High smartphone prices fuel demand for refurbished smartphones

New Delhi: Rising smartphone prices are fuelling recommerce growth with the refurbished smartphone segment expected to register early double digits growth in 2022, though at a tapered rate owing to supply challenges.

Counterpoint Research estimates growth for the refurbished phones market to grow 13% on year this year, compared with 25% in 2021. The research firm said India reported a 14% hike in average selling prices to Rs 17,000 in 2021, leaving price-sensitive Indians seeking affordable smartphones in a lurch, a gap fulfilled by the refurbished segment.

"Affordability continues to be a challenge, and hence the demand for refurbished phones has almost doubled since before the pandemic," Jayant Jha, co-founder and CEO, Yaantra, told ET.


For example, the refurbished version of a flagship model can be cheaper by as much as 60% in some cases, say industry experts.

Quikr said in the January to March quarter, 78% of the demand for refurbished phones came for devices priced under Rs10,000.

Flipkart-owned Yaantra dabbles in smartphone repairs and refurbished smartphones is also seeing new avenues of growth among teenagers in India.

"The demand has unlocked for the teenagers below 15 years, which saw a surge for smartphones initially from online classes, and then due to a strong push for entertainment and gaming," Jha added.

But growth in 2022 is expected to be sharply slower than in 2021. Last year, businesses and individuals were procuring refurbished smartphones at a higher rate to set up and sustain work from home and study from home scenarios of the past two pandemic ravaged years, according to refurbished-market specialist Glen Cardoza from Counterpoint Research.

"2021 saw a much bigger proportion of pent-up demand from 2020 due to Covid-19. Although the growth is high, we don't see that high a demand surge in 2022," Cardoza said.

Quikr said there has been a decline in demand for refurbished phones across price ranges and brands since December 2021.

Besides, supply issues are plaguing the refurbished segment as much as new smartphones.

"India is a very price sensitive market, and hence the demand for low cost devices have always been high. Our bigger challenge is supply. During covid, supply was also hit because people were not keen to sell their old devices because of the whole crunch in the market," Nakul Kumar, chief operating officer at Cashify, told ET.

While the growth rate is expected to be lower in 2021, the volumes are still growing rapidly. The second hand smartphone market is expected to hit 51 million units by 2025, which is 21% of the 245 million cumulative volumes expected in three years, as per a report by IDC India on recommerce opportunities in India.

This surge in demand is also creating challenges in supply for players in the organized refurbished smartphone segment.

"There's enough demand but supply is becoming our constraint because people are not very aware of options to exchange their old smartphones," Kumar said.