- A Wall Street Journal reporter tracked an iPhone 11 that was bought for $250, refurbished, then resold for $350
- But the price varies according to the state of the smartphone and some devices are sold at a loss.
- In any case, it is a lucrative business with great potential for growth
When your iPhone is repossessed by Apple or a carrier, where does it end up? To answer this question, Joanna Stern, journalist for the Wall Street Journal, carried out a report with an American specialist in reconditioning. She was also able to trace the course of an iPhone 11 taken over by an operator, bought back at 250 dollars, then resold at 350 dollars on Back Market. Along the way, the device went through a set of steps.
It was the US Mobile Phones or USMP company that opened its doors to the journalist. Based in New Brunswick, New Jersey, this player processed more than 2.5 million smartphones from repossessions in 2022. The majority of these devices were iPhones.
According to the explanations of the Wall Street Journal, two thirds of the iPhones that arrive at USMP are emptied of the remaining data, cleaned, and then sold to wholesalers, generally in other countries. The remaining third is repackaged by the company, then resold on platforms such as Amazon or Back Market. The iPhone 11 traced by Joanna Stern is part of this group.
First, the data of the previous owner is deleted. Then, the iPhone undergoes a series of tests to verify that everything is working, and that the battery is not too worn out. Then, the device goes through a cleaning, before being rated. It is a visual inspection from which the value of the iPhone is determined. And finally the smartpones is repackaged with a new cable.
Profits and growth potential
The iPhone 11 whose journey the journalist followed had a maximum rating (in good condition). Bought for $250 from an operator, the refurbished device is sent to another entity, called Back in the Box, which belongs to the same group. This then takes care of reselling the iPhone to e-commerce sites. The tracked iPhone 11 was resold for $350 on Back Market.
And the video! Come inside a secret refurbished factory in the middle of New Jersey and learn about the lucrative world of traded-in iPhones:
— Joanna Stern (@JoannaStern) March 15, 2023
The margin is important. But you have to deduct the 10% commission from BackMarket, the costs of the company. On the other hand, the profits made with a device in good condition must also absorb the losses incurred by those in poor condition. To determine the price of a refurbished iPhone, Back in the Box takes into account the condition of the device. But it is often between 20% and 30% of the new price.
In any case, this activity should grow in the coming years, since the demand for used smartphones will be even greater. According to IDC data, the average annual growth of used smartphone sales between 2021 and 2026 will be 10.3%. 282.6 million used smartphones were sold in 2022 alone, according to firm estimates. He also explains that today, trade-in programs are driving the market for new and used smartphones.
