Who would have ever thought that a pre-owned phone could capture such a huge customer segment and grow to the size that we see it today? It wasn’t that many years ago that there were some whispers about the emergence of a pre-used phone, but no one paid it much attention. Some people were dubious while other completely dismissed it as a temporary buzz. Now it is a few years later, and refurbished phones have become a £ 14 billion global market as of the end of last year, and is predicted to grow even more in the coming years.
Anyone looking to buy a new phone these days definitely comes across the term “refurbished phones”, that is how widespread the trend is these days, especially with vendors like Amazon and Apple itself selling phones like that.
If you are one to research properly before you make a purchase then you must have surely come across the report issued by Counterpoint Research, the firm that examines global industry, shows that the market of phones that have been refurbished has grown 13% year on year, reaching 140 million units in 2017. In contrast, the smartphone market has only grown by about 3%, according to the same report, which is much less than the sale of refurbished smartphones.
Such a rapid growth has caught people by somewhat of a surprise. Why is it that it has become such a hot item in such a short time? Let’s take a look.
What does a “refurbished phone” even mean?
So much talk about a refurbished handset, but what does that even mean? Is it the same as a used phone, because they are nothing new under the sun? A phone is said to be refurbished when it is sold back or returned to a retailer, however, unlike a used or second-hand phone it is not sold again as it was received. Before it is sold again, it is inspected and fixed, if required, and tested tirelessly to avoid any issues. A demo unit can also be sold under the name of refurbished provided that it goes through all the same kinds of testing before it put up for sale.
Because the phones are no longer brand-new, they have been pre-owned, used, opened and repaired, they can no longer be sold at the same price as a new handset, so the retailers lower their prices in order to make a sale. This is why all the refurbished phones are much more affordable than a new smartphone. For instance, iPhone X that is sold for £999 brand-new but its refurbished counterpart maybe sold for about £790. Moreover, these phones that have been refurbished also come with a warranty that may be 30 days or few months that give you peace of mind.
So why have they grown so popular all of a sudden?
Who doesn’t want to save money, especially when you can get the same exact features for much less? Affordability has been one of the major factors contributing to the increased interest in the refurbished handsets.
The prices of the new smartphones are hitting the roof, which has made the customers seek satisfaction elsewhere. And refurbished smartphones have given them exactly that. In fact, it was mentioned in a Wall Street Journal report that the rising prices of the flagship smartphones are sending the customers towards the refurbished handsets. The money people can save on the smartphones these days can actually help them buy other electronic devices like a maybe a television or a laptop.
Some studies have shown that the customers have abandoned the new smartphones altogether and directed their attention solely towards the refurbished phones. The sale of the brand new phones have gone down this year. This may be due to lack of work in the innovation department compelling the customers towards better price options. Every new model launched in just a slight modification of the one before, so customers have started opting for the more affordable older models that are just as good as new.
The smartphone market has saturated thus it seems that companies are running out of mind-boggling ideas. And yet despite that, the prices are whopping high. The slight changes made in the body and in the software are not enough to justify the prices at which these phones are being offered. And so people have started thinking practically and developed a great interest in the refurbished smartphones instead.
Moreover, the upgrade cycles are also one of the other factors that have made refurbished handsets desirable. Previously the upgrade cycle was up to 24 months, but now there has been an unforeseen increase. The upgrade cycle in now rather close to 27 or 28 months. If you are looking to invest for the long term consider green ethical investments..
There is also the matter of electronic waste. While smartphones have no doubt become a necessity, the damages that it causes to the environment cannot be denied. Using refurbished phones is one way to help decrease the electronic waste in the environment. And it has, therefore, become a very appealing option to environmentalists.
So what does this increase mean for the smartphone industry?
The smartphone industry has surely been hit hard by the rise of the refurbished phones, so much so that giants like Apple and Samsung have stepped into the market themselves. This, however, doesn’t solve the issue for their new smartphones.
The critics are urging the companies to upgrade their research and development to provide innovation compelling enough to appeal to the customers. Just goodwill is no longer good enough to get the flagship phones going. They recommend that companies invest in more appealing areas such as augmented reality and other areas of artificial intelligence.
Since there is a lot of buzz about the new 5G network, people will be compelled to buy new models in order to take the next step. However, if the companies continue to shoot their prices higher than the skies then 5G may not be a good reason enough for the people to move away from the refurbished phones.