Refurbished devices: Why telecom operators should be pursuing this market?

The global market for refurbished phones is expected to take a growing share of the total handset market in the next decade and telecom operators have an opportunity to play a significant role within this. STL Partners has gathered research that uncovers three main selling points that telcos are using to pitch the refurbished phone market: affordability, sustainability, and quality and trust. STL’s insights highlight space for innovation in the market which can be applied to any telecom operator looking to craft an industry-leading proposition.

The market for refurbished mobile devices is growing

Mobile phones have become an integral part of everyday life with 7.33 billion phones in use worldwide today. Demand for refurbished mobile phones has grown significantly over the last five years, and expectations are that it will continue to grow in the foreseeable future. It is expected that used and refurbished phones will account for 25% of the North American phone market share by 2026, demonstrating the demand in technologically advanced markets.

The predicted rise in demand is in part down to the heightened usage of mobile devices in non-industrial nations, which is triggered by improved network capabilities and growing economies, but a huge part of it is also driven by increased availability of refurbished premium devices (predominantly Apple’s iPhone) in the advanced markets, especially in North America and Europe. Given the wide-spread demand for used phones, the question is how telcos can position themselves amongst growing competition from smaller players to attract more customers in a growing segment.

Beyond being an opportunity to expand consumer revenues, the escalating demand for refurbished mobile phones also aligns with sustainable practices. Embracing refurbished devices contributes to reducing electronic waste and mitigating Scope 3 emissions, showcasing a telco’s commitment to a more environmentally responsible approach in meeting global market demands.

STL Partners has analysed a range of refurbished phone offerings globally

STL Partners recently supported a global operator in analysing refurbished phone offerings across worldwide markets to define best practice. STL Partners researched and synthesised publicly available data on 27 companies inclusive of operators, marketplaces, retailers, and original equipment manufacturers (OEMs). The research revealed that companies utilised one or multiple of three main positioning points to market their refurbished phone offerings – affordability, sustainability, and quality and trust. These positioning territories are synonymous with the core drivers for growth in the refurbished phone market with this article exploring them in more depth.

Top benefits included in refurbished mobile phones positioning statements (n = 27 companies)

Source: STL Partners

 

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Companies utilise one or multiple of three main positioning points to market their refurbished phone offerings – affordability, sustainability, and quality and trust

Affordability

Refurbished mobile phones attract the frugal shopper who sees an opportunity to buy a device with the desired features of a new phone at a lower, more affordable price. This is especially pertinent as the retail prices of new devices have increased considerably over the last five years. Apple in particular sees benefit from selling more affordable, refurbished phones as a way of increasing its customer base.

It comes as no surprise that of the 27 companies that STL researched, 70% use affordability as part of their positioning statement for their refurbished phone offerings. These positioning statements are generally homogenous and there is room for innovation within the affordability positioning remit. Broad statements such as “Get refurbished and second-hand phones for less” are commonplace, although some statements do take it one step further by quantifying the saving, with one company stating, “Save up to 40% vs new, and buy more sustainably”. Affordability attracts customers across all regions, particularly appealing to the UK shopper. All but one of the nine UK-based companies analysed by STL use affordability as their primary selling point for their refurbished phones.

Sustainability

A smartphone being repaired and reauctioned significantly combats e-waste, with the device not being discarded and disposed in landfills. Global refurbished device marketplace Back Market states that selling a single refurbished smartphone produces 89% less e-waste, 77.31kg less carbon emissions, and 243.6kg less mined raw materials than selling a new device. Recycling a mobile phone is a tricky task, especially when it comes to some of the rare metals used in it, but also the plastic and the lithium-ion battery.

Companies are eager to show a commitment to the environment in order to maintain positive public perception, so are increasingly prioritising sustainability in their marketing efforts. Many of the companies surveyed make sustainability claims about their refurbished devices, with benefits referenced by our sampled companies including reduced carbon emissions, reduced e-waste, reduced extraction of raw materials, and sustainable packaging. Nearly half of the 27 researched companies incorporate sustainability into their positioning statements, with some quantifying the impact e.g. “by choosing a refurbished smartphone, you reduce your carbon footprint by 80kg”.

Quality and trust

There has been an advancement in availability of high-quality refurbished devices in tandem with greater access to warranties and quality assurance. This combination has incentivised more consumers to consider refurbished phones as an alternative to buying a brand-new device.

STL’s findings evidence that companies often highlight the comprehensiveness of their inspection and testing processes to build trust in the quality of their refurbished phones. They also advertise the length of warranties for devices which typically extend to 1-2 years, providing assurance to customers who may originally question standards. Interestingly, quality was the benefit underscored the least by companies that STL examined, leading it to be a potential point of differentiation for companies setting up a refurbished phone programme.

Telcos’ current play and potential caveats

Telecom operators are finely poised to play a vital role in this circular economy, with capabilities to initiate both supply and demand of used phones. Consumers are more open than ever to the idea of used tech and there is a clear market for mobile network operators to explore. The economic and environmental customer incentives generated from affordability, sustainability, and quality of trust will permit telcos to have a constant turnover of stock. Whilst many telcos have shied away from this secondary market, they should consider taking more of an active position given it is a segment of growth in most markets.

Top benefits included in telecom operators’ refurbished mobile phones positioning statements (n = 12 companies)

Source: STL Partners

 

12 of the 27 studied companies were telecom operators and the most highlighted benefit in the refurbished phone positioning was consistent with overall research. Emphasising affordability might be the best approach currently, however, over time, sustainability will grow in importance and building an early position as a conscious player is a good aspiration for a telco. When highlighting the benefits of procuring a refurbished device, telcos should look to quantify the benefits (e.g. percentage saved compared to a new device, kilograms of carbon saved) rather than making generic, unsubstantiated claims.

Final thoughts

The vast size and scope of the refurbished phone market suggests that telcos should be prioritising it, focussing resources to build a proposition that attracts consumers. However, making the most of this opportunity will require a distinctive positioning standpoint and an engaging customer journey to create an industry-leading proposition.

STL has gathered in-depth insights identifying the key themes and factors that define the refurbished phone market. STL has the foundation to produce clear recommendations with a timeframe for action, harnessing cross-industry expertise to showcase gaps in innovation.

Jack Hurley

Jack Hurley

Jack Hurley

Consultant

Jack Hurley is a Consultant at STL Partners, specialising in edge computing and hyperscaler partnerships.

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