Wayne Elsey is the founder of the Funds2Orgs, Sneakers4Good and TreeRaise social enterprises in the reuse economy.
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In May 2010, five months after the catastrophic earthquake in Haiti, I walked through the streets and saw people selling shoes, electronics, food and other things out of makeshift stalls. They weren’t waiting for aid to provide for their families; they were working.
As a “shoe man” who worked in the industry for decades, I asked them what they needed as micro-entrepreneurs. The answer was easy: inventory. That experience led to me founding a global nonprofit and two for-profit social enterprise brands that turn surplus items into an opportunity in low- and middle-income nations.
Many companies across the world find themselves with excess inventory, discontinued product lines or underused capacity. But they haven’t yet considered the durable value (and profit) in bridging their surplus with existing need.
3 Reasons Companies Don’t Pursue Redistribution
Most companies have excess in markets where they can find new customers, partners and profit. However, they often miss the opportunity to build a new bridge because of the following:
• Surplus is quickly categorized as a loss. Most companies automatically write off excess inventory. This accounting habit prevents leaders from reimagining another profit line.
• Leaders believe new markets need new products. Creating new products requires investment capital. But there’s untapped opportunity in the circular economy and partnering with underserved markets.
• No one owns the relationship. To create new markets, it’s essential to get people on the ground. Someone has to decide to deliberately create and nurture the relationships in a new market.
5 Steps For Building The Bridge
I don’t have an MBA, or even a college degree in business, but I’ve spent years scaling companies and brands into multimillion-dollar small and midsized enterprises. This is the sequence I followed when creating my micro-enterprise model, and any founder sitting on surplus can do the same.
1. Source the surplus from multiple places. It’s essential to source from diversified suppliers. For my brands, I don’t get the preloved shoe inventory from just the Boston or Austin Marathons. I acquire the inventory from thousands of locations across the U.S.
2. Find the need where it’s already showing up. When I created my companies, I didn’t guess at the demand on a spreadsheet. I traveled the world, talking to people about the amount of inventory they needed, sale prices and the profit they made. Doing so proved the demand existed.
3. Give people a starting stake. If you have excess assets and inventory that you can sell, give people an initial batch to start selling. In the reuse economy, you want to ensure that the small business owners and partners who will resell your inventory can do the job.
4. Build the logistics before scaling. Getting products to other places around the world means customs, shipping and on-the-ground distribution networks. But, depending on your model, you can redirect excess inventory and assets through logistics partners within your home country. The trick is to plan early.
5. Look for more excess. When you have the excess inventory and the asset bridge built and working, continue thinking about more opportunities. Look at other aspects of your operation that are idle and could be monetized to solve someone else’s pain point. Don’t just write off excess; redirect it for profit.
The Broader Case
Redistribution is a profit source your company is likely missing. Companies and families worldwide have surpluses of goods or high-quality items for resale in secondary markets. For businesses, this is a revenue line. Surplus redistribution is a measurable revenue line for any company, but it means taking a look at what you have too much of and then asking who else can use it and how you can get it to them profitably.
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