Refurbished smartphones are cost-effective alternatives for consumers looking to save money when buying a smartphone. Apple and Samsung are the top brands in this secondary smartphone market, allowing users to purchase popular flagship smartphones at a much lower cost. Even as shipments for the global market for new smartphones grew 4.5% YoY in 2021, shipments for the global refurbished smartphone market witnessed 15% growth, according to Counterpoint Research’s Global Refurb Smartphone Tracker. Factors such as attractive trade-in programs, consumer awareness of sustainability, and certified pre-owned smartphones led to this growth.
In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne is joined by Research Director Jeff Fieldhackand Senior Research Analyst Glen Cardoza to discuss the refurbished smartphone market. The insightful discussion focuses on key topics highlighting the refurbished market performance in 2021, key regions contributing to the growth, and key OEMs. The three also touch upon topics like geopolitics, sustainability, right to repair movement, and much more.
Apple maintained its lead in the secondary market even as Samsung inched closer.
ASPs (average selling prices) of refurbished smartphones increased marginally as 4G devices still retained value.
A whole new emphasis on circular economy and sustainability was seen with the increase in repair players, online channel focus and marketing initiatives.
London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – April 20, 2022
The global secondary smartphone market saw a surge in demand as well as supply in 2021. Even as new smartphone shipments grew 4.5% YoY in 2021, refurbished smartphone volumes witnessed a 15% YoY growth, according to Counterpoint Research’s Global Refurbished Smartphone Tracker. With new flagship smartphone prices remaining at the higher end, a larger share of consumers considered buying refurbished models of popular brands like Apple and Samsung.
As sustainability garnered more interest, consumers were exposed to more benefits of choosing a pre-owned device. Customer awareness of refurbished smartphones, certified pre-owned alternatives, quality checks in the secondary markets and warranty options increased during the year. Refurbished players too have matured since 2018 and are now scaling up for more volumes. Apple remains the secondary smartphone market leader but the dynamics between brands seem to be shifting as well.
Source: Global Refurbished Smartphone Tracker
LISTEN: How Trade-Ins, Sustainability & Awareness are Driving Refurbished Smartphone Growth
Commenting on the growth in pre-owned and refurbished volumes, Senior Analyst Glen Cardoza said, “Refurbished smartphones are a part of overall pre-owned devices which re-enter the system through various routes. Trade-ins are the fastest-growing source for such pre-owned smartphones, the volume of which grew more than 10% globally in 2021. We are seeing a YoY increase in volumes among refurbished players in developing markets like China, India, Latin America, Southeast Asia and Africa. These markets will grow more as they have many unorganized businesses and a large rural demographic yet to be captured. ASPs (average selling prices) of refurbished smartphones increased marginally as 4G devices still retained value.”
Source: Global Refurbished Smartphone Tracker
Latin America and India lead with the highest growth rates, at 29% and 25% respectively. Even the US, China and Europe regions have shown a strong growth in volumes from 2020. Research Director Jeff Fieldhack said, “The India and LATAM markets saw the highest growth rates in 2021 and also have the highest future potential growth over the next few years. There were supply shortages in the secondary market in 2020 due to COVID-19 lockdowns and other supply chain disruptions. But the market roared back in 2021. There are large consumer appetites for flagships and the latest flagships have the highest point-of-sale prices in India and LATAM. The secondary market offers consumers the ability to access these devices at ASPs 60% lower than new versions. The improved durability and high quality of flagships make them very appealing in the secondary market”
Fieldhack added, “The US and EU secondary markets bounced back in 2021. In the US, new Apple and Samsung flagship sales increased, which in turn increased the volumes of collected devices at carriers and other collection channels. On the consumption side, amid increasing insurance attach rates, the use of CPO (certified pre-owned) devices as insurance replacements increased during 2021. The B2B consumption of used devices also increased. In the EU, government initiatives are helping secondary market sales. Carriers are also making efforts to use more secondary market devices with e-waste reduction goals. Finally, EU marketplaces and collection companies – Back Market and EcoATM being examples – are growing their presence.”
Sustainability efforts
There is a renewed focus on value chain activities like Repair. This is comparatively more prevalent in mature markets like the US, Europe and Japan. Due to the momentum gathered by the ‘Right to Repair’ movement, there are many new players that have entered these markets seeing a whole new potential once governments and consumer bodies advocate this movement further. Refurbished players in mature and developing markets perceive repair differently as a value-add activity in the chain.
