Modern consumers have developed a certain level of guardedness. Many people won’t dine out without checking Yelp or consider a used vehicle without reading its Carfax report.
But when it comes to used mobile devices and other connected electronics, many would-be buyers are expected to take a leap of faith that a second-hand item will work as it should.
Several speakers during day one of the Mobile Disrupt conference Tuesday in Miami addressed how digital product passports (DPPs) can build a better secondary marketplace, ensuring consumer trust and spurring participation.
DPPs allow buyers and sellers to access a product’s original manufacturing date, refurbishment record, component list and other data points — “what went into the thing and what happened after the stuff went in to make it,” said Josh Matthews, co-founder and CEO of Apkudo.
His company offers a technology platform to provide automated testing, grading and lifecycle management for various devices. Unifying those functions would, over time, build trust across the value chain by giving buyers and sellers insights into tracking and traceability in a baseline, easily digestible format.
That could help grow an organized secondary device market that hasn’t seen much growth in the past few years, according to Simon Bryant, vice president of research for CCS Insight. His telecommunications and technology research firm found that the global organized secondary market (refurbished, warrantied devices) remains about half the size of the unorganized market, which is dominated by user-to-user sales and independent dealers.
While there are fairly healthy secondary markets in North America and western Europe, such markets largely don’t exist in many other global regions. But a continually surging demand for dynamic random access memory, flash chips and other memory-related components has driven new-device prices up, especially in low-tier markets such as India, where phone prices have gone up between $50-$300 (30%-50%) in the past year.
Similar increases will be coming globally, likely pushing more purchasers to the second-hand market. So the marketplace — which has already grown by about 10% this year — should be ready to handle an expected influx of customers, Bryant said. A big part of doing so is standardizing how trade-ins are treated before re-entering the marketplace.
“Buying used devices comes with risk and uncertainty. People will pay less for them, or they won’t purchase them at all,” said Bryant, whose company did a focus study that found consumers strongly support the idea of DPPs. “Consumers fundamentally don’t know what a grade means from one manufacturer to another.”
The European Union has DPP regulations that went into effect two years ago, giving buyers there confidence and stabilizing the marketplace. But similar codification isn’t likely any time soon in the United States, according to Sam Cleland, vice president of mobility at B-Stock Solutions, a B2B auction marketplace management company. That leaves a gray area when it comes to clarity.
“On the B2B side, we still suffer from marketing words rather than facts,” he said. “Bringing this to market is important. There’s still a bit of hedging and guessing going on. We can have double and triple the work because the process is not transparent.”
Market research agrees consumers trust independent parties more than manufacturers. That’s part of why Apkudo has partnered with the Groupe Special Mobile Association (GSMA), which counts more than 1,000 phone makers and businesses in its membership, to launch a device homologation program to create a baseline for OEMs to consistently share product specifications for regulatory and consumer use.
“A big barrier is neutrality,” said Matthews, who noted that legislation can guide neutrality but requires OEMs to relinquish control. “The real opportunity we have as an industry is to get ahead of regulation. That’s always a good thing.”
That’s among the reasons why Samsung Electronics America plans to be the first company in its market to publish DPP information compiled in collaboration with Apkudo on its website. A pilot program should soon be operational to make that data publicly available, according to Craig Feely, the head of Samsung’s Certified Re-Newed trade-in program. That benefits the buyer as well as the seller, he said.
“This has a real, material impact to you and your business,” he said. “We should see a 10%-20% value increase in pre-owned devices due to more transparency. Buyers know what they’re getting, and there are no concerns about returns. Buyers also spend more time researching pre-owned phones than new ones. This is a level of research that’s done for them. DPP should shorten the buying cycle time, helping us move inventory faster. That’s good for all of us.”
With an ongoing critical mineral crunch and a variety of economic factors creating waves in the marketplace, anything that can bring in and retain customers is a good thing, Bryant said.
“This market we’re in is fraught with complexity. This is one part of the puzzle,” he said.
