iPhone 11 shakes up secondary mobile market as trade-in rates continue to rise

Research from B-Stock, which claims to be the world’s largest business-to-business marketplace for trade-in and overstock mobile phones, has confirmed the rapid growth of the secondary mobile market driven by growing consumer demand for used mobile devices, in particular the latest Apple devices.

B-Stock believes the secondary mobile market is set to grow from its current value of $25bn and reach $39bn by 2025. It adds that as trade-in rates rise and new technologies emerge, more carriers and manufacturers are pushing devices to secondary sales channels.

In January 2019, IDC’s Worldwide used smartphone forecast, 2019-2023 report calculated that worldwide shipments of used smartphones, inclusive of officially refurbished and used smartphones, would reach a total of 206.7 million units in 2019, representing annual growth of 17.6%. The study projected that used smartphone shipments would reach 332.9 million units by 2023, with a compound annual growth rate (CAGR) of 13.6% from 2018 to that year.

IDC noted an uptick in demand for used smartphones, which offer considerable savings compared with new models. Moreover, and perhaps crucially for the corporate procurement arena, it added that to date manufacturers have struggled to produce new models that strike a balance between desirable new features and a price that is seen as reasonable.

Looking at what was driving the secondary device market, the B-Stock data highlighted that demand for the iPhone 7 has spiked, with a 90% increase in units sold leading up to the launch of the iPhone 11 and it was the most purchased used model.

In addition, following the iPhone 11 release, the iPhone X became the most popular used model, and at six weeks after launch, the iPhone 11 was already hitting return counters and selling into the secondary market. Yet used pricing for the iPhone XS and XS Max was regarded as weak leading up to and following the iPhone 11 launch. The XS and XS Max were selling for 39% and 44% of their retail price respectively, compared with 52% for previous generation iPhone models at 14 months after release.

“The release of the lower-priced iPhone 11 was most likely the reason behind the weak XS and XS Max performance. The $699 model was well received across the world, particularly in China,” noted Sean Cleland, vice-president of mobile for B-Stock. “It is not only new devices that are driving the secondary market, but also emerging technologies.”

Indeed, Cleland predicted that the next 12-18 months would likely see an increase in 5G phones entering the primary market and displacing 4G devices from the market, and that as new models and technologies launch and trade-ins of older phones rise, a majority of devices will be pushed to secondary channels such as that provided by B-Stock.

He added that despite the lag in mobile phone sales in the past few years, 5G promises to drag consumers out of what he felt was market inertia, and that with every upgrade, there would most likely be a trade-in.

“Retailers have to be prepared to take in old devices with the same velocity at which they put new 5G devices on the shelves,” Cleland warned. “Having a risk-adverse, high-recovery plan in place to handle all the trade-in phones will be essential – this includes leveraging buyback, refurbishment and resale programmes.”