The Used Smartphone Sector is one of the fastest-growing markets today, currently valued at 21 billion USD, a sharp increase from its 17 billion value just last year, and 11 billion in 2015. This exponential growth pattern is expected to continue in the near future, with current market forecasts valuing the market to be as much as 30 billion in 2020. To illustrate, here’s the recent penetration rate of the Used Smartphone Market in SEA, previously one of its weakest sectors:
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The Changing Nature of Smartphone Demand
The Used Smartphone Market is experiencing an exponential boom and is currently expected to grow at least 4 to 5 times faster than the smartphone market itself. But what’s causing this trend exactly? A relatively recent Wiredarticle summarised the reason perfectly: “People don’t buy phones like they used to. Now they buy them like cars.”
How so? Major Smartphone OEMs, in general, have raised prices in a bid to diversify through better internals and more features, i.e. to provide more premium options. For example, Apple’s latest flagship costs around 1,000 USD, and it’s a price most users aren’t prepared to shoulder. This has effectively alienated a swathe of their customer bases, which are increasingly seeing price as the number one consideration when purchasing their devices.
The desire to be cost-efficient is driving users away from pricey, new smartphones, and pushing them toward cheaper options. This largely explains the dramatic growth of Chinese OEMs like Oppo and Huawei, and, of course, the burgeoning demand for used smartphones. People increasingly see the Used Smartphone Market as a viable source for quality phones at significantly lower ASPs.
A Shift in Consumer Behaviour
But there are other reasons, too. There’s a growing demand among users for a second or third phone in addition to their current handset, and it’s a pattern observed worldwide. The following are trends cited from the Deloitte and IDC Reports:
· There’s an emerging need to have separate phones for work and personal use, where ownership of two to three phones per user is increasingly becoming the norm;
· Decreasing communications costs, in general, encourage families to buy smartphones for individual members, including their kids;
· The proliferation of novel mobile gaming genres (e.g. Pokemon Go) promote ownership of multiple phones per user to perform specific in-game tasks (e.g. to play in Arenas);
· Going by market size, the sector for smartphones (including brand-new handsets) within the 200 to 400 USD range is far more significant than any industry, primarily due to their affordability;
· Annual releases from OEMs contribute to high replacement rates globally;
· The rise of green consciousness, and the growing awareness of repair and refurbishing as better options for both the consumer and the environment;
· Smartphones are increasingly becoming part of the IT budget of companies.
As prices of new phones rise, the opposite thing seems to happen to used smartphones, which are consistently seeing a marked decrease in ASP year-on-year, and will continue to do so, according to IDC:
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