By Nate F. Searing
John Barelli, owner and founder of Surplus Management, Inc. and www.watersurplus.com, has some new and interesting ideas on the way the water treatment industry can capitalize on the growing need for pure water used in everything from manufacturing to drinking. Be it a new way to look at Web-based sales or a common-sense approach to providing drinking water solutions to those in need, Barelli is pushing Surplus Management into new territories and finding new opportunities while doing so.
Surplus Management, Inc. (originally known as Pure Solutions) was founded in 1988 as a sales rep firm to market their principals’ capital equipment. Surplus Management changed its focus to providing an outsource investment recovery venue in the late 1990s. Watersurplus.com became part of the firm’s evolution into a revolutionary way to bring water treatment professionals and equipment together.
“The biggest hurdle has been overcoming that ‘junk store’ mentality,” Barelli says. “There are several other companies out there that just sell used equipment, which many customers see as low cost spare parts. We’re doing it completely differently… we’re more selective in the items we purchase, seeking only the highest quality surplus inventory and taking the time to redesign and refurbish it so we can provide our customers with a start-to-finish water treatment solution.” Over 50 percent of Watersurplus.com’s inventory is actually unused and in the original box, Barelli says.
Through a network of customers, business partners and contacts, Watersurplus.com is able to locate and procure a steady stream of equipment suitable for residential, commercial and industrial applications. Unlike many other online equipment dealers, Watersurplus.com does not offer treatment solutions direct to the consumer.
“In order to meet the needs of customers across a large geographical area, Watersurplus.com utilizes a network of engineering companies, equipment manufacturers and local water treatment companies who provide services locally,” Barelli says.
“This is a very unique and collaborative operating approach that helps manage cost and ensures that customers ultimately get what they need. We have created this really amazing network where one day a company is my customer and the next day my supplier, selling us their old equipment.”
Word of mouth and unique product offerings have attracted more than 20,000 people to Watersurplus.com each month, from more than 130 countries. The business is steadily growing by about 50 percent each year. “Small OEMs and foreign buyers are the key,” Barelli says, “because they are eager to try new approaches and save money in the process.” In total, about 80 percent of their business originates online from ‘as is’ component sales and refurbished systems. The remaining 20 percent is rapidly expanding as Watersurplus.com offers an ever-increasing virtual catalog of new products.
“In effect, the used products we offer online are as much marketing opportunities as they are inventory. When you can offer a client the option of a rebuilt pump for only $3,000 that would cost him $6,000 new, customers take the time to explore what else you can offer. While many of them will just buy the rebuilt pump, more and more are asking for help in locating related new components or help with their water equipment and operations.”
One of the strongest areas of growth for Watersurplus.com is in the realm of reverse osmosis systems. “We purchase used RO equipment in good to excellent condition, along with subcomponents that may work in the redesign for a future installation,” Barelli says. “While the RO sector growth is welcome,” he says, it’s not completely by design. “Like so many parts of our business, we have allowed our website growth to be guided by actual marketplace demand. I have a dedicated staff that strives to do what is in the best interest of each customer. This dedication to our customers’ needs, along with a site that is easy to navigate, has created a lot of customer loyalty. We plan to add many new features, like our new technical library consisting of over 5,000 product files in a PDF format to keep our customers returning.”
In the future, Surplus Management aims to continue developing unique partnerships, more new product offerings and additional services. The company recently opened up a line of credit for foreign buyers through the EXIM Bank in an effort to develop a full service export trading business specifically focused on water treatment processes and media.
“We are also exploring the possibility of partnering with leading OEMs to distribute their products exclusively, outside their traditional distribution areas, both within the U.S. and overseas,” Barelli says.
In addition to the company’s drive to establish a new way of doing business in the water treatment industry, another key corporate objective is the desire to bring drinking water treatment solutions to places in the world where it is needed.
“Corporate America generates a constant stream of surplus and used water related equipment assets valued in the hundreds of millions of dollars, while people around the world die from contaminated drinking water. This heartbreaking global irony drives our other long-term purpose,” he says. To that end, Surplus Management is committed to mobilizing over $1 million in cash donations from their company and other equipment manufacturers to help develop sustainable potable water systems in developing countries. This money will be distributed through non-profit organizations that dedicate themselves to that cause.
“By purchasing this equipment, refurbishing it and putting it to good use, we’ve developed a successful, unique business that also ultimately results in a really creative way to help give people access to clean drinking water.”
“Above everything else, we’ve made a determined effort to focus our business activities on the investment recovery niche within the water treatment industry,” he says. “By leveraging surplus inventory and used assets along with our global Web traffic, we continue to lower the cost of capital required to solve water process problems around the world.”