Samsung looks to sell used refurbished top-level phones

Samsung plans to launch a programme to sell refurbished used versions of its premium smartphones by next year, a source has told Reuters.

The South Korean technology firm is looking for ways to sustain earnings momentum after reviving its mobile profits by restructuring its product line-up.

As growth in the global smartphone market hits a plateau, Samsung wants to maximise its cost efficiency and keep operating margins above 10%.

The world’s top smartphone maker will refurbish expensive phones returned to the company by users who signed up for one-year upgrade programmes in markets such as South Korea and the US. Samsung would then re-sell these phones at a lower price, the source said.

The person declined to say how big a discount the refurbished phones would be sold at, which markets the phones would be sold in or how many refurbished devices Samsung could sell.

A Samsung spokeswoman said the company does not comment on speculation.

It was not clear to what extent the phones would be altered, but refurbished phones typically are fitted with parts such as a new casing or battery.

Rival Apple’s iPhone has a resale value of around 69% of its original price after about one year from launch, while Samsung’s Galaxy sells for 51% of the original price in the US market, according to BNP Paribas.

Refurbished phones could help vendors such as Samsung boost their presence in emerging markets such as India, where expensive devices costing $800 (€700) or so are beyond most buyers.

Apple sells refurbished iPhones in a number of markets including the US, but does not disclose sales figures. It is trying to sell such iPhones in India, where the average smartphone sells for less than $90.

Selling used phones could help Samsung fend off lower-cost Chinese rivals that have been eating into its market share, and free up some capital to invest elsewhere or boost marketing expenditure.

Deloitte says the used smartphone market will be worth more than $17bn this year, with 120 million devices sold or traded into manufacturers or carriers — around 8% of total smartphone sales.

Some market experts expect the used market to grow fast as there are fewer technology breakthroughs.

“Some consumers may prefer to buy refurbished, used premium models in lieu of new budget brands, possibly cannibalising sales of new devices from those budget manufacturers,” Deloitte said in a report.