It seems like every phone carrier offers new phones free or at reduced prices to their subscribers who trade in their old phone. Have you ever wondered what happens to old smartphones after we discard them? Do they have value? Who profits?
The path of the used phones is pretty hidden and it isn’t easy to follow the supply model once the older phones are sold. However (before you ask), there is a substantial market and value in the older phones with a life (and profit) after the initial user. In fact, analysis firm IDC estimates that more than 282 million secondhand phones were sold in 2022 at an estimated $64.5 billion. That’s a lot of phones! In addition, thanks to the trade-in offers from carriers, the market for secondhand phones is estimated to increase 10% annually through 2025.
What happens in the supply chain and distribution of these older products? It actually can be difficult to follow as many firms will not specify where the phones go. However, a recent video from the WSJ traces the path and gives insight into the process.
In short it works like this:
- An old phone in gets traded in and the owner gets a credit
- A reseller buys the trade-in phones from the carrier.
- The reseller cleans the data, spruces up the phone, adds power cables, packages, and then sells the older phones to wholesalers, who are often operating overseas.
- The older phones can also sold the buyers on Amazon or to second-hand retailers such as Back in the Box.
- The resellers sells the refurbished phone at approximately 20-30% below the price of the phone when it was new.
For consumers, the used phones offer a good discount. It also keeps valuable product from landfills.
Ready for a new phone?
Group Activities and Discussion Questions:
- Poll students: Who has traded in old smart phones for newer ones? How many have they traded in?
- Then count up the number of old phones sold in the classroom – it will likely be a surprisingly high count.
- Show the WSJ video about phone trade-ins: https://www.wsj.com/video/series/joanna-stern-personal-technology/inside-the-lucrativeand-secretivebusiness-of-iphone-trade-ins/4F0EA296-6546-4603-BF90-8561E08AAD4C
- Show Back in the Box website for selling older phones: https://backinthebox.com/
- Poll students again: Who has bought a refurbished older phone? What was their experience?
- Divide students into teams. Have each team research online sites for selling/buying older phones.
- Next, have teams determine the target market for these devices and create a promotional plan.
Source: Stern, J. (15 March 2023). Inside the lucrative – and secretive – business of iPhone trade-ins. Wall Street Journal.