Dealers need to evaluate risk vs. reward of selling second-hand equipment.
Jack Zemlicka, Technology Editor
With new and often pricey precision farming technology being introduced at a rapid rate, the used equipment market is an appealing option for dealers to attract thrifty buyers and establish lasting business relationships.
The primary benefit of reselling second-hand tools like light bars or spray controllers is that it can get dealers a “foot in the door” with new customers and lead to more lucrative new equipment sales in the future, says Dan Severson, precision equipment salesman at Benco Products in Tea, S.D.
“I’d say about 75% of the time, we’re seeing customers that purchase used precision equipment will upgrade or buy new stuff within a year or two,” he says.
But there are challenges to making the used market worthwhile, according to Severson, who chatted with Precision Farming Dealer at the Raven Innovation Summit last week in Sioux Falls, S.D.
For starters, dealers need to be well versed in a variety of precision equipment brands, beyond simply the one or two they primarily sell.
That level of expertise puts a substantial strain on customer service, says Severson, who primarily handles Raven precision products.
“The challenge with that is in order to move used equipment to our customers, we have to be able to support it,” he says. “So it takes a lot more training time and a lot more understanding of the used equipment. It gets to be a challenge.”
Another obstacle to being a successful used precision equipment dealer is warranty protection. One precision equipment dealer from Delaware attending the Raven summit says, “You can’t warranty precision equipment that is used,” and because of that, it’s impossible to turn a profit.
“If you’ve got a piece of used equipment you are selling for $1,500, you are going to end up spending $5,000 in headaches and repairs to keep that customer happy,” he says.
Rather than sell used equipment, the Delaware dealer says he will use trade-ins as customer loaners when something breaks down. The dealership set up a precision ag service program where for $400 per year, per machine, customers get software updates, a loaner if equipment breaks down and tech support on the phone.
This model, he says, has worked well as a way to generate revenue tied to used precision equipment, without having to rely on selling and servicing second-hand products.
For those like Severson who do dabble in selling used precision equipment, the key is finding the right customers.
Severson says he’s “picky” about customers who he would sell used equipment to. He wants to make sure both the product and customer are reliable.
“You have to be careful who you sell to,” he says. “Some guys, I hate to say it, are just not capable of having some of that equipment and the time you spend with them on the used equipment, ends up costing you more than it’s worth.”
Severson acknowledges that he won’t get rich selling used precision equipment, but it’s also not an area he is ready to give up on because he seems some solid potential in this market.
“I believe there is a market out there, but it’s a tough market to make money in,” he says. “It has to be something you are going to do to get your foot in the door with a customer and move forward with other sales from there.”