruced-up items include Dell, Costco, Hewlett-Packard, Sony, Palm, and Amazon.com, and some experts think this could represent a unique competitive challenge to eBay (story, Page 46). "Anything that takes buyers' interest away from eBay can hurt the marketplace and the sellers participating," says Derek Brown, an analyst with Pacific Growth Equities. EBay officials say the sale of refurbished or B stock represents a small minority of the goods listed on eBay. "We know retailers and manufacturers have multiple channels through which to get rid of this merchandise," says eBay spokesperson Hani Durzy. "Our goal is to alert them that eBay is a great complementary channel."

Easy chairs. In most cases, companies are selling second-life goods to recoup as much cost as possible. Take the Home Office Solutions Group, a small business based in Northbrook, Ill. Every year, roughly 3 percent of the Herman Miller Aeron desk chairs that it sells are returned or exchanged by customers who may have gotten the wrong size or color. Factor in the scores of chairs used as floor models in the firm's showrooms, and "we can end up having to deal with 200 to 400 chairs," says company founder Marc Levin. "Some of these chairs are in perfect condition, but we can't sell them as new." So Levin highlights such furniture prominently on one of his websites, www.ultimatebackstore.com, like the floor model Aeron chairs for $749. While that's more than $100 off the new price, the company can still potentially gain an additional $200,000 or more in sales every year through these products. And while it still uses eBay to peddle some of its excess wares, Sharper Image also uses its website (www.sharperimage.com) to unload its refurbished merchandise, ranging from air purifiers to massage chairs to stereos.

Gailen Vick, president of Reverse Logistics Trends, a trade group representing firms that help retailers and manufacturers handle returns, estimates that the true cost of handling returns, or "reverse logistics," can be 3 percent to 12 percent of a company's bottom line.

But not all companies view the sale of B stock as merely a way to cut costs. Take KitchenAid, the maker of high-end small appliances. In addition to selling its refurbished goods through eBay, traditional outlet malls, and Amazon.com, KitchenAid also peddles its mixers and the like on its website (www.kitchenaid.com). Obviously, the firm wants to recoup as much cost as it can, says Brian Maynard, KitchenAid's director of marketing. But there's another goal: to introduce its brand--and make it available--to low- and middle- income households. In other words, instead of coming out with a less expensive line of merchandise that might taint KitchenAid's luxury image, the company uses its refurbished goods to fill that void. The hope is that the consumers who buy reconditioned KitchenAid goods will eventually upgrade to newer, more expensive models.

Ditto for Callaway Golf, which recently rolled out a program that allows customers to trade in their used Callaway clubs for credit toward new clubs. The trade-ins are polished up by the company and sold at significant discount online at www.callawaypreowned.com. At the same time, the firm hopes the trade-in deal will motivate existing Callaway customers to trade up.

Huge appetite. Online specialty sites like ubid and Overstock.com, which purchase large quantities of B stock from producers, are also benefiting from this trend. Ubid, for example, helps about 3,000 suppliers move their excess and recycled inventory. Roughly half of the company's sales, approximately $200 million last year, came from refurbished housewares and home electronics and computer equipment. "The appetite is huge for this type of merchandise," says Timothy Takesue, executive vice president at ubid. "That's as long as consumers know they're getting a warranty directly from the manufacturer." That's important, says Gillis, since there is no standard definition of what terms like refurbished or factory reconditioned or open-box or floor model really mean.

Of course, as with the purchase of anything, it's buyer beware. But as long as refurbished items come with assurances like warranties, they represent a tremendous value. Talk about satiating champagne tastes on a beer-barrel budget.