ByeAgain and the Economics of Retail Refurbishment in Europe

One thing I've learned from working in capital markets, speaking with founders, operators, and investors on Stradio.io, is that the repressure in regulated industries isn't just doing the work. It's signing off on it, and if you work or have ever worked in regulated industry, you'll know that reporting deadlines can create exactly that kind of pressure. A deadline is approaching, several teams are updating the same spreadsheets, versions are flying around, and eventually someone has seen your has to sign off and be confident everything actually holds together. And that's exactly the kind of problem Copla is trying to solve. Copla is a European compliance and security operation startup working with regulated financial institutions. The new product, Copla Registry, is built specifically for managing the Dora ICT, third party register of information. Instead of relying on fragile spreadsheets, it gives teams structured reporting system with build-in validation, clear workflows, and a full trace of every change. That means teams can collaborate safely, catch issues earlier, and avoid the last minus crumble before submission. And with the Dora ROI submission deadline on March 31 coming up, this is something many compliance and risk teams are thinking about right now. If you want to see how Copla Registry works in practice, follow the link in the episode description and watch the short five minute demo. Europe destroys millions of returned products every year, not because they are unusable, because the system cannot process them economically. Today's question is simple, is refurbishment a sustainability narrative or is it a core retail infrastructure? Returns are no longer a side effect of e-commerce. They are a structural line item on every PNL. Wolfgang Weinkreber, co-founder and CEO of Biagann, builds refurbishment as a service for brands and retailers, integrating AI, proprietary ERP systems, and operational automation, returned and begets into controlled monetizable inventory. The decision is not mortal, it's architectural. Wolfgang Weinkreber, co-founded Biagann in 2022 after working in large scale interlogistics and fulfillment automation at SSI Schaefer. These operational thesis emerge from a structural observation, retailers were destroying usable goods because they lacked scalable refurbishment processes. Biagann build an end-to-end refurbishment system in non-quality control, cleaning, grading, research, fulfillment, powered by internal refurbishment ERP and AI-driven decision automation. The company is currently scaling capacity from tens of thousands to over a million units per year and is raising capital to industrialize re-commerce across Europe. This conversation examines refurbishment not as branding, but an operational infrastructure. Welcome Wolfgang and how would an English native speaker pronounce your name? Hi, happy to be here. I mean to the question, I guess it would be Wolfgang. That's easy. Weinkreber, something in that direction. Weinkreber, okay, here we go. You position refurbishment as infrastructure and not with the sustainability label. At what annual return volume does refurbishment in your opinion shift from optional initiative to really a mandatory P&L function? So from our perspective, it starts from day zero from one piece. Why is that? Because for a brand or retailer, returns are cost. If you have one return, you have a cost for it. That's exactly what we are going to handle that even though you don't have large quantities of the same product, we have operations behind to be able to refurbish that. Because maybe one thing that we might also have to tab into is that we from Baiggen, we are not talking about electronic products because in electronics there are already large-scale operations out there. We are talking about non-standardized products. So categories like baby kids equipment, DIY tools, gardening or pets equipment. You have to issue that every product is different from each other. And so our system has to handle this great variety of products. So we are at first talking about physical products, two certain size because DIY tools, kids, toys, they all, I do assume, have maximum size. And also when I was thinking about this, I thought there would be a threshold of hundreds of thousands of pieces because my next question is if a retailer processes below that volume threshold, as you said, it's one, it's outsourcing because that's what you are offering. You're not a re-commerce platform. You're offering this service as a white label. It's outsourcing superior to building internal capabilities or is scaling the only determined. Yes, so that is exactly what we offer when we take a deeper look at the industry. Because what is the issue, refurbishment in whatever way is not fitting into traditional logistic chains and logistic processes. So therefore a retailer or a part logistic provider, they don't have the ability to perform that on a very high efficient basis and they also don't want to do the refurbishment of products. It's their core business. And that's the reason why we offer this as a service and our system is designed in a way that we can handle products with, so highly individual products. Products where we only have one piece of it in our warehouse because again, what is the requirement here? If we think, not only think about different retailers, if we think about one certain retailer often or brand, they do not have just two or three or ten products that they are selling. They have a great variety of products that they are