A Blueprint for the Used Equipment Business - Kitmondo 2014 New Site Launch Presentation

RECLAIM OUR MARKETA Blueprint for the Used Equipment Business

OUR MARKETIS UNDERTHREAT

HAS THERE BEEN A MORE CHALLENGING TIME TO BE A USED EQUIPMENT SUPPLIER?

•Fraud and malpractice are commonplace

•Potential buyers often mistrust the market

•Conversion rates from enquiry to sale are getting worse

THIS DOCUMENT IS:

OUR CALL TO ACTION

OUR MANIFESTO

AND AN INTRODUCTION TO

THE NEW KITMONDO.COM

THE DIFFICULT TRUTH OF THE USED EQUIPMENT MARKET....

THE GOOD NEWSFor each piece of equipment sitting in your warehouse there is almost certainly (somewhere in the world) a customer wondering how and where to buy the exact same unit. It may be a cliché but, like all good clichés, it’s based on a truth – somewhere, there is a buyer for everything.

THE BAD NEWSThis is where the good news ends. It turns out theprocessoffindingandbuyingthatpieceofequipmentsittinginyourwarehouseissufficientlydifficultandriskythatthecustomerwill,inallprobability, decide not to buy it from you. Net result: they don’t get the piece of equipment they need. And you don’t make the sale.

WHY IS THIS?The inconvenient reality is that the person most in need of your equipment is unlikely to be at the end of your street. If they are, great! Invite them in, demonstrate the piece of equipment and do the deal over a handshake and a cup of coffee. But if they’re out of town, out of state our out of the country making a sale becomes exponentially harder and, statistically, unlikely to happen at all.

THE BUYER’S DILEMMAAt some point in the process of trying to buy used equipment,apotentialbuyerhastomakeadifficultchoice....

DO THEY:A) send their money to the seller and wait for the equipment to arrive (simultaneously crossing every availablefingerandtoe)?

DO THEY:B) get on a plane, travel thousands of miles to the seller’s premises, inspect the equipment, get back on a plane and travel thousands of miles home. Then starttheprocessoftryingtobuytheequipment?

DO THEY:C) decide it’s all too risky and expensive and go back tothedrawingboard(sorry,theinternet)?

NO PRIZE FOR GUESSING WHICH

CHOICE IS STATISTICALLY

THE MOST LIKELY AMONGST

CUSTOMERS LOCATED MORE

THAN 500 MILES FROM THE

EQUIPMENT SUPPLIER....

ANSWER CC) decide it’s all too risky and expensive and go back tothedrawingboard(sorry,theinternet)?

AND INFURIATINGLY...

ANSWER CC) decide it’s all too risky and expensive and go back tothedrawingboard(sorry,theinternet)?

AND INFURIATINGLY...

THEY ARE ABSOLUTELY RIGHT.

THE FAMOUS USED EQUIPMENT MEXICAN STAND OFF...

YOU DON’T WANT

TO...

...release equipment to someone you’ve never done business with until you’ve

received payment.

THE NEW CUSTOMER

DOESN’T WANT TO...

...send money to you (someone they’ve never done business with) until they’ve

received the equipment

SOUND FAMILIAR TO YOU?Typically there are two possible outcomes to the stand-off:

1. BUYER SENDS YOU THE MONEY (YIPPEE)

or

2. BUYER WALKS AWAY (BOO)

THERE IS NO THIRD OPTIONSellers don’t ship equipment to new customers unless they’ve taken a payment. And why would they?63%ofusedequipmentfraudiscommittedbybogusbuyers,sowhyshouldasellertaketherisk?

THERE IS NO THIRD OPTIONSo, in the vast majority of used equipment transactions, the buyer has to pay the seller before they receive the equipment. In other words...

...THE BUYER TAKES ALL THE RISK

AT KITMONDO WE SHAKE OUR HEAD IN AMAZEMENT...

When we hear about the sums of money transferred by buyers that have conducted only the most basic research into a seller. Tens of thousands, hundreds of thousands even, wired to sellers they’ve never met for equipment they’ve never seen.

