The use of second-hand goods is far from new, but the market for refurbished consumer electronics is entering a new phase of growth. Changing consumer behavior, combined with global supply chain challenges and sustainability pressures, is driving a shift toward circular business models.
Many organizations are moving beyond traditional sales to embrace leasing models and Device as a Service (DaaS). As a result, they are extending product lifecycles and maximizing value recovery.
The rising popularity of pre-owned and professionally refurbished devices reflects this broader transformation. Ownership is flexible, sustainability is essential, and access to quality technology isn't detrimental to costs or the environment.
This shift brings concerns that the desirability of used will tap into the revenue associated with brand-new sales. Below, we examine the factors that make refurbished products more attractive, the target market for these, and the opportunities they present.
In 2022, the global market for refurbished consumer electronics was valued at $85.9 billion. It’s expected to reach $262 billion by 20321.
The search volume for phrases associated with “used goods”, including “second hand” and “pre-loved”, increased by 70% from the year prior in 2023. And no, that wasn’t just us, but Google users across EMEA.
UK network operator Vodafone has reported an 83% increase in sales of refurbished devices. They found that 79% of those seeking to buy a new phone would consider a refurbished model. Nearly a third of online smartphone sales are for second-hand models, and almost 60% of UK businesses choose refurbished hardware over new devices.
This demonstrates an increasing interest and demand in the product type. Can your business afford not to cater to this need?
The term refurbished is generally associated with “second hand”. At Ingram Micro Lifecycle, we prefer “pre-loved”. The product is not new out-of-the-box. It has been used before. To make it re-usable, it may go through repair, refurbishment, and remanufacturing.
The American National Standards Institute defines remanufacturing as,
‘a comprehensive and rigorous industrial process by which a previously sold, leased, used, work or non-functional product or part is returned to a “like-new” or “better-than-new” condition – from both a quality and performance perspective through a controlled, reproducible and sustainable process.’
The product starts with a previous owner who returns it as unwanted, faulty, or for other reasons. Trade-in schemes are becoming increasingly popular. These are a source of products prime for re-use. After re-entering the supply chain, the product is assessed for quality and functional conditions. This determines repair, refurbishment, or remanufacturing required ahead of resale.
During the value recovery process, different tactics restore quality to the product. These can include non-invasive aesthetic uplift processes, such as:
There are also invasive processes that get under the shell of the product:
Every refurbished product is given a grade. This grade is an indicator of its condition and varies from A+ to F. Definitions may differ between suppliers. Grades A and A+ are like new or in pristine condition with no visible damage. Grades D, E, and F are non-functioning, for parts only. Grades in the middle of the scale may show some damage.
Product descriptions should display the grade for transparency to potential buyers.
Once the used product has been uplifted and it’s been graded, it’s ready for recommerce. This is the sale of remanufactured or refurbished products, entering them into the secondary market.
Many factors drive the demand from businesses and consumers, including supply, sustainability, and cost. Supply concerns increased following COVID-19 and sociopolitical situations. These affect logistics plus the sourcing/generation of materials and parts.
These supply concerns are largely associated with brand-new products as the supply chain extends internationally. Refurbished and second-life products are more readily available in-country, alleviating some logistic-related delays.
Below, we outline other benefits associated with the use of refurbished goods for businesses and consumers.
For retailers and manufacturers, returned products are an inevitable part of the sales process. While these returns can sit depreciating on balance sheets, recommerce is a great way to recover value by introducing a new revenue stream. Turn those product returns into sales!
The alternative for those products is the risk of becoming e-waste. Once in landfill sites, electronic waste breaks down and decays over time. These leak harmful substances into the soil and air. Recommerce is a sustainable solution. It extends the useful life of preloved products, making them desirable again. Your brand can support waste reduction and the circular economy. The RLA reported1 that in 2022, products identified as sustainable grew twice as fast as conventional products – sustainable products reported a 5-year CAGR of 9.43% whereas the latter reported 4.98%.
Through a more efficient returns management process your brand has more data to tap into for improving future product development. Product strip-downs determine causes of faults and enable better assessment of why customers return products. This information can be fed up the supply chain with insights into how customers use your products, shaping instructions, manuals, and future functionality. You’ll also better understand the repairability of your products – what's easy to fix, what tooling is required, where repair manuals can be improved, how much waste is generated, etc. This all enables you to become more sustainable.
Offering lower price-point products, the refurbished models make your brand more attainable and accessible to customers who have financial barriers to buying brand-new models. This improves your competitiveness against low-end products. Once you’ve welcomed the new customer to your brand, they can see the benefits of your products, and the quality, and may be more likely to continue purchasing from your brand, including brand-new and refurbished.
You’ll also be giving the market what they want. We’ve demonstrated a clear desire from consumers and businesses above to buy more sustainable products, and refurbished, pre-loved products fit that bill. This is where it becomes easier to answer whether the sales of refurbished devices cannibalize potential new sales. These customers are more likely to be new or not loyal to your brand.
