A report from Counterpoint’s Refurbished smartphone tracker shows that the global market for refurbished phones declined by 1 percent year-on-year in 2019 with about 137 million units sold.
In the second half of the year, particularly the last quarter, there was a growth in the market due to Apple upgrades gaining strength, but that did not mitigate the decline from the first half.
The Research director at Counterpoint, Jeff Fieldhack, commenting on the market dynamics said “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 percent 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 percent 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,” Fieldhack noted.
The decline was experienced in the overall market despite growth is several markets such as Indian, Latin, African and American.
“The refurb ecosystem in these economies is at a nascent stage. In terms of smartphones, these markets remain under-penetrated. 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.”, Varun Mishra, Research Analyst at Counterpoint Research, commented on the emerging regions
Countries like India are experiencing an ongoing transition of the refurb segment from the unorganized sector to organized and this is opening up opportunities.
However, 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 highlights from the report
- Apple and Samsung continued to control the secondary market in 2019. Flagship models continue to hold values strongly and are therefore preferred by the overall ecosystem players.
- Apple is still fostering its insurance and trade-in programs. The company has been more focused on the service segment and the experience is enhanced by the newer hardware. A strong trade-in program encourages users to upgrade.
- The Samsung Galaxy S series is currently the main driver for Samsung products. The company is now more aggressive with its buy-back programs as it fosters more repair partnerships. The number of certified pre-owned volumes is likely to increase in 2020 although it was surprisingly low in 2019.
- Huawei’s positioning in the used/refurbished market has been amplified by the strength in new sales and the company’s brand building efforts. The current US sanctions are likely to have a negative impact on the brand and hurt sales outside of China unless they agree on a China-US trade deal.
- The Right to Repair bill, which has now been accepted in over 25 US states, is contributing to the evolution of the repair market and shaping the refurb industry in the US and Europe.