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How the Net can help place 700,000 chicken wings

You’re a business with a major problem. You have 700,000 frozen teriyaki chicken wings already branded for a major food distributor in the United States, when the distributor suddenly announces that it doesn’t want the goods any more. What do you do?

Where it already exists worldwide, the excess consumer goods market is still largely paper-based. In some countries, especially in Asia, the concept of liquidation markets has yet to get off the ground. Seeing an opportunity to leverage the Net, one or two startup operations have already set up Internet-based exchanges that aim to match up buyers and sellers around the globe keen to trade in branded excess inventory items.

“Excess inventory is a very fragmented market, it’s hard to reach buyers,” said Jeremy Tang, Rebound International co-founder and CEO. The frozen chicken wings are a real-world example of the kinds of goods Rebound trades in.

With dual headquarters in Hong Kong and the U.S., Rebound, formerly known as Tradepac.com, officially begun operations earlier this year. The company offers a worldwide Internet exchange for consumer excess goods backed up by services from both Rebound and its partners as a way to foster trust between online buyers and sellers. The exchange offers goods in five categories – apparel and accessories; household and lifestyle; computers and accessories; consumer electronics and food and beverage.

Earlier this week, Rebound announced a string of additional strategic partnerships to continue to build up trust between buyers and sellers on its exchange, as well as equip its customers with the logistical and financial support they need to handle international commerce.

Marybeth Dee, Rebound’s cofounder and president, pointed out that in the U.S., for instance, the excess goods market is highly U.S.-centric. “The only choice to date has been remarketing (goods) within the U.S., which results in cannibalization of (existing) distribution channels,” she said.

Dealing with branded goods that have the same level of traction worldwide fits very well with the global reach of the Internet, Dee said. “A Palm V is a Palm V anywhere,” she added.

Tim Clark, senior analyst with market research company Jupiter Communications Inc.’s Net Markets Group, based in Los Altos, Calif., agreed with Dee.

“It’s a very interesting problem that Rebound is addressing – a neat example of using the Net,” he said. Retailers often guess what amount of goods they require, which can result in overbuying and the need to off-load the excess inventory and recoup their outlay, he added.

Rebound already has around 2,000 corporate clients, notching up just under US$7 million in transactions in March, according to Tang. The company’s client base is growing at 40 percent per month, with the bulk of transactions occurring between North America and Asia-Pacific, although some deals reach out to other areas of the world such as the Middle East and Latin America, he said.

Ninety-three percent of the transactions on Rebound’s exchange are cross-border deals, between companies in the U.S. and The Philippines, for example, or between Mexico and Canada, Tang said.

The entry point for transactions on Rebound’s exchange is deals valued at $10,000, with the average transaction size in the order of $50,000, Dee said. To date, the largest deal brokered on the site was $1.7 million, Tang added.

Among the partnerships Rebound announced this week is a tie-up with B2B (business-to-business) exchange Danzas Group, which will allow Rebound customers to access options for global shipping along with real-time tracking and tracing services. Within six months, Rebound customers will be able to use other features from Danzas, such as document management systems and customs clearance services.

Rebound allied itself with The Trade Bank – an international partnership between Wells Fargo & Co. and HSBC Holdings PLC, to offer secure payment services. The relationship will enable buyers on Rebound’s exchange to secure credit with a prepaid letter of credit. Tie-ups with TradeCard Inc. and Marsh & McLennan Companies (MMC) are designed to help facilitate online payment and business insurance, respectively.

Rebound also announced agreements with liquidator The Ozer Group, based in Needham, Mass., as well as with Asian trade associations and professional services companies such as the Chinese External Trade Development Council (CETRA), the American Chamber of Commerce Hong Kong, the Hong Kong Toys Union, Deloitte Touche Tohmatsu, the Electronics Industry Association of Korea (EIAK), the Indonesian Retails Merchants Association (APRINDO) and the Malaysian Retailers Association.

Rebound already has agreements in place with worldwide inspection company Societe Generale de Surveillance SA (SGS) and global logistical support provider International Freight Services. SGS helps Rebound with the digital trust issue by carrying out product sampling and preshipment inspections for a fee of between $250 and $350, according to Dee. “They go in and verify that the product is what the buyer thinks it is … it’s a great comfort level (for buyers),” she said.

According to Tang, the company vets buyers and sellers that want to carry out transactions on Rebound’s exchange beforehand. “We’ve rejected over 25 per cent of the people who come to our site to maintain a real level of quality… with bonafide buyers who can offer products in sufficient quantities,” Tang said. He stresses that the Rebound exchange is not aimed at individual consumers.

Rebound tries to marry together the Net with some human interaction, Tang said. So, a customer of the exchange is assigned a Rebound account manager to help them navigate the transacting of international business, particularly if this is the first time, say, a U.S. company is doing business in China, he added.

Privately held Rebound received an initial equity investment for an undisclosed sum from Goldman, Sachs and Co. out of Hong Kong. The company is currently instituting another round of financing and hopes to break-even in the third quarter of next year, Tang said.

Rebound’s business model is somewhat similar to what iCongo.com Corp., based in Boston and Montreal, is doing in the sporting goods industry, according to Jupiter’s Clark. ICongo deals with the sale of excess seasonable sportswear. “When swimsuits are out of season in Canada and the United States, they’re just coming into season in Australia, so the company does a lot of north, south deals,” Clark said.

Although Rebound has yet to find a home for the 700,000 chicken wings, in recent deals on its exchange the company has found a home for 6,000 scooters and 400,000 coolers, Dee said.

Rebound, with dual headquarters in Wanchai, Hong Kong and San Francisco, can be reached at http://www.rebound.com/.

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