Inside the Refurbishment Process: How Traded-In iPhones Gain New Life and Profit in the Secondhand Market

The recent video by WSJ delves into the burgeoning secondhand phone market, notably focusing on the refurbishment process of traded-in Apple iPhones. It highlights the journey of these devices from carriers to refurbishment facilities and eventually to consumers, examining the economics of trading, refurbishing, and reselling phones. The video provides insights into the tests and grading systems used to assess and prepare phones for resale, as well as the pricing strategies and profit margins for businesses involved in the refurbished phone market.

  • The secondhand phone market is valued at $64.5 billion, with 73.5 million used and refurbished phones shipped in North America in 2022.
  • US Mobile Phones, a New Jersey-based facility, receives tens of thousands of devices, primarily from cellular carriers, to refurbish and resell.
  • The refurbishment process involves data erasure, a series of functionality tests, cleaning, grading, and kitting.
  • An iPhone 11, for instance, is purchased from carriers for around $250 and, after refurbishment, listed for $350 on platforms like Back Market.
  • Refurbished products are typically priced 20-30% below retail value, allowing refurbishment companies to maintain a profit margin of 10-15%.
  • Refurbishing companies must balance the profits from functional units with losses incurred from devices with defects.
  • The trade-in and refurbishment cycle benefits cellular carriers, refurbishment companies, consumers, and the environment, although it may impact new product sales for manufacturers.
  • Despite potential impacts on new sales, the proliferation of refurbished phones can lead to increased market share and customer base for manufacturers, especially in developing countries.

The Wall Street Journal is an American business and economic-focused international daily newspaper based in New York City. The Journal is published six days a week by Dow Jones & Company, a division of News Corp.

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Original video here.

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