Sometimes when you have a valuable, high-end product with a visible logo that is damaged in shipping or production, you might think it is best just to throw away the damaged goods rather than allow them to be salvaged and sold. Unfortunately, by doing so, you could be drastically reducing your market share and hurting the future of your brand.
Consider Paige Premium Denim pants. These casual jeans go for $189 USD a pair and are most often purchased only by those people in the higher income brackets. Compared to Levi’s $39 jeans, Paige jeans are not considered universally affordable so many people who cannot afford them never even bother to consider them as a viable wardrobe option and Paige loses any potential share in that market.
Now, if a shipment or lot of Paige jeans were to become damaged during production or were somehow mildly damaged during shipping, but were still wearable, they would not be deemed fit by the retailers who sell them for premium prices. If, at that point, they were sold in an online salvage auction and purchased by a discount retailer they could be resold to the public for a significantly lower price allowing the previously ignored market (those who can afford only the $39 jeans) to buy some and experience what expensive jeans look and feel like. When this happens, Paige increases its advertising efforts at no cost because the salvage buyers spread their new found love for the jeans through good, old-fashioned word-of-mouth marketing. And this marketing isn’t just based on what they have seen in magazines—it is based on their actual experience wearing them. In addition, people will see them wearing the Paige jeans logo, which makes these folks a walking billboard and testimonial and begins the process of introducing them as a necessity to a group of people who once thought they could not afford them.
Some companies worry that if they allow their salvaged merchandise to be sold at a discount it will dilute their brand and make it less exclusive. But remember, it is not often that you actually have merchandise that needs to be salvaged. There is not a steady, predictable stream of your merchandise hitting the lower end market on a consistent basis—in fact it could just be a one or two time incident. This unreliable and inconsistent stream of product will not create a loss in the esteem held for your brand.
With increased exposure, free advertising, and a hedge against loss, can you afford not to sell your salvage?