[video:https://youtu.be/y18QJtu6Rg8]
Originally posted on the Blackline Review:
Founded in April 2012, MarkITx is building the world’s largest online B2B exchange for the trading of used IT equipment. The MarkITx platform provides a real-time, transparent view of the secondary IT market. They make it easy for buyers, sellers, and intermediaries to find one another and exchange used IT equipment for fair value with a minimum of effort. The company has the potential to disrupt a multi-billion dollar industry.
Key Facts & Information:
- Buyers and sellers place listings for IT equipment on the MarkITx site and intermediaries bid to refurbish, certify, and ship their merchandise. The company’s proprietary algorithm automatically prices the inventory and matches buyers and sellers based on preferences for pricing and condition of the equipment. An OEM-certified technician ensures that the equipment is in proper working order and MarkITx guarantees a warranty that lasts from 1 year to life. The money sits in escrow until the buyer signs off on the merchandise.
- Their mobile app with geolocation software allows the user to take a picture of the asset tag or model number, locate the IT equipment, price in real-time, and, if necessary, enter the merchandise into the company’s inventory tracking system.
- MarkITx offers the following multiple value propositions: brings together buyers, sellers, and intermediaries to create a liquid, centralized, online, marketplace; provides price discovery, transparency, and inventory valuation; verifies that products are in good working order; arranges for transportation of goods; offers predictive market intelligence and analytics; guarantees customer satisfaction.
- Gartner, a prominent IT research and advisory company, estimates the size of the secondary IT market at 348 billion per year worldwide and it’s growing. There are approximately 30,000 intermediaries in the U.S. In the short-term, MarkITx is focusing on iPads which will be refurbished and sold to schools. The market for desktops and laptops is dying. Smartphones are a C2C market. There is less competition and bigger margins in the B2B space and more opportunities for disruption. In the long-term, the company will be focusing on servers and network equipment. MarkITx is placing a special emphasis on large data centers and the core infrastructure of Cisco, EMC, IBM, and Oracle. The useful life of hardware is growing as Moore’s law begins to slow down.
- Sellers pay a 20% commission to MarkITx and thus receive 80 cents on the dollar. Buyers pay the cost of refurbishing which is included in the sales price and varies depending on the type of product. Intermediaries pay 1K to 5K per month for the right to trade on the site which varies depending on their volume of business. Of the 20% sales commission, MarkITx receives 15% and the intermediary gets the 5% portion. Eventually, MarkITx will add 3 additional sources of revenue: commissions on warranties and service agreements, financing to buyers and intermediaries, and predictive market intelligence and analytics.
- Currently, the seller trades in old equipment when he buys new equipment from the original OEM and receives pennies on the dollar. With MarkITx, the seller is paid 80 cents on the dollar and the buyer purchases quality, OEM-certified, refurbished hardware at a fraction of its retail price. The intermediary or wholesaler doesn’t get his markup but has access to another distribution channel, reduced sales force costs, and limited inventory risk. His markup is reduced but the volume of business increases.
- Frank Muscarello, founder/CEO, is a serial entrepreneur in technology and e-commerce and grew his last company to 20MM in sales and 100 employees. Marc Brooks, President, is a serial entrepreneur and founder of MKMB Holdings. Ben Blair, CTO, is a former partner at an options trading firm and has extensive experience in trading platforms and software development. The company has 9 employees: 5 software developers, 1 data scientist, 2 executives in business development, and 1 social media expert.
- MarkITx has 3 distinct competitive advantages: 1. They’ve created a liquid, online, centralized marketplace to match up buyers and sellers, provide real-time pricing, ship merchandise, and allow for goods to flow seamlessly from seller to buyer. 2. They offer predictive market intelligence and analytics and reveal the optimal time to sell used IT equipment based on market trends and cycles. 3. They focus on the B2B enterprise IT space whereas most of their competition targets B2C.
- Since their launch in May 2012, the company has generated approximately 1MM in revenue. They have more than 300 customers including the largest banks, financial exchanges, and telecom companies. Currently, there are 7.8m in demand and 4.7m in supply listings on their platform with the majority of supply coming from Cisco, Apple, and other Fortune 1000 companies. The company is projecting revenue between 2.5MM and 4MM in 2013. They expect to become both cash flow positive and profitable in 2014.
- MarkITx has distribution agreements with 10 strategic partners including major distributors and IT exchanges which sell B2C and don’t compete directly with them.
- The company raised 1.06MM in November 2012 from a group of Chicago angel investors. They’re seeking to raise between 3MM and 5MM in the 2nd round to continue and gain traction, build liquidity on their online exchange, and expand their business model. In the 3rd round, they will need to raise 10MM to scale. Institutional investors from the West Coast, East Coast, and Midwest are calling on a daily basis.
See the original post here on Blackline Review by David Carmen
