Second-hand smartphone sales surpass $13 billion in 1Q23

In the first quarter of 2023, sales of used mobile devices through circular economy channels continued to surge, generating $13.3 billion in revenue, according to the latest research by tech analyst firm CCS Insight. This sector, which promotes the trade-in, repair, refurbishment and redistribution of older devices, grew an impressive 14% year-on-year at a time when equivalent sales of brand-new devices slipped 2%.

Market prices are thriving as volumes grow, driven by robust demand for newer flagship models and devices being sold “like new”. Apple’s iPhone 12 was the most sought-after second-hand phone in the first quarter of 2023, underlining people’s preference for premium devices. The growing availability of trade-in options and increasingly diverse range of second-hand sellers are significantly boosting demand in the secondary market.

“The secondary smartphone market has already built significant scale and is consistently outpacing the equivalent new-device market as better products become available from leading international brands”, comments Kane McKenna, Analyst at CCS Insight.

Although the cost-of-living crisis has been a major driver of adoption of pre-owned devices, sustainability has also played a role, as used phones offer the added advantage of being less harmful to the environment, avoiding the carbon emissions and raw material consumption associated with manufacturing new devices.

However, supply is a major problem and is stunting growth in this hot segment. “Unlike traditional supply chains, this market relies on consumer trade-ins, which are proving to be the biggest challenge for the industry to reach global scale. Mobile operators in the US are clawing back phones from consumers much more effectively than others, but this hasn’t been enough to stop trade-in levels flattening in recent quarters”, adds McKenna.

Stagnation in the US has highlighted the precarious lack of supply from other global markets. “European trade-in volumes are woefully below where they should be and traders are increasingly targeting Japan, India, South Korea and China to source products, as they collectively have a similar surplus of used iPhones as the US market”, notes Simon Bryant, Vice President of Research at CCS Insight.

Apple’s iPhone range continues to dominate the secondary market, expanding its market share for five consecutive quarters, mirroring a trend seen in the primary phone market. This has also boosted the number of active users of iOS compared with Android.

The landscape is dominated by mobile operators, Apple and Samsung, which source almost three out of four products that enter the circular supply chain. But these companies represent fewer than one in four of the units sold to consumers and enterprises, with resellers and marketplaces making up the lion’s share of volumes to these customers.

Leading national and international retailers and marketplaces such as Back Market, refurbed, eBay and Amazon dominate sales, but many regional players are also strong in their respective markets, for example, Aihuishou in China, Cashify in India, Rebuy in Germany and musicMagpie in the UK.

Summing up the potential of this market, Bryant observes: “Less than 10% of used mobile devices will enter the circular economy in 2023, yet that volume will translate to more than $40 billion in revenue. This market has plenty of headroom to grow and will generate revenue as well as lessening the impact of mobile devices on the environment”. CCS Insight