A 2-million-dollar smartphone market hiding in plain sight
At the moment, the second-hand trend is spilling over from fashion to smartphones. Last year alone, the second-hand market grew by 15 percent – significantly faster than the one for luxury smartphones. Why? It’s complicated.
There he was again, that gaunt man with thinning hair in the black turtleneck, pacing across the stage. He had saved this one announcement until the end, going out with the proverbial bang. In hindsight, it seems only natural. After all, Steve Jobs’ next few sentences would utterly revolutionize the mobile phone market. And it all started with the words: “One last thing.”
It was the year 2007, and he was about to unveil the iPhone to the world – and kick off the competitive high-end smartphone market. Better cameras, better displays, better processors – more and more features, at higher and higher prices. Depending on the features, the latest model – the iPhone 14 – can cost upwards of US$2,000. An astronomical price for the average person.
Today, Apple, Samsung and a handful of smaller competitors are engaged in a fierce battle, constantly trying to outdo each other by launching the best, the latest and often the most deluxe phone technology. On the sidelines, flying under the radar, a completely different market is growing – and doing so with such speed it’s surprising that almost no one is talking about it. The market for second-hand smartphones grew by a whopping 15 percent last year alone, while the market for luxury smartphones like the new iPhone is moving towards saturation and gained a mere 4.5 percent over last year.
Refurbished and pre-owned tech is booming
While the release of every new iPhone garners major headlines, the market for used smartphones has drawn almost no attention – at least so far. Which is surprising, given that its sheer size in countries like Germany makes it hard to ignore. Last year alone, two million “refurbished” smartphones were sold, mostly through digital outlets – and this is likely only a fraction of the market. After all, many smartphones change hands without repairs or refurbishment, on eBay, for example.
As a result, the second-hand technology trend has finally reached the smartphone market and is likely to intensify in the coming years. As early as 2021, more than a third of all respondents said that they could envision buying a used smartphone. With 62 million smartphone users in Germany, this would translate into more than 20.5 million potential customers in this country alone. Just one short year later, 25 percent of customers have already taken the leap. According to a new study, up to 70 percent of consumers would now consider opting for a used rather than a new phone.
Pre-owned clothes make up one fifth of consumer’s wardrobes
This evidences a trend that has been well documented with other luxury goods. For instance, the e-commerce market for used luxury watches is booming thanks to new platforms, just like the market for used luxury fashion by Chanel, Balenciaga and Hugo Boss. The latter company has even taken the step of building its own platform in response to the extremely high demand. The numbers don’t lie: Global used luxury clothing sales in 2021 already totaled €33 billion – and this may only be the beginning.
After all, according to one survey, in 2020 around 20 percent of the average consumer’s wardrobe consisted of used clothing. Experts believe that by 2023, this number could increase to 25 percent, adding fuel to the fire of a market that is already in evidence on every major street corner. This is where second-hand and vintage clothing stores have mushroomed in recent years – and they are now targeting an even younger generation.
The reasons behind the trend towards used goods are manifold. Surprisingly, hipsterism is not one of them. Surveys reveal that customers are not looking to buy those used smartphones or dresses because pre-owned clothes and technology are cool. In fact, only about seven percent of those surveyed listed this as their motivation. Instead, buying used goods has practical reasons – two in particular.
Sustainability and pricing are critical
First, there’s the question of price. Often, people simply cannot afford expensive luxury items by Chanel or the latest iPhone. Buying the coveted item on the second-hand market allows them to save money while relishing the prestige of ownership. This is also reflected in a survey conducted by the Momox portal. In it, 83 percent of respondents said they opted for second-hand clothing because of the savings. Only one buying factor was listed even more frequently: 87 percent of respondents said they opted for second-hand clothing because it is better for the environment.
For smartphones, the situation is similar. In another study, 87 percent of buyers said that sustainability plays an important role in their purchasing decisions. This makes buying a refurbished item much more attractive, especially when you consider that price is not necessarily a factor for consumers of all age groups. According to experts, the interest in refurbished models tends to increase with the level of education, at least among the older generation. Younger buyers, often with lower incomes, attach more importance to the issue of price.
Retailers have adapted to this trend on many levels – in the smartphone market as well as elsewhere. H&M offers a line of sustainable fashion, portals such as Backmarket.de have become well-established, and the Fairphone, a smartphone manufactured according to fair trade standards, is becoming increasingly well-known. Even Apple wants to get in on the sustainability game and is now allowing you to trade in your old smartphones. The catch? For now at least, those are not going to be refurbished. But who knows what the future might bring.
This is a secondary, highly relevant market that bears watching. After all, the items offered here are part of the relevant set considered and compared by end customers when making a purchasing decision.