Once, refurbished products were associated with poor quality and functionality. Repair and uplift techniques have vastly improved to combat that perception. Many pre-loved devices even come with a manufacturer or retailer warranty to reassure the customer that quality is guaranteed. This means that choosing refurbished over brand new doesn’t have to compromise on quality or functionality.
Businesses, too, are becoming more inclined to buy reconditioned products to improve their sustainability. Governments and legislation are encouraging the use of more second-life devices, a move supported by strict data security laws and better technologies in the processing of used products. In some cases, goals are being set at the country or business level to determine the percentage of refurbished technology that must be in use, supporting green objectives.
The sustainability benefits are a huge appeal for eco-conscious individuals too. Choosing refurbished technology over new products avoids the extra resource consumption associated with the manufacturing process. Fewer raw and finite materials are used to restore a used product, and less CO2 is released.
A Google survey found that of the consumers who buy refurbished goods, 41% of people cited financial factors for their decision, 35% cited value for money (getting good quality for less), and 15% cited sustainability.
We’ve mentioned that refurbished products are typically (but not always) sourced in-country, so this often removes logistical barriers. Where supply chain issues affect the inventory availability of brand-new products, refurbished products are only advertised when available. There’s no backlog of orders or waitlist associated with pre-loved products.
The affordability of refurbished products is an advantage. Consumers who are more cost-conscious and deterred by higher price tags can enjoy a brand with a great reputation with a refurbished product. Having products at a lower price point makes your brand more accessible to a wider range of customers. There’s a misconception around refurbished devices that these are always outdated models, but brand-new models can be available as refurbished too, and the awareness around this is growing. As an example, a new release can be available as refurbished because it may be an unwanted return that hasn’t even been used.
There is a misconception that the customers buying refurbished products are the same as those who buy your brand-new products. This isn’t always true. Those who may have bought new and then switched to refurbished aren’t loyal to your brand. There are other motivators influencing their purchase decision.
Consider the customers that are driven by pricing and sustainability. They're not loyal customers because your brand or product alone hasn’t been the sole reason for their purchase. Cost and the environmental footprint of the product are the greater influencing factors. The competitiveness around these is what drives the desirability of the product. It’s irrelevant to that segment of the market whether the product is new or not.
Those who are purchasing for cost or sustainability factors are two different segments of the market that you should look to target with refurbished products. These are the segments that are at risk of being more fluid with their purchases and will look to your competitors to consider all offerings.
Cost-conscious customers have a clear budget in mind and if your brand-new products fall outside that scope, they will not be able to make a purchase. Offering refurbished products makes your brand more affordable and desirable, increasing the potential for cost-conscious customers to make a purchase.
Sustainability-minded customers will look deeper into your company’s mission and ethos, shopping with those who share the same values. Refurbished products are part of a circular economy, and not a linear one, so better for reducing waste and the consumption of raw materials.
Refurbished products provide a fresh opportunity for your business to attract new customers that were originally unattainable. These have different values and motivations from those who will buy brand-new products. This is also an opportunity to position your refurbished products against your low-value competitors without broadening your new product range.
Governments and local authorities are setting targets and regulations to encourage increased use of sustainable and refurbished technology. Failing to offer these products will diminish the products you have available for these markets. Widening your product offering to include more sustainable items increases your potential audience.
Introducing a refurbished product category is like introducing a value range. Your brand may not want to diversify its new product range, but by offering the same products in a used-but-restored format, you have a comparable offering for value-conscious customers. This enables a competitive offering comparable to the price points of your value-based competitors.
You can share the sustainability factors of promoting refurbished products and connect with more sustainability-minded consumers. Advocate for parts reuse and show the steps you’re going to in reducing waste to reassure these customers that you’re taking active steps towards a circular economy.
Use the data and product insights you can harness from the enhanced returns management processes to inform future product design. Issues and flaws can be eradicated while improving designs for longevity and prolonged life.
Technology is ever-advancing and this also helps improve tactics in repair and refurbishment of products, making the processes more efficient and cost-effective. By integrating new technologies, like automation and artificial intelligence, you’ll see a more streamlined approach with higher yields.
Refurbished technology is no longer a compromise—it’s a strategic opportunity. With consumer interest and demand on the rise, businesses that embrace recommerce stand to gain not only from added revenue streams and reduced waste but also from improved brand perception and greater market reach.
By tapping into the value of returned devices, enhancing repair processes, and aligning with sustainability goals, organizations can future-proof their operations, meet evolving customer expectations, and actively contribute to a more circular economy. Now is the time to turn pre-loved products into a competitive advantage as a parallel revenue stream to brand-new products and not in replacement.
Ingram Micro Lifecycle unlocks the full potential of returns and resale. Our solutions provide fast, efficient processing of returns to enable recommerce success. Our returns management solutions ensure efficient handling of returns to minimize depreciation. Technical invasive and non-invasive repair and refurbishment tactics restore value, maximizing the potential for value recovery on our global recommerce channels. Over our years of experience, we’ve developed innovative market-leading processes that restore maximum value to a product.
Contact us today to discuss how our solutions can expand your revenue streams with refurbished products.
1 Reverse Logistics Association Magazine, February 2024