In today’s day and age, companies are going out of their way to rapidly release newer, faster products to capture a larger share of consumers’ wallets. However, price-conscious and value-driven consumers, comprising a large part of the market, are gravitating towards buying pre-owned, refurbished products where they get great savings with assurance on their favorite brands. With increased awareness and availability of such high quality like-new products backed by warranties, it has never been easier for consumers to save even on premium products. While demand has always existed, and is rapidly growing, supply across product categories and brands has not kept pace. But this is changing with the advent of specialist companies involved in refurbishing, and the growth of marketplaces dealing exclusively in such like-new products.
Mobile carriers have been making a push to encourage consumers to trade-in their older generation phones, offering lucrative offers on newer models. While customers don’t give much thought to where the traded-in phones end up, a wave of companies involved in cleaning, repairing, testing, inspecting, grading, repackaging, and reselling are cropping up, leading to a supply explosion in the pre-owned and refurbished mobile phone market. The statistics speak for themselves –
• According to Counterpoint’s Refurbished Smartphone tracker, the global market for refurbished smartphones grew 13% year-on-year in 2017, reaching close to 140 million units, eclipsing the more modest 3% growth of the global market for new smartphones.
• Tom Kang, Research Director at Counterpoint highlights the growth in refurbished smartphone sales puts their volumes at close to 10% of the total global smartphone market.
• Deloitte Global predicts that at least 10% of premium smartphones purchased new in 2016 and priced $500 or higher will end up having at least three owners before being retired, and may still be used actively in 2020 or beyond.
While trade-in programs by major carriers are leading the way, top smartphone brands with global footprints offer attractive recycling programs coupled with trade-ins, apart from concerted global efforts by governments, organizations, and environmental activists to reduce electronic waste being generated by planned obsolescence.
It’s not just mobile phones
This growth in the reuse market is not limited to just mobile phones. A similar pattern is observed in the P.C. and laptops segment, where environmental concerns, and growing demands for affordable products are spurring a demand for refurbished computers that apart from generating savings come with the added assurance of warranties. The growth in this segment is led by startups and corporations, educational institutes, government offices, and consumers in both, developed and emerging markets.
While smartphones and computers are driving the bulk of the growth in the refurbished space, the increased awareness amongst consumers is making them open to purchasing refurbished cameras, audio devices, home and kitchen appliances, office products, pre-owned watches and even open-box products. Customers are willing to purchase brands they would like to own, at prices they can afford. These products are given a ‘new life’ by qualified or authorized companies by putting them through checks and tests.
Organized marketplaces are leading the charge
With the increased acceptance, availability, affordability, and eventual demand, global marketplaces are getting more organized and are getting ready to tap into this growth opportunity. Earlier, online auction and deal sites comprised the primary channels for buying and selling such products, apart from the plethora of unorganized offline retail channels. These unorganized recovery routes continue to co-exist alongside more organized retailers, both online and offline, creating a thriving ecosystem across a product’s lifecycle, helping fewer products end up at landfills. One such online marketplace is Amazon Renewed, which has grown over the years by giving a ‘renewed life’ to products, all while helping customers save money.
Launched in 2014 in the US, Amazon Renewed started with the mission to be a destination of choice for shopping like-new, refurbished products that come with a warranty. With the increased acceptance and demand by customers for more refurbished products across categories and brands, the program grew to become a marketplace for manufacturers and brand owners, refurbishers, and resellers, to provide quality ‘like-new’ products. Customers get great prices on thousands of quality certified refurbished, pre-owned, and open-box products across their favorite brands. The advantage of shopping on Amazon is that customers benefit from the trust and convenience of buying ‘New’ with the cost savings of buying ‘Used’ when shopping for ‘renewed’ smartphones, laptops, home and kitchen appliances, watches and thousands of other products. All products are tested and certified to work and look like new by qualified suppliers and come with a minimum 90-day supplier backed warranty in the US, giving customers added peace of mind. While shopping on unorganized auction and deal sites could mean receiving a great price on what could end up being a faulty product without a warranty or return guarantee, shopping on Amazon Renewed puts the customer first with the same great return policy as on ‘New’ products applicable to all ‘renewed’ products.
To be accepted as a supplier of pre-owned and refurbished products on Amazon Renewed, suppliers have to meet quality guidelines and be able to consistently supply like-new products. Qualifying suppliers can then reach millions of loyal customers and enjoy high customer trust due to the stringent customer satisfaction goals in place to measure overall program effectiveness. Furthermore, suppliers can leverage Amazon’s selling tools and fulfilment capabilities to easily fulfil orders. As one seller sums up selling on Amazon Renewed, “Overall we are extremely happy and satisfied and look forward to growth.”
Customers are fuelling the ecosystem to create a closed loop
As such organized marketplaces are maturing and their awareness increasing, more end users are trading-in, selling, or participating in recycling programs for their gadgets and appliances rather than keeping them as spares for use by family members or throwing them away. With increase in traded-in volumes, specialist refurbishers are on the rise, creating a fair market with standardized trade-in values based on product type, brand, and life, similar to that observed in the automobile industry. A direct effect is that consumers are saving money by buying into older but premium brands in the pre-owned and refurbished conditions rather than paying full price for mid-range unbranded products in new condition. Apart from owning premium brands at lower prices and generating overall savings, customers shopping at Amazon Renewed primarily choose to purchase certified refurbished products to get functional products they can trust. For refurbishers and resellers, the margins on pre-owned and refurbished devices are lucrative for a viable, long-term business model that in many cases exceeds margins from the ‘New’ products’ business.
The future is here, and it’s bright
According to Counterpoint Research, the US and Europe are driving the highest volumes for refurbished products, driven by smartphones, while the fastest growing markets for refurbs include Africa, SE Asia, and India. Major mobile network operators, top brands, and refurbished product distributors are adding full life-cycle services giving consumers guaranteed and standardized values on models, further helping contribute to partially offsetting the costs of their next purchases. Online marketplaces such as Amazon Renewed help close the loop by helping suppliers of quality pre-owned and refurbished products reach customers globally with ease. Customers can shop on Amazon Renewed and get great prices on warranty-backed products across over 640 brands in nine countries (USA, Canada, Mexico, UK, Germany, France, Italy, Spain, and India).
While a typical customer for refurbished products is a value-driven, price-conscious, deal-hunter, with the expansion of product categories, more customer personas and demographics are beginning to gain awareness and are becoming first time buyers. Despite a significant percentage of shoppers who will always purchase ‘New’ and be averse to buying ‘non-new’, the market for certified pre-owned, refurbished, and open-box products will continue to grow faster than most product categories, helping renew the life of used products. This ensures a bright future for specialist suppliers operating in this segment, who are delighting customers worldwide through marketplaces like Amazon Renewed.
Varun R. Thakur, Senior Marketing Manager, Amazon Renewed. Varun manages global marketing for Amazon Renewed, since 2016. Prior to this, he managed EU marketing for Fulfillment by Amazon (FBA).