A “First-of-its-Kind” Survey
An unprecedented survey this year exposed that various market influences had an adverse effect on the ITAD sector, including elevated labor costs and reduced prices in the secondary marketplace.
However, despite certain setbacks, ITAD executives did acknowledge certain positives that came out of the assessment. They noted that many clients were prepared to pay extra to guarantee secure data destruction and eco-friendly handling when it came to end-of-life device management.
Compliance Standards, an ITAD industry consulting firm, and E-Scrap News, a publication devoted to electronics recycling and reuse, have come together to present the results of a joint survey of industry executives concerning Q1. The survey results showed that business was challenging for many during this quarter.
“Although there are several issues, from increased wage pressure to difficulty in finding qualified employees, the biggest challenge is processing higher volumes for less profit,” a respondent confidentiality noted.
“Economic uncertainty has been driving reductions in ITAD volumes, which drive expense reductions in ITAD operations,” another individual wrote.
Quarterly Report to be Published
As part of a now ongoing quarterly survey, ITAD leaders are asked to provide insights into ITAD companies and adjacent market segments. The next survey, which will focus on data for Q2 2023, is now open for engagement.
Every 3 months, those in the industry who contribute to the survey will be given an invitation to join a webinar where the main findings are discussed (recordings can be requested by those unable to attend live). Additionally, all participants will receive a detailed written report which outlines all studies that were conducted.
Summarized below are some of the key findings from this quarter’s survey, with further reflections to be revealed in an E-Scrap News article next week:
Difficult Market Conditions
Results from the first quarter of this year showed a stark contrast compared to the last, with 56 percent of participants noting that conditions had declined, while only 18 percent reported an improvement. The remainder indicated that conditions remained unchanged.
When analyzing year-over-year revenue changes, the results were noticeably varied. 52 percent of respondents experienced an increase, while 37 percent witnessed a decrease. The remaining 11 percent did not see any changes.
Various considerations were listed by those surveyed, such as higher expenses (including labor), an overabundance of used equipment bringing values in the second-hand market down significantly, and a general air of unpredictability when it comes to both global and domestic politics and economic prospects. Additionally, one respondent mentioned that on-year comparisons showed a marked decrease in service demand because the opening quarter of 2022 saw a “stronger than normal demand for services.”
When surveyed about secondary equipment markets, many companies expressed that prices for used electronics were decreasing significantly. Of these participants, 70 percent said they had decreased “a lot”, while 25 percent believed it had been just a minor change. Just 5 percent indicated they had increased slightly.
“The value of electronics has dropped, which eats into profits,” one respondent noted. “So we’ve had to adjust with starting to change cut lines and service fees.”
Customers Recognize the Value of Data Security
Company executives were also asked questions about their customers’ knowledge of data security, and whether they are conscious of reuse and recycling’s environmental advantages as well as whether they would be willing to pay more for these benefits.
The survey results also provided some optimistic information. Remarkably, not one respondent reported that their customer base was becoming less cognizant of the importance of data security, or the advantages associated with reuse/recycling.
Signs pointed to clients being more than ready to invest further in achieving the desired results. Of those polled, 50 percent revealed that their customers were unwilling to budge on what they considered an appropriate amount for data destruction, while 40 percent revealed that their customers would be willing to spend more. A further 5 percent declared that their clients preferred paying less, with the rest said they “didn’t know.”
Regarding environmental protection, survey results showed similar general trends. Half of respondents indicated that their clients insisted on fixed expenses for reuse/recycling, while 35 percent expressed that they would pay additional funds. Only 10 percent maintained that reduced payments were preferred, and 5 percent weren’t sure.
ITAD Firms Represent the Majority of Those Surveyed
The first-quarter analysis in May was assisted by input from numerous different companies. Of these businesses, roughly one-third had 25 or fewer employees, while the majority were medium-sized organizations comprising 26 to 200 employees; the remainder employed over 200 people.
Out of those surveyed, the vast majority described their key business activity as being an ITAD service provider, with others declaring themselves to be equipment/products/software suppliers, commodities recovery companies or “other.”
