India's $6 Billion 2nd hand smartphone story 🤯

Huge tailwinds as a result of the Jio shift.

Sep 19, 2023

Welcome to the 182nd edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more

Indians bought 12 Cr smartphones in 2020, but only 2 Cr were brand new smartphones, that trend is going upwards as more Indian buy their first smartphone - I mean their first second hand smartphone, here’s why ⬇️

Important context 🗓️
The smartphone market has plateaued over the last 4 years. We’re already seeing a 10% decrease in sales compared to last year. That does not mean smartphone users are declining.

Indian smartphone users are at an all time high.

Also, iPhone sales are all time high 🤯
The premium smartphone market grew by over 120% in the last year, and mid-market players like OnePlus grew 60% year over year.

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Before we get into the insight - two things are important to understand. First, The price point for specific features is everything for Indians. Second, 31% of all smartphones sold in India are below ₹10K price point & the next big market is the ₹10 to ₹15K price point smartphones.

Around 25 million smartphones were bought and sold in the secondhand market, & sales are expected to rise to 51 million units by 2025 as per the Indian Cellular and Electronics Association.

What's driving 2nd hand purchases?👇🏼

1/ Everyone wants a smartphone 📱
~74.8% of Indians have a smartphone. The rest either can't afford a smartphone don't have access to a smartphone or don't find the need to buy one. But, the ‘Jio Effect’ created a need even for the later segment.

Internet has helped smartphone penetration & vice versa.

2/ The per capita income is the glass ceiling 💰
The ~25% of Indians without smartphones have income levels that do not allow them to splurge money on a 10K+ smartphone. The affordable "new" smartphone (which is also feature-rich) is hard to find.

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3/ The 2nd hand consumer wants features ✨
Even if it comes at the cost of buying a used phone. Interestingly 95% of 2nd hand smartphones are sold in as-is condition with a tiny percentage being repaired before reselling.

4/ Mobile brands pushing exchange offers 🔁
To solve for new smartphone sales, everyone from Apple, Xiaomi India, and Samsung Electronics is pushing exchange offers through retail & online selling points. No wonder you get crazy exchange deals on Amazon/ Flipkart.

5/ The supply chain now has trust ♥️
Players like Cashify, Yaantra By Flipkart, Amazon Reviewed, OLX, quickr & hyperXchange are solving for device warranties & damage checks for end purchasers. Interestingly, most 2nd hand purchases happen offline - some even provide brand-new packaging.

6/ The Tier 2/3 markets are booming 💭
The retail presence goes well with small retain partner shops across towns that are remote to the metro cities. The pricing just works so well for these audiences who don't/ can't spend huge sums on new phones.

And, one more thing 💡
19% of new smartphone buyers replace their devices within 1 year of purchase while 44% do so within 2 years of buying the device. This feeds into the 2nd hand market. No wonder you have an extremely consistent supply coming into this market.

I believe this is a good thing
More devices → better UPI access → more Indians get financial inclusion → better access solving grass-root economic growth, structurally.