When it comes to status symbols, the newest technology is the thing to have—and the thing to have right now is the iPhone 6 and iPhone 6 Plus. But with a price tag ranging from $200 to nearly $850, it’s not hard to understand why many consumers are taking advantage of more economical trade-in offers. Having the latest, greatest device is all well and good, but saving money is even better. And it’s not just consumers who are benefitting from these kinds of deals; the recommerce trade is lucrative for carriers and retailers as well.
Trading In to Trade Up
According to a Gazelle Survey, 64.8% of smartphone users say they got their last device through trading in an older model. Users are also holding on to their old phones for as long as they can. This generally means they are waiting until the upgrade window with their carrier opens, which is usually every 24 months. What does this mean for carriers? That they’ve got to get creative with incentive programs that encourage consumers to upgrade sooner.
And creative they are getting! The vast majority of Americans that upgrade their iPhones take advantage of tempting trade-in offers to get the newest model for the hottest deals. Wireless providers have been making consumers offers that they simply can’t refuse to encourage them to purchase the newest smartphone models. Promotions such as rebates worth anywhere from $100 to $300 and free upgrades for life with a paid subscription are common tactics. Some carriers have even offered to pay upwards of $50 more than a competitor just to get the consumer to jump ship and switch to their service.
What If Cash Is Short?
For some consumers, coming up with the money to purchase the new iPhone 6 is a struggle. To overcome this, carriers are offering installment plans that allow the customer to pay for the phone over several months. The installment period is usually between 12 and 18 months. After that time, the customer then has the opportunity to upgrade or trade in their phone for a newer model. The company gets the full retail value for the phone, just not in one lump sum.
The benefits for the customer of these trade-in, trade-up incentive programs are obvious. Either they get some extra cash in their pocket or they get a great deal on the newest iPhone.
What’s not so obvious is the benefit to the carrier. The promotional costs of convincing consumers to upgrade to the newest iPhones by trading in their older model are huge, but they’re offset in the long run. It’s all about making money on the reverse side of the supply chain. In other words, companies can refurbish and resell those trade-ins both in the U.S. and in emerging markets around the world. It’s a win-win situation for consumers and companies alike.
With every new iPhone version that’s released, there is an opportunity for manufacturers, carriers and consumers to benefit. To find out more about how your business can get in on the action, contact us. We’ll be happy to explain how our unique recommerce solutions can benefit you.