The market for second-hand devices has collapsed in recent years as an increasing number of consumers are opting for second-hand cell phones over new ones. Showing nearly 10% growth in 2020, the market is are expected to grow on average by nearly 12% more over the next 2 years, reaching $65 billion by 2024.
Amid this steady rise, it’s no surprise that used device vendors are also expanding rapidly to keep up with demand. Most notably, one of the largest second-hand device marketplaces, France-based Back Market, just landed a $510 million Series E investment, launching the company at a valuation of $5.7 billion. And Back Market is far from the only game in town. Amazon and eBay are also big players in the $17 billion used device marketin addition to mobile carriers and device manufactures, such as Apple and Samsung.
So what’s driving the increase in second-hand sales? This is mainly the cost-benefit ratio of new devices. As device technology has evolved, we have seen smaller and fewer innovation leaps from one device generation to the next. This, combined with the economic impact and job losses of the pandemic, has led many buyers to choose to spend $500 on a quality, late-model refurbished device instead of $1,000 for the model. most recent. The added benefits of buying new do not justify the cost.
Durability also plays a role. Even with a booming resale market, hundreds of millions of mobile phones end up in landfill every year and have become the fastest growing form of e-waste. Given the continued shortage of chips affecting the production of new devices, the scarcity of rare earth minerals required for manufacturing, and the human rights issues associated with sourcing these raw materials, many consumers are opting for recycled appliances as a more sustainable alternative.
Buyer Beware: Risks of Used Phones
While demand for used devices has far exceeded supply for at least the past decade, the resale market itself has also been plagued by notoriously high buyer risk. In short: it can be hard to know what you’re really getting.
As much as 1 in 5 mobile phones sold across borders is fake, leaving unsuspecting consumers to spend nearly $48 billion on counterfeit devices. Not only are they a waste of money, impostor devices can also be dangerous, prone to overheating, fire or electric shock, and many contain digital spyware that steals the identity of the buyer or hack into their accounts.
If the device itself is legit, resale devices can still be lost, stolen, blacklisted, or not paid for in full. This means that they are locked or “bricked”, and therefore rendered useless for the buyer.
Even if the device is authentic and accessible, it does not mean that it is fully functional. There is no way to tell by looking at it if the battery health is good or if the device has been repaired with spare parts.
How to protect your investment
So how can buyers protect themselves from low-quality used devices?
- Choose carefully. Some devices lend themselves better to refurbishment and offer more advanced features with a longer “lifespan” before they feel stale or outdated. These offer the best value for money and a better return on investment.
- Ask the right questions. Has the seller tested the device through diagnostic providers before offering it for sale? What level of inspection do these tests offer? Is the device certified and covered by a warranty? Is there a guarantee? What is the return policy?
- Purchase a device history report. If the seller does not offer a full device history report before the sale and instead offers a basic diagnostic test, run your own full device history report. Using only the device’s IMEI number, a comprehensive device history report lists all repair history (including non-OEM parts), checks if the device has been lost or stolen, is locked to a previous user, which carrier(s) the phone can be used with, and whether the device is leased from a provider. Available for around the price of a premium cup of coffee, it’s well worth the cost to protect your investment.
- Find a certified device and seller. The most reputable sellers and reselling platforms perform diagnostics and certify every phone they sell. Much like the Carfax Vehicle History Report and Certification, this third-party mobile device history and certification report ensures that what you see is what you get, providing peace of mind for the buyer.
With all the inherent risk involved in second-hand sales, it’s easy to see how, historically, trust has been the number one thing missing in the device resale market. And for the market to thrive, it’s the first thing device sellers and resale markets need to tackle.
To do this, re-commerce platforms must maintain low failure rates and high device quality to build buyer confidence. The easiest way to do this is to offer diagnostic testing and device certification through a reputable, industry-recognized third-party provider.
In addition to ensuring reliability for the buyer, this objective certification of the device also benefits the seller. Not only does this build confidence in the used market and boost sellers’ brand reputation, but it also increases the resale value of devices by 5-10%, which improves seller profitability. Those higher prices don’t deter buyers, in fact they’re more likely to pay extra for a device they can trust. With returns on used devices averaging 20-30% of sales, it can also help reduce operating costs. Companies that certify their devices with third-party services can see returns drop by as much as 3-5% – a huge reduction that saves money and time and boosts loyalty and referrals.
By bringing confidence and transparency to used device sales, we can expect to see the market continue to thrive with growing demand in the United States and abroad, providing more affordable options for consumers and creating opportunities continuous investment.
Chris Sabeti is the founder and CEO of Phonecheck. Chris founded Phonecheck in 2015 to build trust between buyers and sellers of used cell phones. With its 80-point certification, ADISA-certified data erasure process, and comprehensive device history report for iOS and Android phones, Phonecheck is trusted by major global markets and enterprise device processors. such as eBay, BackMarket, Foxconn and Brightstar to certify large-scale used devices. . To learn more, visit www.phonecheck.com.