India is the fastest growing market for second-hand smartphones: ICEA

India is the second largest smartphone market and the fastest growing market for second-hand smartphones in the world, says a new report titled ‘Smartphone Re-commerce: India Market Opportunity’ by IDC and the Indian Cellular and Electronics Association (ICEA).

The report estimates that in 2021, around 25 million smartphones were traded in the second-hand market generating a revenue of more than $2.3 billion at an average of $94 or Rs 6,900 per device. This marks an increase of about 14% in 2019 and is expected to rise to 51 million units at a valuation for $4.6 billion by 2025.

Of the total number of smartphones that are brought for trade-ins, more than 95% of all the secondhand phones are sold as ‘as-is’ while only 5% go through any kind of repair or refurbishment in India. The report notes that amongst the consumer electronics devices, smartphones are the largest volume driver accounting for over 90% sales in the second-hand market at the moment. Other electronic devices that are sold in the second-hand device market include laptops, smartwatches, gaming consoles, and cameras.

In the report, IDC predicts that the global smartphone shipments will reach 1.54 billion units in 2025 with a compound annual growth rate (CAGR) of 3.9% from 2020 to 2025. “This growth is attributed mainly to the emerging countries in South Asia, the Middle East, and Africa where demand for smartphones is strong due to the lower penetration of smartphones in these countries,” the report said.

Furthermore, the report says that the worldwide used smartphone market reached a total of 225.4 million units in 2020. This figure is expected to grow to 351.6 million units by 2024. In India, this figure is expected to increase to 51 million by 2025. “IDC estimates the cumulative market to reach 245 million units by 2025, of which only about 21% or 51 million will be traded in the second-hand market,” the report added in context with the India second-hand smartphone market.

The report also notes that the entry of organised players in the second-hand market such as Cashify, Yaantra, InstaCash, Flipkart Refurbished, Amazon Renewed has facilitated the growth in the secondhand market. This in turn has raised the share of organised trade to 15% in 2020 from less than 10% five years ago. Interestingly, Apple has a disproportionately high share in the secondhand market when compared to new smartphone shipments, especially within the organised segment.

“The new iPhones with a higher ASP of over $700 are out of reach for the mass consumer segment, however owing to the aspirational value attached, command a much higher share in the secondhand devices market. Similarly, OnePlus, which holds a share of 2% in the new smartphone market, features in the top 5 vendor list in the organised segment, demonstrating the traction for flagship/premium devices in the secondhand market,” the joint report by ICEA and IDC says.

The report also says that within the organised secondhand market, most of the sales are concentrated within the larger cities such as Delhi, Bengaluru, Mumbai, Hyderabad, Gurgaon, Chennai, Pune, Noida, Ahmedabad, Faridabad, Ghaziabad, Lucknow, Kolkata, and Jaipur, which account for nearly 40% of the sales. However, the share of smaller cities has risen in the past few years as these players have expanded their footprint in India. As far as the unorganised second-hand market is concerned, the report notes that there is more demand generation from lower-tier cities with devices that have either already exchanged hands in bigger cities or used within similar tier cities.

Overall, the report estimates the second-hand smartphone shipment in India to grow at a rate of 15% between 2020 to 2025.

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