The Big Picture: Most people who buy a new smartphone these days have a decision to make about which one they replace. Years ago, phones often ended up as handy or tossed in a junk drawer for later handling. Nowadays, device makers and carriers want them back and are using attractive promotions to persuade shoppers to hand them over. Why are they so interested in getting them back, you ask? Not surprisingly, it all comes down to money.
Joanna Stern from the Wall Street Journal recently Requested Major carriers and smartphone manufacturers have been talking about their business, but none have been forthcoming with details. I finally found a third party company called cell phones in the United States He was willing to talk and even let her into their warehouse.
US Mobile Phones is a wholesaler and distributor that buys stock phones from carriers, refurbishes them, and resells them for a profit. Most of the more than 2.5 million devices handled by the company last year were iPhones.
Stern followed the 128GB iPhone 11, which Cell Phones of America bought for $250 from a carrier, through the entire refurbishment process. This includes wiping any remaining customer data from the phone and testing that things like the screen, flash, and speaker are all working properly. Then it goes through a rigorous pre-grade cleaning process so they know how to price it. Once refilled, it’s listed for sale on a third-party marketplace for $350, which is 10 percent off.
That leaves the company with a $65 profit—not much when you consider that they have to pay employees to test, inspect, clean, and repack the devices. Also, if the phone is missing a key component like a charger, it has to save a dime of its own. Damaged phones, such as those with bad batteries, are sold at a loss.
“We have to make enough profit from the good guys that we can absorb the damage from the bad guys,” said Ari Marinovsky, CEO of Back in the Box, its US cell phone sister company.
In addition to carriers and phone makers like Apple and Samsung, there are plenty of other third-party services that are interested in buying used smartphones for cash. Many of them do business online And did you ship your old phone directly to them. Others set up Automated kiosks At grocery stores and big box retailers so you can make a deal and get paid right then and there.
The used phone market has exploded in recent years. According to the International Data Corporation (IDC), 282.6 million Used smartphones shipped globally in 2022. This is an 11.5 percent increase year-over-year, and includes 73.5 million units in North America alone.
By 2026, IDC expects shipments of used phones to reach 413.3 million units worldwide.
Stern concluded that there are more winners than losers in the used phone market. Carriers benefit when you trade in your old phone and buy a new one with them. Refurbishment companies shell out cash when someone buys a used phone through them. Price-conscious consumers win by registering a used phone at a discount. The environment wins because fewer old phones end up in landfills.
Image credit: iPhone use by Sohaib Zaidi iPhone by James Lewis