“The iPhone continues to be in an abnormal state,” but the reason why second-hand smartphones are performing at a “record high” (page 1/3)

The second-hand smartphone market is growing steadily, partly due to the Ministry of Internal Affairs and Communications' action plan. The sales volume for fiscal 2020 (from April 2020 to March 2021) announced by the research company MM Research Institute is a record high of 1.85 million units. In fiscal year 2021, the forecast is for a 10.3% increase to 2.04 million units. Similar voices have been raised from the site of second-hand sales. NewsdTech (formerly known as Mobile Market), which we interviewed, is one such company.

The sales volume of used smartphones will reach a record high in 2020, and is expected to grow even after 2021 (Source: MM Research Institute)

In December 2021, the company will record a record high sales volume of used smartphones. It has grown rapidly by 1.6 times compared to the same month of the previous year. On the other hand, following KDDI, Softbank has released certified second-hand iPhones, and the industry environment is gradually changing. With the rise in terminal prices, it has been pointed out that the purchase of terminals may become difficult due to the establishment of an upgrade program that offers a discount if the terminal is returned after two years.

Under these circumstances, what will happen to second-hand smartphone sales in the future? We asked Mr. Hamaichi Awazu, CEO of NewsdTech and chairman of Reuse Mobile Japan, an industry group, about trends in used mobile phones and their future prospects.

―― In 2021, the mobile industry made a big move, centering on price cuts. What kind of impact did it have on the second-hand market?

Mr. Awazu In October 2019, the revision of the Telecommunications Business Law was enforced, and the line and terminal were separated, which increased the price of the terminal. Last year (2021), online-only plans such as ahamo, povo, and LINEMO were released. While consumers are trying to reduce communication charges, I think that there has finally been a move to lower terminal charges since last year. There is an increasing need to buy cheaply, even if it is second-hand.

Second, SIM lock is prohibited in principle. As a result, our sales channel was originally limited to docomo line users for docomo terminals, but now it can be used by various carriers. On the other hand, the problem of compatible bands for Android has become apparent, so we have to be more thorough in our product descriptions than ever before. There have been stories both at home and abroad of people trying to buy something but not being able to use it.

Hamaichi Awazu, CEO of Newsd Tech (former mobile market). In the mobile market, the company name was changed to News Tech on March 1.

-- Looking at the best-selling terminals, I think the iPhone has a very high ratio. Has this point changed?

Mr. Awazu: As you say, the market as a whole is iPhone, but for us (NewsdTech), 60% is Android. It's a strange business (laughs). The main reason for this is the supply route. Other businesses purchase iPhones from both Japan and overseas, but our model is to purchase devices sold to distributors, recycle shops, ticket shops, etc. Thrift shops and ticket shops have a wide range of customers. Not only iPhone but also Android will naturally gather terminals. The Android lineup is by far the largest, so as a result, the number of Android phones is increasing.

――I see. It means that there are a lot of them that are sold as second hand. What are the best-selling individual terminals?

Mr. Awazu iPhones are popular with a certain segment and sell quickly, but Android is a long-tail product. There are a certain number of people who use Galaxy or Xperia, so those people come to us. In addition, it seems that there are many cases where the Pixel is used by corporations, and we are receiving more inquiries.

――Do you see any trends, including the iPhone, in the last year or two?

Mr. Awazu: That hasn't changed, with iPhones 7 and 8 continuing to sell. The fact that the same product continues to sell for about three years is something that has never happened before, and it could be said that the market has become a bit abnormal. Originally, it would be difficult to collect such old products as products, but since the 7 and 8 are terminals that have been released in large numbers globally, the well-maintained ones are sent to Japan. It means that a circular economy (circular economy) has been created in globalism.

Also, the iPhone 13 is still expensive in Japan, and the 7 and 8 are affordable, and the fingerprint sensor can be used, which is another reason for its popularity. If the price is cheap, it's in the 10,000 yen range. If so, you can buy it with cash. Everyone does not want to make a loan, so 7 and 8 are the ones that meet the conditions.

The iPhone 7 (top) and iPhone 8 (bottom) are still selling well on the used market

――By the way, how about the iPhone SE (2nd generation)?

Mr. Awazu: It sells well, but it's not possible to buy the second-generation iPhone SE. If you can buy it, you can sell it, but it will be a little more expensive (than 7 and 8).

――　The iPhone SE is available at a price that is close to free, as the carriers are doing all sorts of fire sales. Did you notice an increase in purchases?

Mr. Awazu: Regarding purchasing, people like resellers are making a comeback. It should have been almost extinct around 2014 or 2015... There are places where a large amount is flowing overseas via traders, and some of them are entering Japan. Vendors in that supply chain are working [iPhone SE]. However, as a result of the iPhone SE dropping to 1 yen in bulk, the price of second-hand devices has not been affected to that extent. If inventory flows into the domestic market, the market price will fall, but conversely, I think this can be said to be proof that there is no inflow.

As for the iPhone, the situation is a bit unusual, and overseas prices have become too high, making it difficult for Japanese dealers to purchase. It is expected that the selling price will increase in the future.

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