Eco-rating is another sustainability step taken to help consumers make an informed purchase. These initiatives have started in Europe and are gaining support not only with consumers but also with operators and OEMs. However, these initiatives will still take some time to get a foothold even in mature markets. Businesses will continue to prioritize profit generation, which will slow down the pace of these eco-centric initiatives.
Keeping sustainabilityin mind, some OEMs have started advertising and assuring all stakeholders about their sustainable practices, right from sourcing and production to the end of device lifecycle. This is an ongoing set of initiatives that will gather more steam in the coming quarters. OEMs will have to balance the cost of sustainability with their profit.
The Global Secondary Market Report for Smartphones now includes updates and insights on the following:
Refurbished yearly forecasts
Smartphone repair industry
Eco-rating initiatives
E-waste
Key brand sustainability initiatives
Feel free to contact us at press@counterpointresearch.com for questions regarding our latest research and insights.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Analyst Contacts:
Glen Cardoza
Jeff Fieldhack
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press(at)counterpointresearch.com
San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul
June 10th, 2020
According to the latest research from Counterpoint’s Refurbished Smartphone Tracker, the global market for refurbished smartphones declined 1% YoY in 2019 reaching just over 137 million units. The latter half, especially the fourth quarter the market grew, as Apple upgrades remained strong. However, a 1% increase during the second half of the year was not able to offset the decline in the first half.
Commenting on the market dynamics, Jeff Fieldhack, Research Director at Counterpoint Research noted, “This is the first time in the last four years that the refurbished market has declined for the full year. The trend is mainly linked with the downturn in new smartphone sales in key regions like the US, China, and Europe. The sell-through in these regions combined declined 6% YoY during 2019. The upgrades in the premium segment also remained slow, as users continue to hold on to their devices and replacement cycles lengthen. Premium devices are key to refurbished device volumes in the mature economies. China, the largest market for refurbished devices, declined 4% YoY during the year. This was due to the combination of a sluggish economy and the fact that it is harder for players within the refurbished market ecosystem in China to make a profit. The China-US trade tensions have also affected the secondary market as many large players are being much more cautious on purchases. Many of the smaller players in the ecosystem have seen growth, but it was not the case with the larger players.”
Despite a decline in the overall market, there were several growth markets like India, Latin America, and Africa.
Commenting on these emerging regions, Varun Mishra, Research Analyst at Counterpoint Research, added, “The refurb ecosystem in these economies is at a nascent stage. In terms of smartphones, these markets remain underpenetrated. Many users are looking for affordable devices to come online. The transition from feature phones to smartphones and the aspiration of premium devices at an affordable price point continue to fuel growth in these markets. There is also the ongoing transition of the refurb segment from the unorganized sector to organized in countries like India which is opening opportunities. There still needs to be more consumer awareness, standardization in processes, and quality assurance to build consumer trust to fully tap the market potential in these regions. However, going forward, because of COVID-19, the growth of the segment will be impacted in 2020.
Other key themes in the refurbished market:
Apple and Samsung continued to dominate the secondary market in 2019. Flagship models continue to hold values strongly and hence are also preferred by the overall ecosystem players.
Apple continues to foster its trade-in and insurance programs. This also makes sense for Apple as it has been focusing on its service segment. The experience of these services is more enriched with the newer hardware, and a strong trade-in program can help users upgrade.
Samsung’s Galaxy S series is the main driver for Samsung. The company is getting more aggressive with buy-back programs and adding more repair partnerships. Certified Pre-Owned volumes are likely to increase in 2020. This area has been surprisingly low in 2019.
Huawei’s strength in new sales and brand building efforts has helped it increase its presence within the used/refurbished market. But the US sanctions are likely to hurt sales and the brand outside of China in 2020 unless an agreement is made within a China-US trade deal.
There has also been an evolution of the repair market especially in the US and Europe, which is also shaping the refurb industry. The Right to Repair bill, which has now been accepted in over 25 US states, is also driving this trend.
BONUS Podcast: Hit the play button to listen to it
Background:
Counterpoint Technology Market Research is a global research firm specializing in detailed industry analysis of the TMT sectors. It services major technology firms and financial firms with a mix of monthly reports, customized projects, and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of over 15 years in high tech industries.
