The second-hand smartphone market is big business. CCS Insight’s Pulse research on the circular economy has found some staggering numbers in measuring just how big; we calculate that about 64 million second-hand smartphones were sold through the organized secondary market in the first half of 2023 alone — secondary market meaning official distribution channels such as through network operators and second-hand device sellers. These sales brought in revenue just shy of $20 billion, as we see in the chart below.
The pace of development of this circular economy has been astonishing and we continue to publish new research about this on a regular basis.
I often find it extremely valuable to zoom in on these sorts of topic. Clearly 64 million smartphones moving through the secondary market is a huge number, but what does each one go through in order to complete the journey from trade-in to resale?
Well, to take a look at this, I recently travelled to Norwich to visit a technology recycling and refurbishment centre, courtesy of Virgin Media O2 and Ingram Micro Lifecycle. The former will be a familiar name to many of our UK readers.
The mobile network operates a recycling initiative to take back old hardware and refurbish or recycle it. It sees this as a vital strand of its environmental strategy which stops old devices going to landfill, and the company is one of the leading operators selling second-hand devices in Europe, thanks to its ownership of giffgaff, a well-established channel. To offer this service, Virgin Media O2 works closely with Ingram, a global reverse logistics distributor that specializes in this refurbishing and recycling process; the two companies have been in partnership since 2003.
The site itself is designed for high volume and rapid turnaround. Virgin Media O2 recycled 250,000 devices in 2022 and has handled 3.8 million since 2009; the plant I visited handles just under 1,000 devices each day. This includes tablets, PCs, earbuds, wearables and even games consoles, but the undoubted star player is the smartphone, which is clearly the central focus of the operation. Chief among these is the iPhone — we have consistently found that Apple’s products are the most sought-after used phones, but it was eye-opening to see such a high share during my tour.
Every device sent in through the mobile operator’s Recycle scheme is assessed individually to determine which elements work and which are in need of repair, or whether the device is possibly past its useful life and should instead be broken down and recycled. For people who send a device in, it’s likely that they’ll receive a cash offer on the very same day their device is received by the plant, so quick is the turnaround time between receiving a gadget and assessing its value.
Devices in need of refurbishment then enter a surgical phase where they’re taken apart, further assessed by technicians and repaired as needed. For example, if the initial assessment finds that a device needs a replacement camera unit and a repair to its touch screen, the necessary parts are ordered to a workstation by a highly trained engineer who can then get to work. Technicians tend to specialize in certain areas and are readily available, along with components from a huge onsite warehouse.
Despite my lack of expertise in disassembling and rebuilding hardware, I stepped up to the plate and carried out some repairs on an iPhone 11, taking it apart and replacing some damaged components. It’s an intimidating process, requiring the use of specialized tools and dealing with problems like tiny screws that are very, very easy to lose — as I may have experienced more than once. Although repair-at-home kits are growing in popularity, it’s easy to see why many people still prefer to send their device for certified refurbishing rather than do it themselves.
A commonly cited barrier to trade-in of devices is a concern that old data could be scraped from a smartphone, tablet or PC and used for nefarious purposes. However, the next step at the Ingram recycling plant sees every device thoroughly wiped and reset to a truly blank canvas using software directly from device-makers. The company is keen to stress that this is a deep cleanse rather than a simple factory reset chosen through the phone menu, alleviating consumer concerns about privacy and security.
Cracked, chipped or damaged screens are especially common with old devices, which is no surprise; the beating that an average smartphone takes throughout its lifetime makes a few scratches fairly likely. The repair job here is very carefully considered. Some devices will need a total screen replacement including the display below, but this is a costly option. Instead, many devices will have the outer layer of their screen very finely scraped away to remove any blemishes before a finish is applied to ensure the screen looks as good as new.
Looking at some of the “end product” devices, I was seriously impressed with the quality on offer. Virgin Media O2 markets its second-hand devices as “like new” and says that the reason it works with Ingram is because of the high quality of its refurbishment processes. I would have struggled to pick out any flaws with the devices I saw at the far side of the factory and imagine most buyers would be very happy with the quality on offer.
Taken altogether, this is an impressive partnership between Virgin Media O2 and Ingram Micro and seeing it in action really brought home the care and attention that goes into pre-owned devices — which, after all, are becoming more and more popular.
We continue to measure the rise of this segment in our Pulse research — you can learn more about this by joining our free webinar on 20 September. As consumers are more attuned to the value of their old gadgets and increasingly inclined to buy second-hand devices, it’s an area we’ll be keeping close tabs on.
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