Hello.
The time has come for rationality, when it is impossible to brush aside certain tools that can reduce the cost of purchase. In electronics, the most popular product is smartphones, a category in unit terms larger than any other product, be it computers, TVs or wireless headphones. In monetary terms, smartphones also occupy the first place, and using their example, we can consider in detail such a tool as trade-in, but first, a few thoughts about the smartphone market, which will lead us to the topic of trade-in.
The ruble price of a smartphone in Russia has always increased; there were no exceptions to this rule. It is affected by the exchange rate of the ruble, and its fall against the dollar or yuan automatically leads to the price of the device rising.
Please also note that the phones have incorporated dozens of different functions and have become much more complex than any model ten years ago, not to mention those that were on the market even earlier. Accordingly, the cost of devices is growing – it cannot remain low. Flagships appeared that first approached the $1,000 mark apiece, and then, thanks to the iPhone and Apple’s pricing policy, stepped over it. During the iPhone X era, there was a constant discussion in the industry about how elastic demand was for flagships at a retail price of $1,000 or more. It turned out that demand is elastic and more models can be sold at that price. This, in turn, paved the way for the emergence of smartphones with flexible screens – they could not have happened without new price segments.
Buyers who have tried flagships become attached to them, as these devices provide a different quality for everyday use, plus higher quality materials increase the survivability of the smartphone under adverse external factors. Switching from a flagship to a model even in the mid-segment often looks like a forced step when you need to save money. And when saving money, people more often choose a flagship device from either previous seasons or cheaper brands.
Our device life cycle has increased as they have become more reliable. The flagship lives on average about 5-6 years, and it can live this long in the hands of one person. Apple became the first manufacturer to update its smartphones for 5-7 years, keeping the software up to date. Today, flagships from Samsung receive seven years of updates; Chinese companies are targeting 3-4 years. The average lifespan of smartphones in 2024 in Russia has increased to 4.5 years and continues to grow.
The increase in the average lifespan affects the purchase of new devices: people are willing to pay up to 30% extra for it, since there is an understanding that the phone will be with them for a long time. But a long lifespan opens up another market – the sale of an old phone, or rather, its trade-in.
In past years, many people simply left their old phone in the nightstand at home, or at best passed it on to relatives. Someone has turned to selling from hand to hand, but there is always a hassle and an incomprehensible set of problems. When trade-in appeared in large networks, they began to willingly hand over devices to it, especially since you can buy a new model exactly there. Today, trade-in has become more popular than ever, as it reduces the retail price of a new device, and buyers have become more rational. It should also be noted here that the blocking factor is the reluctance to trade in a relatively new two or three year old phone when it is still perceived as “wow”. But after three years, people are mentally ready to trade-in their smartphone, since they no longer see great value in it.
In the first ten months of 2024, trade-in in Russia has skyrocketed. Let’s look at the statistics of the combined retail network of MegaFon and Yota; it eloquently confirms this. In January-October, the demand for the trade-in program increased by 120% in physical terms; in monetary terms, the growth was fivefold. I will quote data from the MegaFon report:
“For the second year in a row, Samsung remains the leader among smartphones trade-in: from January to October 2024, devices from this brand accounted for a third of all transactions under the program. The top three also included Xiaomi and iPhone: their share among smartphones traded in was 22% and 18%, respectively. At the same time, Apple’s share even increased: in the same period last year it was only 11%.
In terms of money, the leaders are the same, but the championship belongs to Apple: for the second year in a row, these smartphones account for half of the funds from trade-in. Samsung’s share, as in physical terms, is one third of all smartphones handed over, but the dynamics have increased slightly and amounted to 32% versus 28% in January-October 2023. Xiaomi takes third place with 8%.
The most commonly sold Samsung smartphones are the Galaxy A10 (32 GB), Galaxy A50 (64 GB) and Galaxy A51 (64 GB). Xiaomi has Redmi 9C NFC (64 GB), Redmi Note 9 (64 GB) and Redmi 9 (64 GB). Among Apple devices, iPhone 11 (64 GB), iPhone XR (64 GB) and iPhone 11 (128 GB) are most often brought in.”
The popularity of iPhones in trade-ins is easily explained by the fact that these are always flagships with a long support period and a relatively high residual value. But where did the trade-in for Samsung models come from? The answer should be found in marketing activities that encourage people to trade in old devices when buying new ones. Users see increased discounts on the purchase of the same flagships when returning their devices. Sometimes it amounts to 5-10 thousand rubles in addition to the residual value of the smartphone being returned. This gives you an excellent offer that allows you to save money on the purchase of a new device. And it is clear that this is rational behavior, all other things being equal. Chinese companies have exactly the same approach. The high share of Xiaomi is easily explained by the fact that for the second year in a row the company ranks first in unit terms on the Russian market; there are plenty of models from this brand.
It is beneficial for all manufacturers to increase sales of models in the middle and high price segments, since their users are more active, they are more loyal and are more likely to buy other devices, for example, smart watches or headphones of your brand.
The popularity of trade-ins is also influenced by the conditions of federal retail, for example, at MegaFon we see the opportunity to de facto hand over any smartphone and purchase any model. You can also refuse to buy a new device and simply return the old one and get money. Someone uses the service like this. The advantageous thing is that when you trade-in, a discount on additional accessories or services is automatically included, for example, you can glue glass for free, you will only be charged for the selected protection.
The most common question: “What happens to those devices that are put up for trade-in?” The answer can be found right there on the retail shelves: they are sold as refurbished. In the network service they perform magic on them, clean the body, and check the general condition. The difference from the spontaneous secondary market is that such devices are provided with a guarantee, and if on the market you buy a “pig in a poke,” then this is not the case. Let’s look again at the example of MegaFon retail: they give up to 180 days of warranty for refurbished devices, which covers all concerns.
What I like about trade-in is that it is a civilized way to sell an old device, giving it a second life in someone else’s hands. Plus less electronic waste and more money for you to spend on your purchase and save. Just an old phone lying on a shelf depreciates in value, turning into history, and handing it over will definitely reduce the cost of a new device. This is why trade-in is popular, and there are more and more rational buyers every day.
Source: mobile-review.com