...AND WE SHAKE OUR HEAD IN DESPAIR

When we hear about the countless stories of vanishing sellers or equipment that never arrives. In eight years, we’ve seen it all. From the one-man band scamming a few hundred dollars to the organized, “professional” used equipment dealer bilking customers for hundreds of thousands. It’s tragic and it’s dangerous and it’s ruining our market.

A FRAUDSTER’S PARADISE

A FRAUDSTER’S PARADISE

Fraud is an appealing career choice for lazy, unprincipled people. To these people, the used equipment market displays mouth-watering characteristics:

•High value equipment, often thousands or tens of thousands of dollars in value

•Buyers send payment in advance

•Equipment can take several days or weeks to be delivered

A FRAUDSTER’S PARADISE

Put it this way, if you were a fraudster, where would youspendyourtime?

FRAUDSTERS ARE WINNINGLeft unopposed, fraudsters will reach most used equipment markets sooner or later, possibly yours. And once infected, a market gains a bad reputation very rapidly – making it almost impossible for genuine buyers and sellers to do business.

QUESTION IS...

QUESTION IS...WHAT CAN BE DONE?

TO RECAP...

FUNDAMENTAL PROBLEM # 1In99%ofusedequipmenttransactions,thebuyertakes all the risk

FUNDAMENTAL PROBLEM # 2The cost of visiting your premises to inspect equipment makes the deal too expensive

FUNDAMENTAL PROBLEM # 3You can’t risk sending your equipment to the buyer withoutfirstreceivingpayment

ITS WHY...•potential buyers back-out at the eleventh hour

•it’ssodifficulttocompleteinternationaldeals

•the conversion rate from original enquiry to sale is so low

and

•the used equipment market is a magnet for fraudsters and malpractice

The solution to the problem is easy to describe but fiendishlydifficulttoimplement...

TAKE THE RISK OUT OF BUYING USED EQUIPMENT

whilst

PROTECTING THE SELLER FROM FRAUD

OUR

BIG IDEA

KITMONDO’S LITTLE BIG IDEAOk, we don’t pretend this is the only solution to the problem and we don’t expect you to swoon in admiration for our incredible genius. What we’re proposing is a practical, repeatable way to take the risk out of used equipment transactions. A method that makes buyers more likely to buy your equipment whilst ensuring you are paid in full every time.

IT WORKS LIKE THIS...

1. Buyer and seller discuss equipment through the Kitmondo marketplace

2. Buyer decides to buy the equipment

3.Kitmondocollectsfullpaymentfromthebuyer

4. Seller ships the equipment (or buyer collects)

5. Buyer inspects the equipment on their premises

6.Buyeracceptstheequipment

7. Kitmondo pays the seller

AN IMPORTANT IDEA?Like we said, it’s not earth-shattering genius. It’s not Twitter. It’s not the Higgs Boson. But, and we think it’s a big but, this is a process that has been rigorously designed and implemented by a group of people (ie. us) that recognize the issues at stake in the used equipment market and are obsessive about fixingthem.

OUR LITTLE SECRET...

OUR LITTLE SECRETFor 18 months we have been piloting this new way of doing things under the name Kitmondo SafeSale. Maybe you’ve seen it on our website or even used it tocompleteadeal?

OUR LITTLE SECRETSo, this idea of ours hasn’t come out of fresh air. It’s based on the experience and knowledge gained building out a safe transaction service that has now been used by hundreds of buyers and sellers throughout the world.

BUYERS LOVE IT BECAUSE:•They get to inspect the equipment at their own

premises

•Their money is safe if the equipment is not as described by the seller

•They can buy safely from equipment sellers thousands of miles away

SELLERS LOVE IT BECAUSE:•Itgivesbuyerstheconfidencetopurchasetheir

equipment

•Equipment doesn’t ship until full payment is collected from the buyer

•It opens up national and international sales opportunities

THE PAIN OF CHANGE...

THREE THINGS YOU’RE NOT GOING TO LIKE MUCH

You’re going to have to ship equipment before you’ve received payment

Remember, we have the buyer’s money. Before we ask you to ship the equipment, we’ll have received and cleared the full payment from the buyer. It’s held on deposit for you and paid out as soon as the deal is complete.

THREE THINGS YOU’RE NOT GOING TO LIKE MUCH

You’re not going to receive the buyer’s contact information straight away

Inordertomakeoursystem100%fraudfreeit’simportant your initial conversations with potential buyers take place through our messaging system. This way we can spot bogus buyers.

