In the middle of 2022, I had written about the growing refurbished phones business globally. This is a sequel to how big this business is likely to be in the next 3-4 years time. What a significant business opportunity at the organized level.
Almost all of the key data is taken from IDC latest information available. A big thank you to IDC for sharing such valuable data and insights.
IDC Forecasts Nearly 415 million Used Smartphones Will Be Shipped Worldwide in 2026 with a Market Value of $99.9 Billion.
International Data Corporation estimates worldwide shipments of used smartphones, including officially refurbished and used smartphones, will reach 282.6 million units in 2022. The unit growth represents an 11.5% increase over the 253.4 million units shipped in 2021. This growth is expected to continue as IDC forecasts used smartphone shipments will reach 413.3 million units in 2026 with a compound annual growth rate (CAGR) of 10.3% from 2021 to 2026.
Trade-in programs continue to be the driving factor for the new and used smartphone market globally. We have witnessed new programs launch successfully across multiple regional markets where trade-in is still a new concept for local consumers. Additionally, in mature markets such as the U.S., Canada, and Western Europe, trade-in continues to play a significant role in speeding up refresh cycles through telco and retail-driven promotions. This has contributed to an increase in trade-in value (TIV), which is typical when demand for new devices is slow. The rise in TIV has pushed prices up in the secondary market due to consumers getting more for their old devices to help drive upgrades.
The increased sale of higher-priced devices in the new market has also created a circular effect as many of these aggressive trade-in deals feature primarily on premium devices. How long these aggressive trade-in offers last remains a big question for buyers and sellers. Eventually, narrow margins will impact the overall profits of the channel, vendor, or perhaps both.
The market of unboxed-refurbished products has grown rapidly over the past few years. The pandemic has positively impacted the refurbished mobiles market. Millions of people have had to work or study from home for the first time. These millions have augmented the demand for information technology hardware, particularly in third world markets and in the lower segments of society globally. Enterprises are reaching out to providers of refurbished mobiles to cater to this demand, which in turn is expected to fuel the growth of the refurbished mobiles market.
The key problem for unboxed-refurbished product sellers is the presence of several unorganized players, especially in the offline space. These end up giving a bad name to the entire refurb business.
The Asia Pacific region is anticipated to witness the highest market share in the refurbished market owing to the extensive production capacity and availability of refurbished devices to provide the equipment in secondary markets, which is further boosting the growth of the refurbished mobiles market.
North America is expected to witness the highest growth rate in terms of revenue in the refurbished electronics market, due to rise in government regulations on reducing e-waste. This in turn will help in reducing e-waste and further help companies to pursue business opportunities from old and used products.
The Indian market for unboxed-refurbished goods is growing rapidly. It is believed that brands and organized online players who have got into this segment, and are willing to go that extra mile to provide quality service are actually making better margins than in the sale of new products.
In the GCC and South Asia, what has been observed is that out of the traditional, decades old distributors, intermediaries and fulfillment partners of new products of key brands, very few have caught on to this opportunity area. The online aggregators and new startups are taking up this role too.
There is still room, as the space is not too crowded in the organized unboxed-refurbished segment. All it requires is finding a good, reliable, regular supply of returned goods, an efficient refurbishing facility, a down-the-line sale strategy, and backing it up with quality service.
A refurbished smartphone is a device that has been used and disposed of at a collection point by its owner. Once the device has been examined and classified as suitable for refurbishment, it is sent off to a facility for reconditioning and is eventually sold via a secondary market channel. A refurbished smartphone is not a “hand-me-down” or gained due to a person-to-person sale or trade.