Dubai: It’s not just the brand new iPhones that are flying off the shelves; there has been an increase in the sale of second-hand devices too.
Apple Retail Stores across many part of the world have always had a trade-in programme to help customers who wish to trade in their old iPhones for reuse or recycling. Customers will be able to receive a credit for their returned phone in the form of “Apple store gift card” so that they can use them for buying a brand new iPhone.
The trade-in, refurbishing, and resale of the iPhones are all conducted by many e-commerce portals, Sunstrike, PCS Wireless and Brightstar, etc.
After the value of the iPhone is determined, users can accept the deal and the phone data will be wiped right in front of the user.
In the last two years, Ahmed Ashraf, former general manager of Brightstar Mena, told Gulf News that the volumes are moving faster than it used to and Dubai has become a “major hub” for second-hand phone market.
According to research firm Gartner, the worldwide market for refurbished phones that are sold to end users will grow to 120 million units by 2017, with equivalent wholesale revenue of around $14 billion. This is up from 56 million units in 2014, with equivalent wholesale revenue of $7 billion.
But consultancy firm Deloitte Global predicts that in 2016 consumers will sell outright or trade in approximately 120 million used smartphones generating more than $17 billion for their owners, at an average value of $140 per device. This is a marked increase from the 80 million smartphones traded in 2015 with a value of $11 billion, or an average value of $135.
Worth $17 billion in 2016, and with 50 per cent year-on-year growth in units, the used smartphone market is forecast to grow four-five times faster than the overall smartphone market. A total of 1.6 billion smartphones are expected be sold in 2016, an 11 per cent increase on the prior year.
According to Deloitte, used smartphones represent an increasing share of the market: about seven per cent of the total smartphone sales by units in 2016, up from five per cent in 2015 and four per cent in 2014.
“We expect the practice of selling smartphones could well accelerate through 2020 as both consumers and suppliers increasingly embrace the practice of selling or acquiring second-hand smartphones. For consumers the primary incentives to sell a device — rather than keeping it as a spare, giving it to a family member or throwing it away — will likely be driven by the ease of doing so, the lustre of owning a latest model device and the trade-in value on offer.
“We expect the market for acquiring second- (or third- or fourth-) hand devices to become steadily more organised. A decade back, those wishing to sell their old phones would often use online auctions or marketplaces, which could be far slower and uncertain relative to being quoted a trade-in value at the point of sale, or simply swapping one phone for another with a leasing plan,” Deloitte said in its report.
The trend to resell old hand-me-down phones may be better for the environment: 140 million mobile devices were thrown away, ending up in landfills in the US in 2012 alone. By 2016, and globally, the number would likely be over 250 million, with some portion of those previously discarded phones now being resold.
Ashraf said that most of the phones sold in the Middle East are as it is, no parts changed. Customers are asking for the “original phones” and the other party refurbished phones are less than 10 per cent.
Major markets in Middle East are UAE and Saudi Arabia.
On a monthly basis, he said that around 120,000-150,000 units are sold across Gulf Cooperation Council countries a month.
“Here the contract price for a new sold through telecom operators is very expensive compared to the US and Europe, where a new iPhone is available on a contract for $199 because it is subsidised. That is why there are non-subsidised phones sold through carriers in the region,” he said.
That is why Middle East has started playing a “bigger role” in second-hand eco chain.
If a refurbished (CPO) iPhone 6 is traded at $450 in the market, the price of a new iPhone is traded at a $100 premium.
“Apple does it in such a way that they bring certified pre-owned of the models that are not available in the market. There’s huge demand for iPhone 5 and 5s and even the 4s as they’re available for relatively lower prices,” he said. These low cost devices are converting the android and other Brand customers to Apple (iOS) ecosystem hence generating Brand loyal customers and secondary sources of revenues through devices and App Store.
People have started understanding the “value of the device” and they are buying it, and now they have “lot of choices”.
Apple is also gearing up to launch a refurbished iPhone market in India and China.