THREE THINGS YOU’RE NOT GOING TO LIKE MUCH

Buyers have three days to inspect the equipment on their premises

If the buyer receives equipment and it’s faulty or not as described they can send it back to you (at their own cost). We think this is pretty fair and reasonable. Remember, this is why buyers use the service - they know they are protected if something is wrong with the equipment.

THREE THINGS YOU’RE NOT GOING TO LIKE MUCH

We understand some or all of these aspects of the new Kitmondo will represent a change to the way you normally do things. We know these are possibly difficultchangesweareaskingyoutoconsider.Andit’snaturalyourfirstreactionmightnotbeabsolutelypositive. But we hope you understand why we’re doing it, why it should lead to more sales for you and why, we believe, it might help improve our market.

REAL WORLD CAVAET

REAL WORLD CAVAETOccasionally it will not be practical to complete a transaction through Kitmondo’s new safe transaction system. Maybe you need to agree staged payments with a buyer, or maybe a buyer is unable to use an intermediary service (some universities for example).

REAL WORLD CAVAETLet us be absolutely clear. We’re not going to get in the way of you making a sale. That’s the exact opposite of what we are trying to achieve for you. We want Kitmondo to increase the likelihood of you making a sale not reduce it so, in situations where it’s impossible to transactthroughKitmondo,wewillworkwithyoutofindan alternative, but safe, way to make the deal happen.

AND FINALLY....

DOES ANY OF THIS REALLY MATTER?

Sometimes we ask ourselves why we spend so much timeonthis?Howcouldweinvestsomanyweeks,monthsandyearsdoingthiswithourlives?It’snotcutting edge, it’s not altruistic and it’s certainly not glamorous!Whyshouldwebebothered?

Let’s face it, when we were kids none of us dreamt of building a better marketplace for used equipment.

DOES ANY OF THIS REALLY MATTER?

When we ask these questions, we’re really asking ourselvesifourworkatKitmondoismeaningful?Other than putting food on our tables, can it give us personalfulfilmentandasensethattheworkwearedoingisworthwhile?

The answer can take a while. But it is there.

ITS THIS....Buyers and sellers of used equipment typically work in small or medium size businesses or institutions. Often they are self-funded. Often they are family-run. To these people, fraud can have a devastating impact. Being hit by a fraudster is not just an accounting problem. It’s jobs, mortgages, people’s livelihoods.

ITS THIS....So, yes, we believe taking on fraudsters is a meaningful use of our working lives and a worthwhile aim for the Kitmondo business. Granted, we’re not curing diseases or putting a man on the moon. But we are standing up to callous, arrogant criminals – and that feels good.

ITS THIS....And before it’s suggested this is just convenient marketingwaffle,rememberfrauddirectlyimpactsKitmondo as well. We only get paid if a sale is completed and, over the years, we’ve been victim of non-payment dozens of times. Fraudsters take food off our table and take money out of our pay packets. It makes us angry. And where there’s anger there’s passion and where’s there’s passion there’s meaning.

SO WHAT NEXT?We appreciate a change like this isn’t necessarily easy, but all we ask is that you give the new Kitmondo marketplace a try. We’ll do everything in our power to prove it is a safe and successful sales channel for you.

SO WHAT NEXT?The new Kitmondo website is live from today 19th March so you can take a look at the changes we’ve made. You don’t need to change a thing to your account. All your listings are up and live and, hopefully, attracting attention from potential buyers.

SO WHAT NEXT?If you have observations, doubts, or are downright opposed to our new marketplace we want to hear from you. Please email Tom or Richard directly or on [email protected].

SO WHAT NEXT?We look forward to working with you.

Best wishes and thank you,

The Kitmondo Team

Kitmondo LtdCollingwood Buildings38CollingwoodStreetNewcastle upon Tyne

NE1 1JFUnited Kingdom

[email protected]

+448703666150

Image Attribution: Chris Kerr, Olivier Guin, Simon Child, Simon Child, Mister Pixel, Alex Auda Samora, Olivier Guin, Nicholas Menghini, Bohdan Burmich, Maria Ladegaard Rasmussen