How COVID-19 Will Change the Adoption of Used Electronics
Facing The Truth
What a year 2020 has been. COVID-19 has caused cosmic shifts in virtually every industry throughout the world. Business owners and analysts are still debating what the magnitude of these changes will be in both the short and long term, especially as the virus continues to surprise us at every turn. Several industries have already experienced drastic changes in demand — the most notable industries being travel, entertainment, and retail.
The most troubling aspect of COVID-19 is the lost wages of tens of millions of US workers. According to Fortune News, over 44 million people, as of June 6th 2020, in the US have filed for unemployment. Already, both large and small companies are filing for bankruptcy protection, which leaves us to wonder if the availability of jobs will ever return to “normal” even after the threat of the virus subsides.
This in turn leads us to ask, how will consumers spend their disposable income, with the assurance of tomorrow’s dollar being far from promised. We believe that the current climate will trigger a conscious-cost-driven economy, in which consumers will put more thought into their purchases, and focus primarily on buying essentials.
A Conscious-Cost-Driven Economy
During recessions, consumers often flock to second-hand markets, as they did in 2008 when second-hand retail locations saw a 35% increase in sales (ABC News). One of these second-hand industries is particularly positioned to boom: second-hand mobile electronics. According to The Hustle, early data showed sales of used smartphones rising by 28% in 2020. Evidence shows that with less available spending capital and a bleak economic output, consumers will opt to purchase used electronics rather than new ones. Major retailers such as Apple are already taking steps to mitigate these impending consumer spending habits by positioning their product lines to appeal to more frugal buyers, as evidenced by the release of the 2nd generation iPhone SE.
Demand for used phones is already on the rise. In fact, prices for used iPhones on Amazon and other marketplaces are up as much as 15% since March. Even as prices continue to rise, consumers still feel like they are a bargain relative to the cost of new phones.
For example, prices for recent models of iPhones such as the iPhone XS Max (released in Fall 2018) fell over 40% year over year when the new iPhone 11 Pro Max was released in Fall 2019, yet the differences in the phones specifications don’t justify the price disparity. We expect similar price changes for the iPhone 11 Pro Max to occur when the newest generation of iPhones is released in the Fall of 2020.
The Future of the Second Hand Mobile Electronics Market
Realizing that the used phone market is positioned to expand rapidly and that there is a need for a commodity based exchange, we have come up with a solution: Eze. At Eze, we strive to make purchasing these used mobile devices more accessible to enterprises, retailers and online businesses. Eze is a B2B commodities exchange for buying and selling used smartphones in wholesale quantities. Businesses can use the platform to purchase used devices from over hundreds of professional wholesalers and refurbishers across the United States. The platform enables safe and transparent trade by offering a secure payment system, real time market prices, and discounted shipping. Each seller is vetted and monitored for the accuracy of each of their transactions. In addition to creating a platform to simplify trading, we’re looking to improve several aspects of the value chain, including our machine learning software that can identify scratches, dents, and other abnormalities a device may have — introducing the first enforced grading standard in the industry.
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