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Insurance companies are not in the business of hawking church pews, door peepholes or the edible organs of butchered livestock. Yet when their clients that sell such things go out of business or file damage claims, insurers are often stuck doing just that. SalvageSale.com intends to make their job easier.

Since recently launching, Houston-based SalvageSale has helped some 2,500 insurance companies and brokers sell salvage items ranging from beef lungs to scrap metal from grounded ships to 1,415 metric tons of Indonesian crude palm oil.

SalvageSale matches insurers selling salvage items with those who want to buy them (usually midsize manufacturers) over its Internet exchange. If there is enough buyer competition, auctions ensue. SalvageSale charges the seller a 12.5% commission, an ample cut, but less than the average take of 40% charged by offline salvage brokers.

A big business

The reselling of salvage (and often crushed, scratched or otherwise damaged) items is a more than $50 billion industry. Yet to date it has been underserved on the Web. This is hardly surprising, given the industry's fragmented nature and the Luddite ways of many insurance executives.

Despite all this, SalvageSale has launched at an opportune moment. Globalization is sweeping the salvage industry, with more than a third of SalvageSale's business coming from outside the U.S.

Inherent to the risky business of trans-ocean trade are damaged goods. A shipment of marble, for instance, is more likely to get chipped in the hull of a ship enroute from Bahrain to Baltimore than in a 16-wheeler going from Chicago to Cincinnati.

Additionally, the Internet by, virtue of its breadth, is making far-flung b-to-b deals increasingly routine. SalvageSale is at the crux of this trend. For example, it recently arranged the sale of about 90,000 door peepholes between a seller in Miami and a buyer in Syria.

While SalvageSale's core sellers are insurers, business from other industries-for example, food companies-is starting to flow in, said Dan Parsley, SalvageSale's CEO.

Speed, neutrality, transparency

SalvageSale's biggest values are the transparency, neutrality and speed it brings to the salvage resale business, Parsley said. Of those, speed is most valuable to salvage executives.

Today, nearly all salvage sales happen offline, a time-consuming and expensive proposition.

Typically, insurers take title to salvage goods after a client has gone belly up or has filed a claim for damaged items it received. Representatives of the insurance company then inspect the goods, usually at a loading dock or a warehouse, and then try to sell them on their own or, more typically, hire a broker to do so for them.

Phone calls and haggling among the insurer, brokers and potential buyers can lead to days or weeks of stalemate, which can result in salvage goods losing much value. This is especially true of perishable items, which make up a good deal of the salvage business.

At least one industry watcher said SalvageSale is in good stead to change all this. "There's been a market for liquidation for quite a while," said Richard Hren, senior consultant with Downers Grove, Ill.-based Nykamp Consulting Group.. "The application of that marketplace into the Internet is very logical. It's a fast, cheap means of intermediary."

SalvageSale, meanwhile, has started to market its services. Much of this is being done through viral marketing, by striking deals with brokers that can aid it with offline connections.

Its most marked deal to date is with Crawford & Co., the world's biggest reseller of salvaged goods. Atlanta-based Crawford's agents, who work out of 700 offices in 65 countries, are inspecting claims on behalf of SalvageSale and directing its customers to the exchange. "It intrigued me because it was almost entirely automated," said Grover Davis, Crawford's president-COO. "There's a greater chance to recover more proceeds."

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