London – New research from CCS Insight reveals the full extent of the global market for second-hand and refurbished smartphones. In addition to informal peer-to-peer sales, a growing network of organized resellers accounted for 107 million unit sales in 2021 — 28% growth on the previous year.

Growth in the “circular economy” associated with pre-owned smartphones is set to accelerate in 2022 as large companies invest in buying devices, refurbishing, recycling and retail activities. These companies will take market share from the primary smartphone market, as well as from peer-to-peer and small-scale high-street sellers.

Simon Bryant, vice president of channel and supply chain research at CCS Insight, comments, “The market is maturing rapidly and the industry structure remains fluid, with many companies emerging as serious players. They include the likes of Cashify, Backmarket, Genuine Solutions, PCS Wireless, Phobio, Recommerce, Renewd, Swappie and Umicore. Specialist companies currently represent a large proportion of this market, with many established smartphone brands still playing catch-up”.

CCS Insight’s research reveals that as many as 1.3 billion phones will reach their first end-of-life in 2022. A little over half will remain in drawers or be thrown out. But a growing proportion will be resold on the second-hand market. A portion of those units will be refurbished and sold “as new”, with prices close to those of brand-new devices and competing head-on with new smartphones.

Apple iPhones make up over 80% of this circular economy. The high residual value of iPhones means that the average selling price in the organized secondary market is about 14% higher than in the primary market. Many phones from other brands have limited value in this industry and are often discarded or passed down to family members. A small but growing number are harvested for parts and valuable raw materials. Firms such as Fairphone, Genuine Solutions and Umicore contribute to this effort in various ways.

Sustainability is a key driver of this industry, but for companies more than consumers. Consumers do not yet appreciate how their smartphone choice has a material impact on the planet, but larger companies in the supply chain have a sense of the “smartphone problem” — the sheer volume of devices manufactured, distributed and discarded annually. More cynically, consumer-facing companies also appreciate that activities to refurbish and extend the life of devices is a relatively straightforward concept for consumers in “green” marketing messages.

Simon Bryant notes that the popularity of leasing phones in the US has created a net surplus of traded-in smartphones, providing a shot in the arm for the European market, where trade-in volumes do not come close to sustaining demand. “In 2021 Western Europe had a net deficit of more than half of the second-hand smartphones it consumed”, he states. “Over 11 million units had to be imported to sustain demand for second-hand iPhones and premium Samsung smartphones”.

CCS Insight’s research indicates that beyond the US, the circular economy for smartphones is vibrant and relatively mature in the UK, the Netherlands, France and India. In northern Europe, Germany and other developed markets for smartphones, the organized secondary market is in its relative infancy, but we expect sales in these regions to grow over the coming years. Supply is the main barrier to growth and will remain a drag on volume growth over period of CCS Insight’s forecast to 2026.