Across India, millions of users still buy second-hand phones because they would rather use an old phone with the features they need than settle for a new phone with lower specs.
Across India, millions of users still buy second-hand phones because they would rather use an old phone with the features they need than settle for a new phone with lower specs. Along with affordability, the shorter upgrade cycles of smartphones these days are also fuelling a demand for used phones. In most cases the prices difference is huge, even if the phone has been used sparingly by the original buyer. The supply side is fed by those who want to upgrade as soon a new phone that catches their eye is announced — this means selling their existing phone for whatever it is worth and moving on to a new one.
“The quality of mid-range and premium devices in past year or so has improved significantly. But since these devices are priced high, they are out of reach for many low and mid range consumers. Considering the quality of these devices, they work very well even after a year of usage, hence the demand for these devices is increasing amongst the low and mid range consumers in the used phone space,” Navkendar Singh, Associate Research Director – Client Devices and IPDS : India & South Asia, IDC India, told Aapkasamachar.com over mail.
Singh says used phones are attracting a lot of first-time smartphone users who are upgrading from a feature phone. These people basically want to experience video, data, and content. Instead of buying an expensive smartphone, they end up buying a used smartphone which fits perfectly in their budget.
“There is a certain segment of consumers who like to replace their phone every six to eight months to enjoy latest technology and specifications, and also as a status symbol. This is leading to increased supply of used phones in the market,” Singh added.
A few years back, the only way to get a second-hand smartphone was through the grey market. Every big city in India has a grey market of its own; Delhi has Gaffar Market, Mumbai has Heera Panna, Kolkata has Fancy Market, and Chennai has Burma Bazaar. Since the market for second-hand smartphones has expanded a lot, there are now different digital platforms (including e-commerce sites) to buy and sell second-hand smartphones. One of the leaders in the space, OLX, claims it processed half of the 4 million pre-owned mobile phones sold online in India in 2016-17.
The second-hand devices market it split into two: the first being local retailers and the second the refurbished market where phones are tested and repaired before being resold. Refurbished phones come with a minimum guarantee, usually six months, but command a premium in comparison to the grey market.
“The average replacement cycle for smartphones has shortened to less than two years. More than 65 per cent of Quikr users are selling their phones in less than two years. Around 35 per cent within one year. Therefore they opt for getting something which is as good as new,” Sarath Chandra Gudlavalleti, VP, QuikrBazaar, told indanexpress.com. As per the online classifiedmarket site, Xiaomi, Lenovo and OnePluscontinue to show the highest growth in the marketplace, while Apple has the most aspirational value.
Nitin Kochhar, Head Categories, ShopClues, believes the growing smartphone penetration in india and decrease in product life cycle has led to the growth in used devices business in India. Kochhar says consumers see a great value in second-hand phones which are available for less than the price of a new phone. Currently, on ShopClues, the most popular used smartphone brands are Xiaomi, Lenovo and Samsung.
Meanwhile, Hitendra Chaturvedi, Founder and CEO, GreenDust, says the entire definition and user perception of an “old phone” has changed. According to Chaturvedi, consumers really don’t care even if the phone is a six-month-old device. For them, a 50 per cent discount on the phone sounds like a real good bargain.
Greendust, which offers second-hand smartphones, claims both Apple and Samsung continue to be the most popular brands in the used device segment in India, with demand remaining consistently high across the past several quarters. These brands are closely followed by smartphones from Moto, OnePlus and Xiaomi which have also displayed steady growth.
Unorganised retail market continues to be popular for used smartphones
At Delhi’s Gaffar Market, a popular den for imported devices, the second-hand smartphone business is booming. Young adults, especially from the adjoining areas of Delhi, in their mid-20s continues to flock the oldest grey market in Delhi to buy used smartphones. The demand for Apple iPhone 6 and iPhone 6s is peaking while Samsung Galaxy S7 Edge is the popular choice among Android fans.
One retailer said the demand for second-hand phones have been stable and it is the price that matters and not how new the model is. A quick survey of the market revealed what is pulling in the customers. A 16GB Apple iPhone 6, now priced around Rs 22,999 on Amazon India, can be purchased for as little as Rs 12,000 here. For those who bargain, the price can go lower. Although there is no warranty on the iPhone 6, a bit of haggling can get you a seven-day warranty, good enough to figure out if the phone has any major issues.
Being predominantly in the unorganised sector, there is no way to quantify the used smartphone market in India. By rough calculations, unorganised retail still dominates and the online channels are unlikely to be more than a third of the volume. The popularity of the former is driven by the window to discuss the device and negotiate a price before the transaction. This is not an option online. Also, the transactions are instant, especially while selling and there is no hassle waiting for the phone to be picked up and valued.
Used smartphones might help OEMs in the long run
“The used phone market will continue to appeal to consumers looking for options in the mid to premium segment, looking for experiencing a flagship model from Apple, Samsung or Google, but cannot afford a newly launched model,” IDC’s Singh added. ShopClues’ Kochhar points out that even though they are independent universe, a lot of OEMs will start to acknowledge the used phone market and use this to increase sales through exchange programmes and buybacks.
GreenDust’s Chaturvedi believes OEMs will be impacted in the long run, but will still benefit from the rising popularity of used phones. “The market for refurbished, surplus, opened box or used phones allow users to afford expensive phones, try them out and eventually buy a new phone. In essence, users are basically able to test out an expensive phone of a brand without having to bear so much cost and eventually graduate to a new phone, the next time,” Chaturvedi added.
Buying a second-hand smartphone? Here is the rider
Buying a second-hand smartphone has its advantages, but users should avoid getting scammed. Often users get fooled by a fake device and in some cases, they end buying a stolen phone. The internet is flooded with unfortunate stories about people who bought a used phone only to know they were duped by a seller. One should obviously check the condition of a used phone, but try not to get lured by lower prices as you might get a dud.
There are other security risks when buying a used smartphone. In 2016, Norton by Symantec identified 6,464,472 new pieces of malware apps and 5,741,834 new pieces of greyware – apps with potential privacy issues or intrusive behaviors.
“Despite the growing threat and awareness of cybercrime, consumers remain complacent about protecting their personal information. It is imperative that the second-hand device owners take control of their personal information. Given that smartphone they are receiving is likely to go through factory re-set, the basic hygiene and security software update is much advised. Also, if there is an OS update available, they should prioritise the same,” Ritesh Chopra, Country Manager, Consumer Business Unit, Symantec, told Aapkasamachar.com
