Smartphones have become a near-universal extension of ourselves. In the United States, mobile penetration rates are nearing 80%, and about half of Americans have cut the cord entirely, solely functioning on their mobile phones.
It’s no surprise that the smartphone industry has been booming as a result. However, it’s slowing down more than you’d think. After nearly a 28% growth in 2014, smartphone shipments grew just 10.5% in 2015 and only 3.1% in 2016.
Not only that, but it’s becoming harder and harder for OEMs to innovate around the smartphone—something manufacturers are recognizing themselves.
As the smartphone market stagnates, the refurbished mobile device market is poised for growth and giving the industry new revenue streams to dive into.
The Used and Refurbished Mobile Device Market Is on the Rise
While the smartphone market stagnates after a decade of major growth, it’s the refurbished mobile market’s turn to rise.
According to a recent IDC report, the U.S. used mobile phone market is set to grow from 15 million units in 2015 to over 55 million units in 2020—a nearly 30% compound annual growth rate in line with the height smartphone market growth.
It’s easy to think that the refurbished mobile device market is growing simply because there are more mobile phones in the country. However, there are 4 key reasons why the secondary smartphone market will continue to grow despite near-static smartphone penetration moving forward:
- Mobile Phone Demand in Developing Markets: The United States isn’t alone in its increasing attachment to mobile phones. In some low and middle-income countries, access to mobile devices has become more prominent than access to electricity and water. This correlates to increased access for low income areas within the United States as well, providing a distribution opportunity for higher end (yet affordable) used devices.
- Growth in Mobile Device Insurance and Warranty Programs: When the average price of a smartphone in the United States is over $550 (and even higher if considering a high-end iPhone or Android device), consumers are expected to invest in insurance plans to protect their investments. And yet, accidents will happen and insurance claims will rise. Growing warranty and insurance claims will call for more high-end refurbished mobile devices.
- Emerging Certified Pre-Owned and Pre-Owned Market: The market segment is young, but major players are starting to make their presence felt. Best Buy, Walmart, Apple, and Target are providing customers with alternative means of purchasing devices—even if they have credit issues and can’t purchase equipment in installment plans.
- Regulation of Electronic Waste: According to the U.S. EPA, electronic waste grew 120% between 1999 and 2009. Worse, only 25% of the 2.4 million tons of disposed electronics were collected for recycling. Now, individual states are taking it upon themselves to regulate electronic waste, which will drive more devices into the secondary market.
These driving factors are pushing carriers, retailers, and OEMs to find more efficient ways of recycling smartphones.
Mobile Phone Recycling: A 3-Stage Lifecycle
Carriers, retailers, and OEMs have always had trade-in programs, but old standards won’t scale to meet growing secondary market demand—especially if you’re trying to maximize value.
- Device Collection: Enable incentivized mobile trade-in and recycling in an omni channel fashion. Whether a customer is upgrading a device or signing onto a new carrier, you have an opportunity to collect a used device.
- Device Processing: Collected devices are sent to a central location for an automated solution to validate the trade, process device grade, and clear data. At this stage, you’re preparing for disposition.
- Device Disposition: A portion of the devices must go to stakeholders for internal needs—insurance claims and warranty fulfillment. Others can be used for a CPO program. And whatever you’re left with is either sold in the secondary market or deemed beyond reuse, in which case you recycle according to R2 standards.
Even if you have a program in place to recycle efficiently in this way, there’s one more challenge to overcome. Leveraging the massive amount of data that a recycling program provides.
Contact us today to learn more about deriving insights from trade-in volume, residual values, consumer behavior trends and more.
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