Samsung Electronics is planning to launch a program that will see refurbished used versions of its smartphones sold on at knockdown prices.
And this sustainable smartphone plan could be up and running by the start of next year…
The South Korean tech giant is now the number one name in smartphones, having given its mobile profits a shot in the arm through a restructure of its product line up.
And as the growth in the global smartphone market begins to level off, it’s looking for ways to sustain that earnings momentum – and it plans to do this by refurbishing any high-end phones that are returned to the company by users who signed up for one-year upgrade programs.
The scheme will initially target markets in South Korea and the United States, where it will re-sell the returned phones at a lower price.
Samsung is keeping it cards close to its chest on this one, and so there are no details on how much the refurbished phones will sell for, or even which markets the phones would be sold in or how many refurbished devices Samsung will sell.
And it’s not yet clear exactly how the phones will be altered, but it’s fairly safe to assume they’ll just be fitted with things like new casings and batteries, as per most refurbishments.
What’s the benefit of refurbishing phones?
There’s a huge market for refurbished phones in emerging markets like India, where there is a massive appetite for tech despite most not being able to find the $800 or more needed to buy brand new – the average smartphone in India sells for $90.
So by selling on cheaper refurbs, companies like Samsung can boost their profile in these countries and fend off the threat from the lower-cost Chinese manufacturers that are currently eating into its market share in these developing nations.
Samsung’s main rival in the smartphone market, Apple, currently sells refurbished iPhones across Europe and the United States, but it won’t make its sales figures public.
It’s estimated that an iPhone has a re-sale value of around 69% of its original price after about a year of its launch, while Samsung’s Galaxy sells for 51 percent of the original price in the U.S. market, according to BNP Paribas.
Deloitte estimates the used smartphone market will be worth more than $17 billion this year, with 120 million devices sold or traded in to manufacturers or carriers – to put that into context, that amounts to around 8% of total smartphone sales.
This business model is not without its risks though.
Entering the used smartphone market is not without its risks though as offering these refurbished devices could eat into – or cannibalise – sales of Samsung’s other mid-range devices, especially if, as expected, the used smartphone market grows quickly as technology breakthroughs slow down.