The theme of WEEE (Waste Electrical and Electronic Equipment) is more current than ever. Every year around 50 million tons of cyber-garbage are thrown away, which, in terms of recoverable materials, would be worth approximately $62.5 billions. Of these, only 20% are disposed with legal methods: the remaining 80% is thrown into gigantic landfills on the margins of the large cities in less developed countries. In 2014, The Guardian carried out a report in Agbogbloshie, on the outskirts of Accra in Ghana, describing the area as a big “E-waste dump”.
The smartphone market is now saturated. Recent research by Credit Suisse estimated 357 million smartphones produced in the last quarter of 2018 (down 3% on an annual basis) and production levels in the first quarter of 2019 will be around 289 million, 19% less than the same period last year. There are two reasons for this trend: a longer life of devices and the growth of the reconditioned electronics market. In the reconditioned market, smartphones, PCs, monitors and other used equipment are analyzed, repaired and then restored back to a condition similar to the initial one. Finally, the electronics are resold at low prices, with minimal or non-existent defects.
Big companies like Apple and Amazon and dedicated platforms like oojea, Trendevice BackMarket are the main actors of this market, together with the Austrian startup Refurbed, which recently arrived in Italy. It is a new startup founded by tree millennials, Peter Windischhofer, Kilian Kaminski and Jürgen Riedl, that had a revenue of almost $250,000 in 2017. For example, on Refurbed you can buy a reconditioned 64 GB iPhone X at the price of €809.90 (instead of €999) and a 2016 MacBook Pro for €1607.90 (instead of €2199). The more you spend the greater the discount will be applied. Refurbed’s main selling point is the warranty it offers, hardly applied in other “used” markets. The co-founder Peter said “The idea for this startup was born from personal experience. I bought a used phone on the web, but after 2 weeks it broke down. I lost the whole amount of money previously spent, moreover, I could not ask for a warranty because it was a used phone”. The philosophy of this new marketplace is very simple: good quality, good price and excellent warranty.
Other companies like Mediaworld, Euronics and eBay dedicate entire sections of their websites to second hand products. They understand that, by replacing some parts, it is possible to give new life to a used tech item. They also offer extended warranties from 3 to 24 months.
2018 has been the golden year for this economy. BackMarket increased its sales over 100% throughout Europe, with a peak of +521% in Germany. On the other hand, these products could represent a threat for the biggest tech producers like Apple and Samsung. Given the costs for a new iPhone (from £999 to £1449 for the new XS model), consumers that cannot afford these prices can now easily choose to buy from the secondary market. It is already an ordinary practice and if large electronics platforms begin to offer reconditioned electronics through their websites, it could become a lot more popular.
At the beginning of this year, Apple cut estimates on revenues for the first time in 16 years due to higher prices and the China-USA trade war. The stock price fell by 10% in one day. In the future, will this regenerated market reflect a negative trend on Apple revenues?
Definitely. The decision to buy a regenerated device combines the need for innovation with the need to protect the environment and ensure reasonable savings.