selling and therefore if they need a partner for the refurbishment, they need somebody who is also able to deal with the specific varieties. Could you take us on a little mental journey, drone fly through your retail facilities right now? Who is it we see and what kind of products are you already processing because in my mind there's like a lot of different back shelves with different products and you have a lot of automated tools running in between and a few people looking into that and some kind of car wash where the products go through. Yes, so what's happening now, warehouse? If we take the drone fly to rather warehouse, there is a first step which is called the sorting so we get products from different customers, some of them have directly rerouted their return address to our warehouse. Others are collecting the returns in their own warehouse then they do the check, the grading. So if a product is new and can be sold is new again, they put it back into their storage and their shop. If they cannot process with the products, they collect it on pallets and then that will be shipped on truck loads to our warehouse. And in the first step in the sorting, what we're doing is we take this bunch of different items randomly packed on pallets and then every product gets a unique back hood from our system. So then we are marrying a single product with our system. That's the first step and in the next step we really run through the refurbishment processes. So we do a checking of the product so we see if everything is working, if all the parts are here, we do a channel cleaning of the product. If necessary, we do spare parts management. So we have also integrated an intelligence spare parts management before a product goes to trash, it gets moves into our spare parts management and if the same product comes now, where has again, operators will have it on, they're using the phases that they can exchange parts on that. And in the last step, we do a grading. So we define what refurbishment condition that this product has. And then once the refurbishment part is done, the products move into fulfillment, they will be listed out the medically on different resell channels and then once the product is sold, we put the products out and shipped them to end customers. And maybe the most important thing what we have to talk about is that for the reason that products are different from each other. that not only the product variety, but also the variety of possible errors, defects, or whatever a return product can have, is that big? So that means at the moment, technology is not ready to do that fully automated. So what we are doing is we are setting on a data driven process. We've integrated the tech layer into our system. That means that we track all the data for every item. We cluster data, we take in data from other sources. And then we have AI guided workflows in the background that show our operators directly at the work stations. For example, at the check station, they have an user interface, and their our system automatically generates refurbishment guidelines, what things, what steps need to be done for each and every different item. And that is the most important thing. Because with that, we enabled the refurbishment for non-standard as goods on a scalable and industrial. Okay. I was wondering, where does the refurbishment fail economically? Is it low-product value? Is it excessive handling complexity? What would a hat in mind is like mechanical wristwatches there? Or is it the resale channel friction? So for sure, there is some, let's say, a threshold of a selling price. We say a product under 20 euros of the suggested retail price is not doable with a positive business case. And the other thing that you have to dig into account is that it is a complex handling. But that's exactly where our system gets into the game. And we reduce that complexity in order to have the positive business case. And last but not least, you mentioned the resale channels. Here I would more or less put it the other way around. The resale channels are kind of, they're pushing into that. Because the resale channels, like the big marketplaces out there, they want to expand the product portfolio. They want to also expand the product portfolio in the refurbishment section. But in order to do that, they need the demand. So they need somebody who is supplying their refurbished products to the marketplaces. So here we see a strong push. We've been talking about the retailers here and you offer their service. So I was wondering from their perspective, what measurable signal tells a retailer to stop refurbishing a category and liquidate instead? - I mean, at the end, it has to be a business case. So if they are doing something or trying something, and they see that there is no business case behind, that might be the KPI or the signal to stop doing the refurbishment, because for sure, at the end, it is a standard resolution, but it also has to be a positive business case. Your model is refurbishment as a service. Why is the service architecture here superior to a marketplace resale model? - I mean, mainly the marketplace resale part is part of our model. So in our refurbishment service, we do not only offer the, the physically refurbishment of the product, we also offer the fulfillment and the listing and the customer support on the resale marketplaces. And for us, we saw that it is kind of the whole package that brands and retailers want to have, because they are not familiar, most of them are not familiar with the refurbishment solutions. So they're searching for a partner