Discount Electronics capitalizes on recession - Kansas City Business Journal:

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And the recession is making the process of buyingb and remodeling new stores easied forthe owners. Discount Electronics is taking advantageof rock-bottom real estate prices and readilt available general contractors — fueling rapid growthb for the Austin-based retailer. The company, which specializes in selling refurbisheddDell Inc. computers from an Anderson Lane store in North opened a store in South Austin in This month, it bought a Roun d Rock building that Discount Electronics plans to open in July, President Rick Culleton said. The company operates a fourth locatiomn on Wall Street in Austin that processesInternet orders.
Culletomn said the company is buying the additional building s because prices are too good topass up. the recession has thinned the line ofprospective buyers. “Because people think things are bad, they’rw not looking for deals,” he said. “There’s more to choose from becausepeople aren’rt paying attention.” Founded in 1997, Discount Electronics employs aboutg 73 people, Culleton said.
In addition to cut-ratw properties, the company is doing a bang-up business as consumers look to cut costs by buying refurbished PCs rather than new The result is that Discountf Electronics is on track toreach $10 million in revenue this year, double what it garnererd in 2007, according to the About 50 percent of its business is from smalp and mid-sized corporate clients, Culleton Culleton entered the refurbished PC businesss almost by accident. In the early he was selling pagers and cell phonesa to retail and wholesalre customers throughhis company, Intouch Telecom, when he learnedx that a customer neededs several used PCs.
Culleton filled the order and soon began filling otherws while it became apparen t that pagers were on theway out, so he sold his stak in Intouch and launched Discounrt Electronics. Today, the business is mostly split evenlgbetween Web-based sales and retailk business, he said. The No. 1 selled on the Internet side of the businesxs is laptopAC adapters; in the retailk stores it’s USB cables, which Discount Electronicsa sells at a deep discount compared to most electronics The Dell computers the company refurbishes and resells are bought by the pallet from severaol brokers such as Austin-based Harper Remarketing Groul Inc.
The brokers get the PCs from Dell Financiakl Services after business customerleases expire. Discounr Electronics buys its Dell partsfrom Converge, a Massachusetts-based company that specializes in what it calls “reverse supply-chain The process of buying used equipment comesd with a strong environmental component, requiring plenth of documentation, Culleton said. Environmentall concerns from companies such as coupledwith anti-counterfeiting efforts, have forced companies to be more awars of proper disposal, said Debraw Eggeman, executive director of the California-based Independent Distributors of Electronics Association.
That bodes well for companiex such as Discount Electronics because fewer potentiaol products end up in But since theeconomic downturn, companies are keeping theier information technology longer, so used equipmen t is getting harder to come by. Harpefr Remarketing President Ty Black said he typicallgysells 1,500 to 2,0000 PCs per month versus 4,000 a monthj last year. At Discount Electronics, the deman for used PCs remains strong. Its newest on Manchaca Road in South openedin April. Culleton said he bought the buildiny — a former Hollywood Video store — from a California-base real estate investment trustfor $1.
1 During its first week of the store generated the amount of business that Culletonj had projected for after six monthes of operation. Another benefit of the recession — trade workers aren’yt as busy, which makes it easiet to enlist them, shortening from months to weekd the time it takes to get new stores to Culleton said. “It’s toughe in a boom time,” he said. “It’s slower to get everything done.
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