As  the market for new smartphones continues to stagnate, the used mobile phone market is slowly but surely becoming a larger piece of the global smartphone pie. While consumer excitement once drove a lightning fast replacement cycle focused on new handsets, the explosive year-over-year growth of new mobile device sales has stalled. The fourth quarter of 2018 marked the fifth consecutive quarter of decline[1], and forecasting by research groups like CCS Insight suggests that the downward trend will continue through 2019[2]. 

Smartphone manufacturers are trying to find ways to entice customers to upgrade their devices faster, but the trend continues towards holding devices longer and settling for older models. . While this may be a challenge for brands trying to hit revenue targets, it is a huge opportunity for used mobile phone retailers, distributors, and repair shops that can satisfy the growing global demand for used phones. 

Here are five things you probably didn’t know about this segment of the mobile market.

It is Growing Rapidly 

Very few realize how big the used smartphone market is or how large it will eventually get. The used industry represents 10% of the entire smartphone market, but that number will increase in the next few years. IDC has predicted that the worldwide used mobile market will reach approximately $30 billion in 2020, representing sales of 222.6 million units[3]. Persistence Market Research forecasts that the market will be worth $39 billion by 2025[4]. There is already a huge demand for used iPhone and Samsung devices around the world, and the growth of the used cell phone market is substantially outpacing  growth in the new smartphone market. 

It is Truly Global in Nature

The US is not driving the growth of the used phone market. Retailers and distributors capable of serving developing nations in Africa, South America, Southeast Asia, and Eastern Europe can capitalize on a nearly insatiable demand for used devices. Africa, in particular, is a booming market, as mobile has served as a “leap-frog” technology for the entire continent, enabling companies and governments to bypass the need for physical infrastructure.  In Africa, entire industries are springing up, spurred by mobile technology. Getting connected devices into the hands of those previously unable to access them in these markets is a huge opportunity. 

While developing nations serve as a major opportunity for used phone retailers and distributors, there is still substantial demand for used devices in developed countries. This demand has been spurred by the steady shift from a post-paid market to a pre-paid market, where consumes are responsible for purchasing their own devices. However, consumers in the US and Western Europe tend to prefer newer, higher-end models when they’re shopping secondhand devices.  If you are sourcing newer models, these are the markets to target as they pay the highest premiums.

It is Still a Nascent Market with Poor Quality Control

The global demand for used smartphones has fueled a largely underground and unregulated market where there has been little to no quality control and scammers are able to operate without fear of prosecution. It is still the industry norm for wholesalers and retailers to wire in advance when they buy used smartphones. This means that if a buyer receives a bad batch of handsets, they have little recourse. 

The risk is exacerbated by the fact that there  is very little standardization in testing and grading.. One supplier’s definition of “fully functional” could be very different from that of another, and grading scales remain subjective and are often confusing. 

However, no market can remain inefficient forever, and today leading platforms like WeSellCellular are developing transparent and consistent industry-wide standards so retailers around the world can buy phones online with confidence. Eventually the used phone market will have the same safeguards in place that protect retailers in other markets. 

It is Good for the Planet

Consumers are increasingly looking for ways to make greener choices, and buying used devices offers an easy win-win for the world and your wallet.The used handset market is great for the environment for a couple of reasons.

While recycling is an option for consumers who want to ensure that their old phones do not end up in landfills, less than 1% of smartphones are recycled by consumers or by companies that accept devices for trade-in[6]. Many people and businesses don’t know where to go for e-waste disposal or dislike the high cost of e-waste recycling. As a result, phones end up in landfills where they leech mercury, lead, silver, and flame-retardants into soil and waterways. Electronics recycling is a costly endeavor that is more of a burden to companies and consumers than it is an opportunity

Reuse is a more sustainable and profitable option. Currently, 25% of all pre-owned phones are sold back into the market, which suggests that selling secondhand devices is both easier and more economically feasible than recycling them. Furthermore, recycling electronics and mining their raw materials requires substantial energy, which  results in additional CO2 emissions. Because used devices are typically sold as is, there is no additional negative environmental impact when purchasing them.

It is Filling an Important Gap in the Global Smartphone Market

One of the biggest factors driving rapid growth is the relative affordability of used handsets. Shifting markets have virtually erased the mid priced smartphone segment, leaving consumers looking for new devices with two options: budget handsets from lesser known brands or expensive flagship phones. Used smartphone sales are filling in that mid-market gap and giving consumers who want to buy high end brands a less expensive option.

Another factor driving the demand for used handsets is dwindling consumer excitement in new devices. There have been fewer major tech disruptions in the mobile phone industry in the past few years. Outside of a handful of augmented reality and personal assistant technologies that have not yet reached their full potential, newly released flagship devices aren’t all that different from their high-powered predecessors. There’s no reason for a consumer to rush out to buy the iPhone 11 when an iPhone 8 can do everything the average consumer wants. 

However, this one is a bit complicated. There is no doubt that people are keeping their handsets longer. Research conducted by NPD Connected Intelligence shows that the average upgrade cycle is nearly three years[7]. . There is doubt about a how this affects the used smartphone market. While the global supply of used smartphones is negatively affected by longer trade-in cycles, the counterbalance is that a higher percentage of consumers are trading in when it eventually comes time to upgrade.   Furthermore, the same factors that make buying new phones less attractive, such as lack of innovation, are what make used smartphones more attractive. This is why demand for used phones will continue to grow for the foreseeable future.

If you are a used cell phone retailer or distributor, it is good to stay on top of market trends.  However, on a day to day basis, the most important thing is to locate a consistent supply of inventory, in terms of both quality and availability.  This means finding a reliable wholesale supplier that understands this dynamic market as deeply as you do and has access to the supply you need.