Analyst Contacts:
Jeff Fieldhack
Varun Mishra
Counterpoint Research
press(at)counterpointresearch.com
The Coronavirus (COVID-19) pandemic has caused the global smartphone market to decline below 300 million in Q1 2020. As a result, we have also lowered our overall smartphone shipment estimates for the year 2020. The global market for refurbished smartphones also saw a 1% decline in 2019. Given the current economic conditions and global downturn, the user buying pattern is expected to change. But it does bring new opportunities for the refurbished smartphone market.
Despite a decline, Apple and Samsung continued to dominate the secondary market in 2019. But how does the refurb ecosystem work? Which are the key refurb smartphone markets? Once the smartphone enters the refurb ecosystem, a fair amount of work goes into making it sellable. So, what are the typical repairs that are carried out?
Host Peter Richardson and research analyst Varun Mishra discuss the key trends and opportunities in the global refurbished smartphone market in the latest episode of “The Counterpoint Podcast.” The discussion also touches upon the replacement cycles and the refurb market in India.
According to Counterpoint’s refurbished handset tracker, the global refurb market is growing faster than that of new smartphones market, as consumers increasingly turn to refurbished phones amid increasing prices of new devices from leading brands. The global refurb market grew 10% YoY in Q2 2018 in stark contrast with the market for new smartphones, which declined 1% annually. The trends are linked.
Several factors are contributing to the steady growth in refurbished phones. The price point remains a key factor, of course. But this goes together with an increasing level of professionalism in the refurbished device ecosystem. This, in turn, means that leading channels, such as mobile operators, are willing to distribute refurbished handsets – usually with things like warranties that lower the perceived risk for consumers to buy a refurbished device. And the trend has also been noted by broader mobile ecosystem players that have observed that there are often better profit margins available than with new smartphones.
As consumers upgrade, they are preferring to sell their old devices into channels and use the value to offset the cost of the upgrade. Device exchange programs by operators, retailers, OEMs and e-commerce players are fueling the trend in both developed and emerging economies. This, in turn, is increasing the volume of devices in the refurb channels. The share of preowned phones that are being put in draws has been steadily reducing over the years. As compared to 2017 Q2, there has been a 7% increase in preowned devices which are sold into the channels (OEMs/operators/retailers).
Exhibit 1: Refurbished Smartphones vs New Smartphone Shipments YoY Growth in Emerging Refurbished Markets – 2018Q2Source: Global Refurbished Handset Tracker
China remains the largest market for Refurb in terms of volume while India has seen the highest year on year growth at 41%. In price-sensitive economies like India, Thailand and Vietnam consumers are preferring low-cost / refurbished devices over new devices. Growth will be further fueled in India as large e-commerce giants like Amazon and Flipkart expand into refurb markets, offering device return policies to build consumer trust. Africa is also growing its refurbished market infrastructure steadily. Nigeria has a robust market for used phones but a large part of it is dominated by used devices sold through gray markets. These devices generally come without accessories or warranties and refurbished market players can tap into this current gap. Large players, like Brightstar, are eying these emerging economies. As more refurb players enter and build consumer trust, these markets will grow.
Apple remains the top preference in the refurbished segment globally due to a variety of reasons:
High residual value: iPhones depreciate much less than products from other brands.
The design consistency from version to version means that a refurbished iPhone 7 is difficult for the casual observer to distinguish from an iPhone 8. This changes with the iPhone X, but will find a new level.
Apple’s vertical integration means that new versions of iOS are updated to older products, meaning that most applications will run perfectly on previous generation iPhones.
The players in the refurbished ecosystem also prefer premium devices like Apple as they offer the best margins and most stable pricing.
Apple and Samsung together captured over one-third of the total refurbished handsets market globally. Chinese brands that are making a mark in the new smartphone category are yet to create a dent in the refurbished market. When they do it will mark a new level of maturity for them.
Going forward, growth in the refurbish segment will likely continue and the popularity of refurbished handsets will increase in emerging economies where consumers have limited income to buy expensive new flagship devices.
The analysis is part of our Global Refurbished Handset Tracker. This report covers the refurbished market in exhaustive detail by analyzing the refurbished market by region, setting out key players in each region and thereafter drilling down into each region and comprehensively analyzing important metrics. It concludes by setting out Global/Regional ASPs for refurbished smartphones that further adds detail to the overall picture of the refurb market. Please reach out to sales@counterpointresearch.com for more details.
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Source: Global Refurbished Handset Tracker