Despite a 9.5% growth in used smartphone shipments in 2023 compared to the previous year, the International Data Corp. (IDC) reports a slower-than-expected growth rate, primarily attributing it to the challenge of acquiring inventory.
“With refresh rates extending in most mature markets, acquiring inventory remains the biggest challenge for resellers,” said Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker. “Secondary phone retailers are hungry for inventory as the high end of the market continues to be scarce due to customers just holding on to their devices. This lengthening can also be witnessed in the new market where shipments declined 3.5% for 2023.”
IDC data indicates a decline of 3.5% in new smartphone shipments for 2023, reflecting the overall market challenges, including high price points, macroeconomic issues, and prolonged refresh cycles. However, the demand for used smartphones remains robust, with IDC projecting shipments to reach 431.1 million units in 2027, boasting a compound annual growth rate (CAGR) of 8.8% from 2022 to 2027.
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Inventory
The shortage of available inventory is not only influenced by extended refresh cycles but also by other factors such as high price points and macroeconomic challenges. In most developed markets, refresh rates for new phones surpass 40 months, further limiting the availability of inventory for the secondary market. While trade-in programs contribute to the industry, they constitute only a fraction of the total used inventory.
The lack of inventory has a widespread impact on each region’s total available market (TAM) for used devices, pulling down the total secondary market by approximately 2.7%. Longer refresh rates and weak consumer spending continue to dampen both new and used markets.
However, demand for used smartphones remains healthy and will continue to grow throughout the forecast period, the IDC noted.
IDC anticipates a 3.5% decline in new smartphone shipments in 2023 due to ongoing global economic challenges, including demand fluctuations, inflation, and political unrest. Despite these obstacles, the IDC remains optimistic about the sustained growth of the used smartphone market throughout the forecast period.