who can take away all their efforts in that area. - I'm sure there are some key wheels turning in some of our listeners out there. And so my next question is, if a brand, if brands retain the ownership of goods, where does the decision authority sit? For example, for pricing grading or channel identification so that people listening to this, thinking about getting such kind of service, maybe in the future, adding it to their strategy, what would they need to think about in that terms, in those terms? - Yes, so we're following a partnership model that means that we are not a difficult data. If you work with a liquid data, you don't have any control over your product and we want to turn the status quo around. Because we work together with the partners. So even for we are doing already handling in the background, the brand of the retailer still has full control of our brand, pricing, where and when to sell the products. For sure, we make the suggestions based on our knowledge. We would offer this product with this price, on this market place and these countries. But if a brand has some strategic interest, for example, to say no, we want to exclude this specific market, then for sure we will exclude it. - When a brand insists on preserving premium positioning, does that constrain improved margin or destroy throughput its efficiency? - When we talk about the brand positioning on the refellishment channels, it's not really about the fact that if how they grade the products, if they don't want to put products in a certain grade on the market places, because the grades, ABC grade, they are here and they are defined on the market places. It's more the question about what market places am I choosing for reselling my products? Because for sure there are market places like what is it in Germany, it's kind of tagging in Austria, it's Wilhelm, so we're private people deal with use products. That's a marketplace where you don't have a good brand positioning, no premium brand positioning. But for sure there are other market places out there, for example, Reefurb, who have very strong premium positioning. So if you put your products on these specific market places, you can still maintain the premium positioning, but you can hand-law the products behind. - Talking about products on a word condition, would you shift from service provider to principal owner of inventory? - We also have the second model that we are the owner of the inventory. Mostly it's the case in our customer position. So for sure, we also know that, especially when talking to bigger brands or bigger retailers, there might be complex structures in the company, and also it's not that easy to move to new models, like our Reefurbishment is a service model. So therefore we offer, it's called a buy and sell model for a test pilot, so that we directly purchase a certain amount of items. We do the Reefurbishment, we take the ownership, and then we have data that we can validate, and based on the data from the test pilot, it is way easier also for the brand in the more complex, bigger company structure to move towards the Reefurbishment as a service model. - As our audience will already have noticed, this conversation is for allocators, allocated capital deciding to supply chains, or carrying return risk on a balance sheet, if you don't own P&L responsibility or operational throughput decisions, this discussion will not necessarily compound for you. Staying with the questions of Reefurbishment here, you Reefurbishment process is driven by an internal EAP enterprise resource program, and AI decision automation, where exactly does AI change the margin structure? Is it in assessment speed, in labor reduction, or even in resale optimization? - So mainly it is in the efficiency of our Reefurbishment, because when we maybe circle back to the road, fly the cross-star warehouse from before, we use the AI guided workflows at the, really at the work stations where our people are operators are working. So that means by supporting our operators, with the outputs from our AI, we enable them to be more efficient, and that is for sure directly related to the labor cost and the economics behind. - If I would be me and would be removing the ITMURL from you, from a company overall, which unit economics do you think would deteriorate first? - I guess it would be the time for Reefurbishment. So for sure we could do the Reefurbishment system would work, but not that efficient as we have it right now. And for sure, again, the time to Reefurbishment is directly linked to the labor cost and the volume of the economics. So it's time and the associated cost going with it. Okay, Reefurbishment promises capital efficiency, scale demands capital intensity, In the next segment, we will resolve whether refurbishment is the European efficiency play or disguised hypercrops in for such a bad. We'll be back after short ad break. Wolfgang, you are scaling from roughly tens of thousands to over million units annually. Is this a capital efficient trajectory or a deliberate move towards an industrial concentration? I mean, for sure what we see is that we have strong economies of scale inside of our process. If we do a larger scale, we can do it way more efficient. But also on the other side, we want to be the top on player of refurbishment of non-standardized goods in Europe. So that's the way we want to go and we want to scale our solution. I would be asking to position yourself explicitly. American side business scaling or European capital discipline? I would say we are more on the European capital discipline because all of