Computer Maker Turns to DM to Sell Refurbished Computers

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Fujitsu PC Corp., Milpitas, CA, the U.S. computer unit of Japanese technology giant Fujitsu Ltd., is using direct marketing to sell notebook computers and peripherals over the Internet to quickly squeeze revenue back out of refurbished PCs that have been returned to the company.


"The idea is, how can we provide the refurb product in the fastest time to the end users before the price decays any further?" said Bert Parekh, FPC's director of marketing and strategic planning. "The products depreciate so fast because of the fast technology development that the objective is to get the product out in the hands of customers before it loses value again within a week or two."


Typically, refurbished computers are inspected and tested after they are returned, then restored to meet published specifications and offered for sale at a discount of 15 percent to 20 percent. FPC's refurbished notebooks carry a 90-day warranty.


The company opened its online store, FPC Online Outlet, last month. Though the company plans to market the site through portal Web sites like Yahoo and to produce banner ads on the Net, FPC is holding off on advertising the site for now as it completes testing its back-end processes. Since the site is fully automated, the company wants to be sure that three accidental clicks on the "check out" button don't turn into three separate orders.


The store, located at http://onlineoutlet.fujitsu-pc.com, offers Fujitsu LifeBook notebooks and will target price-sensitive buyers, including consumers, small businesses and home businesses. Additionally, Fujitsu resellers who don't sell accessories will be able to steer their customers to the site to purchase peripherals. Marketing communications concern CKS Group, Cupertino, CA, is guiding FPC's media planning for the project.


However, unlike Dell Computer Corp. and other U.S. computer companies that have racked up sales by direct marketing their products, FPC doesn't intend to begin direct selling its new PCs. The company wants to avoid conflict within its sales channels and keep the value its resellers add to new notebooks, Parekh said.


"Suppose you're a small- or medium-sized company and you want networking along with mobile computers," he said. "[Some resellers] go through the whole systems integration along with whatever server you want and whatever software you need. That's the value-added system integration. Others may be offering some Web-based services." Other resellers may be the primary service and support providers for the notebooks, he said.


FPC's rates of returned PCs in the retail and reseller channels are less than half the industry average, Parekh said. Because of that, the company doesn't see the site becoming a big revenue generator.


"This is a refurb business," he said. "Quite honestly, we don't want to make this a big business. It's not like we have thousands of notebooks to sell. If we do our job right with our channel partners, with the resellers and retailers, we don't expect many refurbs to come back."
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