Refurbished smartphone sales soar as new devices struggle
- Organized sellers such as Cashify, ControlZ, HyperXchange and Xtracover have also been seeing growth in their businesses
Sales of refurbished smartphones in the domestic markets continue to grow, defying the slowdown trend in new smartphones that have made brands struggle in one of the world’s largest electronics markets for the past four decades. Even as most of the second-hand smartphone market remains unorganized, data sourced by Mint projected a mid to high single-digit growth for refurbished smartphone market, as well as a rise of over 50% in average selling price of second-hand phones.
Talking to Mint, Glen Cardoza, senior research analyst at market research firm Counterpoint India, said demand in refurbished smartphone market remains strong.
“The refurbished smartphone market grew at a very strong rate of 19% year-on-year (y-o-y) in calendar year 2022. While growth rate may not be as strong so far this year, there is still healthy demand in the second-hand market—the first half of the year has seen a mid to high single-digit growth in device sales, and the same growth rate is likely to be retained through the rest of the year," Cardoza said.
On 30 August last year, Mint reported exclusively that 65 million smartphones were projected to be sold in the refurbished smartphone market by the end of 2022, as per data from market tracker Redseer. Cardoza said at the time that while the growth rate of refurbished phones had already slowed from 2021, the healthy double-digit growth rate in 2022 was due to the rising price of smartphones—and the lack of available options in budget price ranges. “This year, the refurbished phone market has continued to grow, as buyers are finding competitive premium smartphone options among an increasing number of organized sellers in the second-hand market. The sector, however, continues to be ruled by unorganized segment—which accounts for at least 80% of all refurbished or second-hand smartphone sales in the country," Cardoza said.
Organized sellers such as Cashify, ControlZ, HyperXchange and Xtracover have also been seeing growth in their businesses. Nakul Kumar, co-founder and chief operating officer at Cashify, said the company has seen a “rise of almost 100% in demand and sales" in first half of 2023, over last year.
“We are also seeing very strong demand uniformly, which is why this year, for the first time, we will host our own festive season sales—where we will offer bank offers as well as internal discounts on devices," he said.
He added that sales of refurbished devices “are more on the premium side", leading to “higher ASPs across all sales." Counterpoint’s Cardoza said average selling prices (ASPs) of refurbished phones have risen by 50% and above—rising “to a range of Rs9,000 to Rs13,000 in the first half of this year, from Rs6,000 to Rs9,000 last year". For Cashify, the ASP of devices sold through both its online and offline platforms is “almost Rs20,000," Kumar said.
This is likely to have a positive impact in the balance sheets of refurbishing companies, too. Cashify, for instance, reported operating revenue of Rs498 crore and net loss of Rs99.8 crore for FY22, according to data sourced from business research platform Tofler. These figures are likely to change.
This growth comes off the back of a steady decline in the new smartphone market. Data from market researcher IDC published in its 3 August report pegged a fourth straight quarterly decline in shipments for smartphones in India—and a 10% drop in phone shipments for the first half of the year. Navkendar Singh, associate vice-president of IDC India, told Mint at the time that a sharp market recovery and change in buyer sentiment is unlikely to happen in the second half of this year—which in turn could lead to yet another year of overall shipment decline.
Smartphone brands, however, have not expressed significant concerns with this change in dynamic as yet.
A senior executive at one of India’s top five smartphone brands said, requesting anonymity, “We’re not concerned about the fundamental strength of India’s smartphone market, and in our overall business. We have strong product portfolios across price brackets where the demand is, and with the advent of 5G, consumer demand is unlikely to decline completely. The advent of new abilities and features, such as AI-driven tasks, will also compel users to upgrade their phones. Sales in second-hand markets are, in fact, a good way for us to gauge buyer sentiment towards our brand or even competing brands, and does not really take away buyers."
“After all, a buyer will always aspire to own a new phone over a second-hand one, any day. There are always cyclical demand shifts in every market, and this is one such cycle, too," he added.
