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India's $6 Billion 2nd hand smartphone story 🤯
Huge tailwinds as a result of the Jio shift.
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.
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.
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.
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.
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.
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