Refurbishing is changing the electronics industry, as it presents a viable solution to the growing problem of e-waste. We discuss the three main drivers behind the recent growth of the recommerce sector, including environmental and commercial factors.
Why recommerce is booming
Electronic devices have drastically transformed our daily lives, revolutionizing how we work, socialize, and learn about the world around us.
Once disposed of, electronic devices are frequently discarded in landfills, contributing to the world's fastest-growing domestic waste stream: electronic waste, or e-waste. It is estimated that global levels of e-waste will reach a shocking 74.7 million metric tons by 2030 (Global E-waste Monitor 2020). This is a major concern, as the improper disposal of e-waste can harm both the environment and public health.
Luckily, more and more consumers and businesses today are interested in curbing conspicuous consumption and finding new ways to make the most out of the planet’s limited resources. This concern has fueled a renewed interest in second-hand goods, ushering in an era of unprecedented growth for the recommerce market.
In this blog post, we will discuss the impact that this trend is having on the overall electronics industry, paying particular attention to refurbishing as a sustainable solution to the growing problem of e-waste. We will also discuss what established and up-and-coming businesses can expect if they want to get involved in the refurbishment space.
Refurbishing Electronics as a Business Opportunity
As we hinted in the introduction to this article, managing e-waste is anything but easy. In this context, refurbished devices are an obvious alternative to brand-new products because they reduce the amount of e-waste that is being generated. Furthermore, we also know that manufacturing is the most carbon-intensive process in the electronics industry. Hence, extending the lifetime of an existing device is the most impactful way to reduce its negative consequences for people and the environment.
From a business perspective, the way we currently consume electronics is a clear case of unrealized potential. Just think of the average smartphone, which is made up of valuable metals such as gold, silver, and copper; not to mention cobalt, a rare mineral that is essential for the rechargeable lithium-ion batteries that power up just about everything nowadays. Cobalt has also become infamous due to the appalling working conditions that miners face in the DRC, which owns around 70% of the global cobalt supply.
If these materials are so valuable, why do we keep churning out new devices, when so many existing electronics could be repaired, refurbished, and then resold to a new user? Each of these steps is a potential profit-making opportunity waiting to be seized. At the very least, a device can be broken down into parts that can go into building or repairing another device. In other words: value can be extracted multiple times from the same device after its first lifecycle. It’s a win-win scenario, where businesses contributing to the circular economy would profit from what would otherwise be hard-to-manage electronic refuse.
The real kicker is that refurbishing is not even that complex or costly for businesses wanting to enter the market. The process involves cleaning, restoring and testing a device so that it can be sold to a new consumer (as well as carrying out software updates, if needed). So the model is quite straightforward: buy an inexpensive phone that is not perfect for some reason, restore it or polish it with relatively little effort, and sell it for a bit more.
While there are still challenges to overcome before this vision becomes the norm, the trend towards refurbishing electronic devices is definitely on the rise. A recent survey conducted by consultancy firm Kearney revealed that 28 percent of more than 5,000 consumers across Europe and North America would prefer a high-quality refurbished product in comparison to a lower-quality brand-new product. This shows that consumers are becoming increasingly aware of the environmental impact of their purchases and are willing to make more sustainable choices. It should come as no surprise then that the electronics recycling market is expected to grow and hit the 66 billion U.S. dollar mark by 2026.
Refurbishing is Good for the Environment — and Your Wallet
One of the main reasons behind the recent success of the refurbished model is that pre-owned electronics are significantly more affordable than brand-new gadgets. According to Consumer Reports, consumers can save up to 50% off the original retail price when they choose to buy a refurbished device instead of a new one.
We decided to run an experiment ourselves to understand just how much cheaper choosing to go refurb can be. Taking a basic iPhone 14 (128GB, Midnight) as a reference, we looked up how much it retailed for on the Apple Store (US). After doing so, we compared the original price of the iPhone 14 to refurbished deals listed on a few of the most popular recommerce marketplaces. We also decided to be somewhat conservative in our savings estimates by selecting only excellent/mint condition devices.
On the Apple website, the new iPhone 14 retails for $829 USD (price without choosing an Apple Care plan or a phone carrier). The same unlocked device was being sold for $636.00 on Reebelo, $664.34 USD on Back Market, $644.99 on Gazelle, and $701 on Swappa.
The results are clear: even consumers searching for top-of-the-line refurbished products can save up to 23% off the retail price.
We have summarized our findings in the table below, which breaks down the potential savings and provides a description of what "excellent condition" means for each of the recommerce marketplaces we visited.
In sum, switching to a refurbished device can amount to remarkable savings for cost-conscious consumers. Furthermore, buyers who choose to go this route are still getting a high-quality product that will perform just as reliably as a new device.
Improved Quality Controls and Buyer Warranties
One of the typical buyer objections to refurbished devices is that secondary sellers may not seem as trustworthy as the original manufacturer, and for good reason. In the past, there was an obvious lack of transparency in the refurbishment process, which gave way to unethical business practices, unpleasant surprises, and dissatisfied consumers. However, the truth is that refurbished items can be just as good as new ones, especially if they have been refurbished by a reputable company that follows strict quality control standards. And so, the former stigma around buying used electronic devices is quickly disappearing.
The reliability of reborn electronics relies heavily on thorough testing and careful refurbishment. Consequently, most refurbishers and refurb-specific sellers have defined comprehensive quality tests and grading systems to ensure that you get what you bargained for. For example, any vendors hoping to sell on Refurbed (a leading recommerce marketplace in Europe) have to follow a 40-step process before being able to list their products on the site.
Another important factor to take into account is that, since the original manufacturer’s warranty has likely been voided, it is now standard for marketplaces and independent sellers to offer additional device warranties for the buyer. Nowadays, you should be able to expect around a one-year warranty on your refurbished purchases, give or take. To sweeten the deal, marketplaces like Back Market might also add their own money-back guarantee. In most refurb recommerce sites, this ranges between a 14-day and a 30-day “trial” period.
Refurbishment and Its Management
In conclusion, refurbishing electronic devices is an important trend that can help reduce e-waste and its impact on the environment. It is also a more sustainable and budget-friendly option for consumers that can contribute to the growth of the circular economy. However, it is essential to ensure better and more transparent management of the refurbishment process to ensure consumers’ confidence on refurbished items, and businesses’ ability to stay on top of their bottom line.
We are pleased to announce that we just went one step further in our mission to extend the lifetime of 10 billion devices. Building on our sustainability efforts and decades of after-sales and repair industry experience, Fixably is now entering the refurbished market with Fixably Refurb: a plug-and-play software solution that will enable businesses involved in refurbishing to streamline their performance, improve process efficiency, and get in-depth control and visibility over the entire refurb pipeline based on data-driven insights and robust reporting capabilities. You can learn more about Fixably Refurb here.
If you want to stay up-to-date on what’s happening in the refurb industry, please make sure you follow us on LinkedIn, Instagram and Twitter, where you will be the first to know about the content that we are planning to publish on the topic.