With smartphone companies launching new phones almost every week with better specs and design, users are moving to newer devices faster than ever before. Most smartphone customers upgrade to a new phone within six to 12 months, and any newly launched phone finds its way into the second-hand smartphone market within four to six months, according to a report, titled The Second Hand Smartphone Market in India, by Cashify, an online assured-sale platform.

Not surprisingly, the used smartphone market is also picking pace, and becoming more sophisticated. Phones are now being tested on several parameters and repaired and being given the refurbished tag. According to the Cashify report, the total refurbished smartphone market was approximately 11% of the total smartphone market share in India in 2018. Overall, the rate of growth of used phones, including refurbished and other second-hand phones, in India is around 25%, higher than the global average of 18-20%, said the report.

Bigger e-commerce companies like Amazon under the tag Amazon Renewed, Flipkart under 2GUD, Cashify, and others have also entered this space. “The second-hand market is being largely captured by refurbished phones, which have been growing at more than 200% year-on-year and are the largest product category in the refurbished space," said a spokesperson from Amazon in an e-mailed response.

But how do refurbished phones fare against second-hand phones and how do they stack up cost-wise? Let’s first understand the difference between refurbished and second-hand phones.

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The difference

Typically, a used phone undergoes several checks before it makes it back to the market. The dealer, for instance, might check whether or not the battery, buttons or cameras work, the quality of audio, screen responsiveness, network, WiFi connectivity, and so on. While these are basic checks, phones that are selected to get refurbished go a step further. Also, it’s usually the newer phones that are picked up to be refurbished.

“Once cleared by experts, the phone is taken to the refurbishing facility where it undergoes more rigorous checks and parts that need to be repaired get due attention," said Nakul Kumar, chief operating officer and co-founder, Cashify. The tag ensures that a highest-category refurbished phone is as good as new, with a lower price point.

“The phones that come into the second-hand market are either passed on to original equipment manufacturers or third-party refurbished players and, if required, repaired by them in a dedicated facility. The devices are thoroughly tested to ensure that they are functioning to their full potential and graded based on their quality," said Varun Mishra, research analyst, mobile device and ecosystem, Counterpoint Market Research, a market research firm.

Second-hand phones, on the other hand, are purchased directly from the seller or the used phone market place and don’t go through extensive quality checks or repairs. “In case of second-hand phones, the device is, typically, sold in its present condition and no modification is done to address any hardware or software issues that may exist," said Kumar.

Cost analysis

Refurbished phones are more expensive than second-hand phones, but does that mean that you should opt for a cheaper option? “The price of a second-hand smartphone can be around 10% less than that of a refurbished one if you are buying from a vendor, and 20% less if you are buying from the user. It depends on how you negotiate," said Kumar.

If a phone is used for a brief period or is an unboxed product, the discount may be less. “We only sell ‘like-new’ products that are tested by professionals and don’t sell used grades at all. As much as 15-35% of the online selling price is the average discount of most of our refurbished phones," said the Amazon spokesperson.

While second-hand phones are cheaper, there are more risks associated with them. “In case of any malfunctioning or hardware issues, customers may have to pay for the repairs. A refurbished phone is covered by a warranty," said Kumar. Keep in mind that the tests carried out on refurbished phones differ from company to company. So check the company’s refurbishing process to understand how comprehensive their procedure is.

Safety issues

If you are in the market hunting for a used phone—refurbished or not—one thing you need to ensure is that they are completely secure. “The best thing a new user of an old smartphone should do is to immediately do a full factory reset following instructions available from most technicians or from the phone manual. While this does not remove any firmware changes and risks reverting the phone to an older version of the operating system, at least malicious software and residual data gets removed," said Prasanna Mulgaonkar, chief executive officer and co-founder, Cloud Raxak Inc, a Silicon Valley-based security compliance and management company.

From a security perspective, refurbished phones, though slightly more expensive, are better inspected and, hence, safer. “A refurbished device is one that the manufacturer, or a third party has restored to new or like-new condition, and has been thoroughly inspected for any problems and repaired, if necessary. While buying second hand phones from peer-to-peer marketplaces, one does not have the same (security) assurances that you usually get from a certified seller," said Venkat Krishnapur, vice-president - engineering and managing director, McAfee India, a global computer security software company.

But remember that even a refurbished phone is not 100% secure. “Consumers should be conscious that even undertaking all the recommended refurbishing measures may not always eliminate trojans and malware, which may remain on the device at the root level. Before buying a pre-owned device, verify the owner as genuine and only buy from a trusted source. If you are buying from an online marketplace, be sure to read reviews of previous buyers to gauge the genuineness of the seller," said Krishnapur.

Most people use their smartphone for banking services, mobile e-wallets, social networking and ride-hailing apps, which have sensitive information. So it’s best to carry out basic hygiene checks from a security perspective before buying a used phone.

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