Behind the Boom: Consumer Trends Driving the Used Phones Sales Upswing
Exponential Growth of the Used Smartphone Market
The Used Smartphone Sector is one of the fastest-growing markets today, currently valued at 21 billion USD, a sharp increase from its 17 billion value just last year, and 11 billion in 2015. This exponential growth pattern is expected to continue in the near future, with current market forecasts valuing the market to be as much as 30 billion in 2020. To illustrate, here’s the recent penetration rate of the Used Smartphone Market in SEA, previously one of its weakest sectors:
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The Changing Nature of Smartphone Demand
The Used Smartphone Market is experiencing an exponential boom and is currently expected to grow at least 4 to 5 times faster than the smartphone market itself. But what’s causing this trend exactly? A relatively recent Wired article summarised the reason perfectly: “People don’t buy phones like they used to. Now they buy them like cars.”
How so? Major Smartphone OEMs, in general, have raised prices in a bid to diversify through better internals and more features, i.e. to provide more premium options. For example, Apple’s latest flagship costs around 1,000 USD, and it’s a price most users aren’t prepared to shoulder. This has effectively alienated a swathe of their customer bases, which are increasingly seeing price as the number one consideration when purchasing their devices.
The desire to be cost-efficient is driving users away from pricey, new smartphones, and pushing them toward cheaper options. This largely explains the dramatic growth of Chinese OEMs like Oppo and Huawei, and, of course, the burgeoning demand for used smartphones. People increasingly see the Used Smartphone Market as a viable source for quality phones at significantly lower ASPs.
A Shift in Consumer Behaviour
But there are other reasons, too. There’s a growing demand among users for a second or third phone in addition to their current handset, and it’s a pattern observed worldwide. The following are trends cited from the Deloitte and IDC Reports:
· There’s an emerging need to have separate phones for work and personal use, where ownership of two to three phones per user is increasingly becoming the norm;
· Decreasing communications costs, in general, encourage families to buy smartphones for individual members, including their kids;
· The proliferation of novel mobile gaming genres (e.g. Pokemon Go) promote ownership of multiple phones per user to perform specific in-game tasks (e.g. to play in Arenas);
· Going by market size, the sector for smartphones (including brand-new handsets) within the 200 to 400 USD range is far more significant than any industry, primarily due to their affordability;
· Annual releases from OEMs contribute to high replacement rates globally;
· The rise of green consciousness, and the growing awareness of repair and refurbishing as better options for both the consumer and the environment;
· Smartphones are increasingly becoming part of the IT budget of companies.
As prices of new phones rise, the opposite thing seems to happen to used smartphones, which are consistently seeing a marked decrease in ASP year-on-year, and will continue to do so, according to IDC:
A Still-Growing Supply of Used Phones
Of course, the smartphone market remains stable at large, with Apple and Samsung still dominating the market share. But this too spells even greater stability for the used smartphone market: this means a steady inflow of new, slightly used phones that could be resold after being repaired/refurbished.
There will always be users that would opt to replace their current phones, even with cheaper refurbished options on the table. The IDC Report notes that more than 50% of users it surveyed had phones that were less than a year old, and OEMs take advantage of this by releasing more powerful and feature-rich phones each year.
This would typically mean shortening the lifespan of smartphones. But with the proliferation of refurbishers like GES in the secondary smartphone ecosystem, the average lifecycle of phones is extended, where premium phones are expected to have “three or more owners before being retired, and will still be actively used in 2020 and beyond”.
Implications for Galaxy eSolutions
GES is in a unique position due to its full control of the business process and is well-positioned to be the market leader in the Used Smartphone Sector by 2020. If you partner with us today through our ICO program, you’ll gain access to a booming market with enormous revenue opportunities. Visit our Galaxy eSolutions site to learn more about the fantastic opportunities for growth available to you today.