us, what is important that at the moment we run the profitable business case with our refurbishment, operations, but for sure if there are the right partners on board, also the first way the the blitz scaling is in our mind. And which structural condition would you switch polarity? I would say if we would have investors on board who are willing to go way more aggressively in the topic. So if they would pre-finance our automation by our robotics and DPI right now at the moment. What do you think which constraint in Dach is structural, meaning Germany, Ortrance, Switzerland? Which constraint there is structural, is it regulation, labor cost, capital markets, and which is situational? I think a big issue we have in Dach region that is labor cost and labor cost is a structural thing here. Other factors for example like the capital market for my personal opinion is can be more a situational thing. Your early belief was that refurbishment could be managed by a small founding team. What evidence invalidated that assumption? I mean mainly we still stick to that belief. We are a small founding team. There is my co-founder Jan who is doing all the technical things in the operation, operations, there's me and more business development and the the defining side. And we have Mark Ruzon board, he's a co-founding investor and he's more into business development and scaling our company. But from that perspective I would say we are still a group of small founding teams. What is the operational rule you see today to decide when to industrialize versus keep down a control? I think there are two important factors. And these are, do you have the speed and do you have the knowledge and the expertise? For example if I talk specifically about our case, my co-founder Jan and me, we both come from the automated inter-lethistic sector. So we know what we are doing when we talk about logistics processes. So that for sure will be kept found and found the control. But even maybe talk about certain other areas. For example, business development and scaling our company that might be very important input from the outside to us data topics where we don't insist on further control. In your current organization, our refurbishment decisions centralized or distributed across operation nodes? These decisions are centralized and I guess that is also the most important thing in our system because what is the issue here? When we are talking about tens of thousands of different products, one single person, one single operator, isn't able to have the knowledge, how to refurbish all of these different items. So therefore we are collecting and getting all together the decisions centralized and aware of and from there it will be distributed to the single operators. And I was wondering at what scale does the centralized decision making break? I would frame it the other way around because it will not break at a certain scale. The bigger the scale, the better it gets because we are the more data we can put into our system that the more feedback loops we get from our operators directly to work stations, the better our model can train behind and the more precise our refurbishment guidelines will be. I think that also tickles in the back of my mind an interview we had about digital assistance who help you to work more efficient as a leader in an organization. You should listen to that. If you are not accountable for hiring capital allocation or strategic polarity in your organization, the next section will not translate into action. This dialogue assumes it does institutional responsibility and not commentary. Let us get into the last few questions. Reverbishment integrates social workforce element through partnerships with labor market integration programs. Is that mission-deligned leverage or an operational risk? We see there's a mission-eligned leverage and as an additional benefit because what we are doing here is we take away the skilled labor force component of our operations. So we are able to work with, let's say, more unskid labor and therefore having a way better way to go for scaling operations. If there's somebody drilling in the background, sorry about that, if social integration increases error rates by 5%, would you preserve it or remove it? So I'm happy that we don't see it, that there are more error rates from from socially integrated people, but at the end I would say it is a depending whether it's a socially integrated person or a person who we had directly, if the error rate is increasing on the personal level, for sure we have to change something here. And we already at the end, we kept it very tight. Thank you very much. As of today, is by again capital open, capital selective or capital closed? We're capital selective. So we are at now at the, in different dogs with investors because we want to close a seed round to further expand our investment capacity and move on with our scaling. And are you net hiring, net stable or net selective? Net hiring, especially with our plans ahead, there are lots of people that we need to have in board. I see and you'll share with me your career website after this conversation and we'll link it down here in the show notes. Reverbishment is no longer a sustainability footnote, it is a designed choice inside retail architecture. The operators who treat returns as infrastructure will compound. The rest will write off inventory and call it waste. This had been startup radio and Wolfgang. Thank you very much. Thank you. That's all folks. Find more news, streams, events and interviews at www.startofrad.io. Remember, share it is caring.