A few years ago, many thought it unthinkable for the refurbished phones market to grow to the size that it has today. As early as 2013, there were rumours about the emerging interest in used phones. But too many were skeptical about the refurbished smartphone market then, and the trend was dismissed as a passing fad. But sure enough, the market continued to grow, and by 2017 – just three years later – Deloitte declared that it had become a $17 billion global market in 2016.
By the end of 2017, the market was worth roughly $19 billion, and the updated five-year forecast from IDC reports that it would continue to grow at a year-on-year rate of 10% through 2022, which is a modest estimate at best. This growth in the used phone market has been linked to the noticeable slowdowns that the smartphone market has been experiencing recently, growing only 3% last year – a huge departure from its growth rate in previous years. There are multiple reasons for this trend, but experts point to three major causes:
- Longer upgrade cycles. IDC reports that upgrade cycles are getting longer at a rate faster than they had previously predicted. Whereas mature used smartphone markets used to have cycles 24-25 months long, “now they’re closer to 27 months and 28 months.”
- Right-to-Repair. The Right-to-Repair movement has steadily been gaining momentum over the past few years, but it has begun picking up steam at a faster rate lately. The consequent expansion of consumer choice with regard to repair has guaranteed that smartphones get an extended lifespan and greater use value.
- Rising upgrade cost. The IDC highlights this as the most prominent reason for the used phone market’s recent growth. “Increased smartphone prices at the high end of the spectrum has led to many consumers holding on to their phones longer than expected,” they report. This also means that upgrading to relatively recent phones sold at a cheaper rate – i.e., refurbished smartphones – had become the more appealing option as of late.
By 2022, IDC notes that the used smartphone market will reach $52.7 billion, with the average selling price (ASP) falling from US$231 in 2017 to just $180. The introduction of new technology like 5G and the trend toward premium phones have raised ASPs for nearly all smartphone brands in recent years, although the overall trend predicted in IDC’s previous forecast remains the same. If anything is for certain, it’s that the used smartphone market will continue to grow exponentially as second-life devices grow more poised to take a larger market share over the course of the next five years.