Mobile networks play a pivotal role in the mobile industry. First and foremost, they hold the keys to network access, so we can all make calls, send texts and browse the net on our phones. They build their business models around selling us this ‘airtime’.
Yet network operators have long had a lucrative little sideline in selling mobile phone handsets as well. Most commonly, they do this via airtime-plus-device contract bundles. Most of us will have come across these deals at one time or another – you sign up for a voice and data plan on a monthly fee for a fixed term (usually 12 or 24 months) and get a brand new handset thrown in at the start of the contract.
The monthly subscription you pay subsidises the new phone you get at the start of the contract. You are obviously paying more than the value of the voice and data services you use, but broken down into monthly chunks, it doesn’t feel unreasonable. Over the course of a couple of years, however, the operator is making a tidy little mark-up on that phone.
The networks also seem wedded to the idea that the phones they provide as part of a bundled contract plan should be brand new. They fall in line with the big manufacturers to promote the latest models hard.
Yet in many ways this seems oddly out of step with the direction the mobile market has been heading in recent years. As we keep highlighting, the consumer goldrush for the latest smartphones has started to lose its sparkle. People are no longer queuing up outside phone stores for the latest Apple and Samsung releases anymore. They are keeping their handsets for longer, and looking for better value when they do make a change. Sales of new phones have gone into decline, while the pre-owned market is soaring.
Yet out of the UK’s four biggest mobile network operators, O2, EE, Vodafone and Three, only the first two advertise pre-owned and refurbished phones for sale. Why is that?
It is a difficult question to answer. No doubt there are factors such as commercial tie ins with device manufacturers involved. But you wonder how far that could actually be holding back operators from pursuing their best commercial interests.
For a start, there is the simple fact that pre-owned phones offer much better margins than new. Even with any costs of refurbishment factored in, the considerably lower wholesale cost of second-hand phones – a consequence of the ample supply of devices out there – means used phone vendors can sell devices for much cheaper than new and still get a higher mark-up. A savvy operator could easily put together phone-plus-airtime bundles with refurbished handsets that significantly undercut typical market prices, grabbing the attention of value-conscious consumers, yet which still return a more than healthy margin over the course of the contract.
Another point for operators to consider is that phone-plus-airtime deals are no longer first choice for consumers. SIM-only plans are now the most popular type of mobile deal in the UK; consumers are buying airtime and phones separately because they are looking for the best value possible from both. Networks try to cater to value-conscious customers by offering budget and mid-range handsets marketed as ‘Pay As You Go’ phones. But they are still missing a trick – by selling unlocked, refurbished, pre-owned phones, they could offer premium models at bargain prices, with the flexibility for consumers to pair any phone to any kind of SIM deal.
Phoenix Cellular hold one of Europe’s largest stock holding of used mobile phones from both Apple and Samsung. All devices are tested and graded in house by our expertly trained staff and come with a complimentary 13 month warranty, why 13 months, 2 weeks for you to test the device and make sure you’re happy with the grading, 2 weeks to sell the device, your customer then benefits from a full 12 month warranty.
Distributing over 50,000 devices on a monthly basis you can be rest assured that Phoenix Cellular has the capacity to supply any network with the demand that they should expect from selling used mobile phones.