This move will help the company to sell its phones in emerging markets
In a world where most good smartphones are way too expensive for the average Joe, it seems like Samsung understands that most of us can’t buy a premium smartphone after every six months. Thus, the South Korean company is all set to launch a program through which it aims to sell refurbished premium smartphones from 2017, according to Reuters.
Samsung does not want to lose out on its smartphone market share and wants to keep its sales momentum going. It will now target consumers with refurbished phones as the sales of new smartphones have dropped. The tech giant wants to keep its operating margin at 10% by focusing on refurbished phone sales to help achieve this target.
Samsung’s second quarter earnings were robust; the company managed to beat analysts’ estimates as operating profit during the period increased by $1.1 billion year-over-year (YoY). The company believes that sales of low cost smartphones will help achieve its target and match its rivals such as Xiaomi and Huawei in terms of pricing.
The tech giant will refurbish high-end phones returned to the company by users who signed up for one-year upgrade programs in places such as South Korea and the United States. Samsung will then sell refurbished phones at a lower price. No details were given on how low the cost of these phones will be, in which markets will it sell these phones and how many refurbished phones it expects to sell.
Refurbished phones are usually sold with slight alteration such as changing the battery or adding a new casing. Samsung’s rival, Apple is one company that sells refurbished phones in different markets but it has never revealed how much it has earned in sales from such phones.
Selling refurbished smartphones in emerging markets can help Samsung increase its market share in the region. With high end smartphones usually priced above $800, it is difficult for consumers in emerging markets such as India to buy these phones. They either opt for refurbished phones or find cheaper smartphones that gives them maximum features in a limited budget.
In India, an average smartphone costs $90 only, which is why smartphone giants find it difficult to match this pricing even with their refurbished phones. Apple is hopeful that it will be able to conquer the Indian market. It is currently seeking permission from the government to sell refurbished phones in the country.
According to a report by Deloitte, the used smartphone market is expected to grow up to $17 billion this year, about 8% of the total smartphone market. Around 120 million refurbished phones are expected to be traded this year. Experts believe that the used smartphone market will grow rapidly in the future as well, as many people prefer premium models rather than using low budget smartphones.