Increasing Phone Prices Results to Boom in Second-hand Mobile Market

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According to the biggest trade-in company in the United Kingdom, the increasing price of mobile phones has led to a prospering market for second-hand handsets.

Sales at Redeem, a Scottish group that recycles mobile phones for mobile operators including O2 and Vodafone, increased by 18pc in 2016 to £95m.

Redeem’s chief executive, Paul Adams, said that sales of used mobile phones were flourishing even as those of new devices stagnates. Higher prices – the latest iPhone has a cost of as much as £1,149 – means that owners are determined to gain money back on phones even when they choose to, later on, upgrade to newer models.

“The market for pre-used handsets is growing really quickly, consumers are making a shift to buying [used] handsets,” he said, claiming that as prices go up, people are increasingly trading in older phones to afford new ones in a similar way to the used car market. “People are realising there’s ­residual value in the phones, they’re no longer leaving them in their drawer, they want to do something with them, ” said Adams.

Redeem gathers handsets from ­mobile operators when customers trade phones in with operators for a discount on a new phone or for cash, erases their data and refurbishes them at a plant located in Estonia before reselling to networks or customers abroad.

It says it handled 1.6m phones in 2016, with just over half of those in the United Kingdom, and has profited from the rise of “refresh” contracts that allow consumers who want to upgrade phones regularly, trade in older devices. In the United Kingdom overall, about 9m used phones were sold, as compared to 24m new ones.

Backers of Redeem include an investor in Wagamama and Virgin Wines, Praesidian Capita, and asset manager Connection Capital. Recently, it has signed deals with Tesco Mobile and Giffgaff, a spin-off network that is run by O2.

Meanwhile, the founders of Bullitt, the British smartphone maker,  have left the firm after selling down their shares. Bullitt, which makes specialist handsets for brands like Caterpillar, Kodak, and JCB, was founded in 2009 by a trio of former Motorola employees, David Floyd, Richard Wharton, and Colin Batt.

The founders stepped down from the day-to-day operations of the company two years ago but have now resigned from the board of Bullitt and no longer perform an active role, even though they do maintain non-controlling shareholdings.