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yesthattom

What happens when construction is cancelled?

I have a business idea but I'm not sure if it would work in reality.

Companies like HomeDepot/Loews and/or OfficeMax/Staples get a lot of big orders for construction jobs and renovations (lumber, office furniture, etc.). My question is: How frequently do they bad news from customers that they've taken delivery on a big order and need to return it. Is the person begging to return it and HomeDepot/OfficeMax/etc. in the uncomfortable position of having to say "no" or are there contingencies?

The reason I ask is that if it happens a lot, an interesting business would be a company that could provide estimates of how much these goods could be sold for on eBay or the various business-to-business auction sites that sell used materials.

What would make it interesting is that when the seller sells a big order, they could electronically send a copy of the bill of materials to my company. We would warehouse the data and automatically look up its resale value. Since the cancellation wouldn't happen for weeks, we'd have plenty of time to do the calculations. We could do it in batches, slowly, using spare CPU time (free/cheap) on Amazon EC2 (the lowest priority CPU is the cheapest). If the order gets cancelled, we would have the data that the seller needs right away because we pre-calculated it.

Where do we go from there? What's the business model?

Idea 1: Just provide the info. The seller sends all bill-of-materials to us and we promise to have a response when they need it (as long as the cancellation is a week or so later). They would pay us for this information because it would let them manage their business better: buy insurance more accurately or have the info they need to be able to take orders back more efficiently or ??? (they might see other value in this info)

Idea 2: We provide this info to companies that insure sellers. Do such things exist?

Idea 3: The seller provides these bill-of-materials to us for free. In exchange, we don't give them the info, but we take the materials and sell them on the open market. (Either we make money by buying the goods from the seller at a price we know will be profitable; maybe we charge the seller a service fee; maybe we take the goods on consignment and split the profit with the seller).

Why doesn't the seller just do this on their own? They could, but we would be in a better position if we did this for many companies... Developing the algorithms and technique once and doing it as a service for many companies would be better than one company spending $ to do it and keeping it for themselves.

The business pitch to the seller is: "We turn returned-goods into profits for you."

1) Does anyone know if this is a real problem for sellers? I suspect that in the 150+ years that retail has existed this problem has had other solutions and those solutions may be "good enough".

2) Does anyone know if this kind of service is being offered already? In particular, doing this in a totally automated way with EDI, etc. so that it can be done cheap; ahead of time; before you even know if the order will be returned?

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it's not an issue at all; I mean, it's genuinely not an issue for the Office Max/Staples thing (those chairs can be sold elsewhere and they have a national system). Home Depot just puts the stuff back on the shelves, occasionally dispersing it through several locations if needed, and discounting things that are cut/mixed/etc (every section of Home Depot has stuff of that nature, paint that was returned, counters that were cut and not paid for, cut 2x4s that were intended for one project that got canceled, etc. I *never* do a home project without checking for the remnants, leftovers, overcuts, etc.).

On other option: donate the goods to the Habitat for Humanity Housing ReStore, in order to collect the tax write-off.

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