99% new pre-owned phones have become hot commodities. Why are second-hand phones so popular these days?

Recently, along with the continuous rise of memory prices, the mobile phone market has seen a corresponding upward trend. Against this backdrop, 99% new mobile phones have become hot commodities in the market. Why are second-hand mobile phones so popular? How should we view this phenomenon?

I. Are 99% new mobile phones becoming hot commodities?

According to reports from CCTV Finance, the transaction volume of second-hand mobile phones has surged in Huaqiangbei, Shenzhen, Guangdong. Statistics from market research institutions show that products with an average price of over 4,000 yuan account for more than 68% of the total.

Industry insiders told CCTV that generally speaking, the price of most second-hand mobile phones will gradually decrease as time goes by after their launch, and it is very common for popular models to see a 20% price drop within one year. However, affected by the rise in memory prices, the prices of second-hand mobile phones have generally remained firm this year. Compared with the price of brand-new devices, 99% new or only unboxed second-hand mobile phones are usually 500 to 1,000 yuan cheaper. Driven by strong demand, these mobile phones have become sought-after products in the market, and merchants are actively recycling them.

According to reports from Tonghuashun, the term "99% new" here is a condition description in transactions, which is not equivalent to brand-new devices. Its appeal partly comes from the price lower than that of new phones, and partly from the appearance and usage status close to new phones; but the label itself cannot replace the understanding of the specific condition of the device. For buyers, the battery status, records of repaired or replaced parts, normal function performance, warranty and after-sales terms will all affect the actual use value. Therefore, the transaction logic of near-new mobile phones is not only about "how much cheaper it is", but also whether the discount is enough to cover the differences in device status and after-sales guarantee.

For ordinary consumers, this choice often arises between budget and usage needs: they hope to buy models with relatively new performance and appearance, but are unwilling to pay the full price for brand-new devices. If the price difference is clear and the device condition is transparent, second-hand products can become a compromise solution; on the contrary, if the description of the condition does not match the actual situation, the money saved on purchasing the phone may be offset by maintenance or subsequent usage problems. The attention paid to 99% new mobile phones shows that consumers are not comparing a single price tag, but the combination of purchase cost, device status and subsequent usage risks.

II. Why are second-hand mobile phones so popular?

Recently, many people around me are changing their mobile phones, and the most discussed topic is not how powerful the performance of the new models is, but where to find a 99% new mobile phone. The so-called 99% new refers to the kind of mobile phone that has hardly been used, with the shell and screen as good as new, but the price is hundreds or even thousands of yuan cheaper than a brand-new one. A few years ago, buying a second-hand mobile phone was somewhat embarrassing, but now it has become a smart choice. How did this happen?

First of all, the continuous rise in the price of new mobile phones has become the biggest market driving force for 99% new second-hand mobile phones. In the past, when people changed their mobile phones, they always thought that if they waited a few months for the price to drop, they could always get a suitable price to start. Now this old experience is completely invalid: the prices of many models not only do not drop after release, but even rise after a period of time. If you wait for big promotion events to get a bargain, you will find that the promotion intensity is getting smaller year by year. The price range that could have been reduced by hundreds of yuan now at most gives you some free accessories, and the actual transaction price cannot be lowered at all. The decision-making of ordinary consumers to change mobile phones has been directly changed. In the past, it was normal to replace a new mobile phone every two or three years, but now after calculation, the cost of replacing a new mobile phone is much higher than that two years ago. Many people begin to realize that their old mobile phones can still be used, and there is no need to force themselves to pay for the new models.

The mobile phone replacement cycle has been extended little by little. The original rhythm of replacing a phone every more than one year has gradually become two years or even longer. However, people's demand for mobile phones still exists. It is impossible to keep using laggy and aging old devices. At this time, the price advantage of 99% new mobile phones is fully highlighted. Most of these devices have just been unboxed not long ago, some are returned by users under the 7-day no-reason return policy, some are demonstration devices from offline stores, and others are idle devices that have only been used for one or two weeks. They have almost no usage wear and tear, and their performance is no different from brand-new devices.

The most critical point is that they do not have the first-launch premium of new phones, nor the inflated price when the brand is just released. They can be used as soon as you get them, and the price is much lower than that of brand-new devices. For those who are discouraged by the price increase of new phones, this is almost the most cost-effective choice. You don't need to pay for the brand's marketing costs, nor pay for the early adopter premium of new features. You can get an almost brand-new experience with less money, so naturally they have gradually become highly sought-after products in the market.

Secondly, second-hand platforms have broken the original information asymmetry. In the early years, when people mentioned buying second-hand mobile phones, most people would feel nervous. They were afraid of buying refurbished phones, assembled phones, devices that had been flooded, had their motherboards repaired, or screens replaced. Sellers could boast endlessly, but after you get the device and check it, you find it is full of traps. The root of this problem, in the final analysis, is information asymmetry. Sellers know everything about the device, while buyers know nothing about it. No one can be sure of the price, and in the end most people left in the market are those who dare to take risks, while normal consumer demand is squeezed out. Gresham's Law in economics is perfectly applicable to this industry.

However, the situation has changed significantly in recent years. The turning point is that platforms have entered this market and rebuilt the trust system. Represented by platforms such as Aihuishou, the collected devices will go through multiple rounds of inspections, checking the appearance, screen, motherboard, battery and functions one by one. After that, they will be graded according to their conditions, and equipped with corresponding warranty and return commitments. The value of this strict selection system does not lie in how fancy it is, but in that it turns the information that was only known to sellers into a public standard that both buyers and sellers can see. Buyers no longer need to rely on their experience and luck, and sellers no longer need to rely on their glib tongue.

The transaction frictions are eliminated, and the market efficiency is improved. You will find that what the platform does is actually to bear the cost of inspection and after-sales guarantee for all users. Once this cost is spread out on a large scale, second-hand mobile phone trading has changed from a risky business that relies on courage to a normal industry.

Thirdly, the profit growth point of the circular economy has begun to evolve into a trust-based economy. Many people think that second-hand platforms make profits from the price difference, buying at a low price and selling at a high price to earn the margin. This understanding is too superficial. These circular economy platforms represented by Aihuishou actually make profits from the turnover of trust. The price difference is only the appearance, and trust is the hardest currency in this business. After a device is collected from the user, going through the whole process of inspection, grading, pricing, listing and selling, it is essentially to continuously endow the same product with credibility.

For the same mobile phone, if it is sold by an individual, buyers will hesitate for a long time. But if it is placed on a platform with inspection endorsement and warranty commitments, buyers dare to place orders, and even can pay in installments with peace of mind. What is the difference? The difference lies in trust. Whoever can stably produce trust can take the initiative in this market. Precisely because of this, only products that have been inspected and reviewed by the platform can gain more recognition. Those devices with unknown sources and unclear conditions are difficult to be truly accepted even if the price is very low.

This mechanism is actually very healthy. It uses market forces to reward those participants who are willing to disclose all information clearly. In the long run, the higher the efficiency of trust turnover, the lower the transaction cost of the whole industry, the more people are willing to enter the market, and the bigger the market cake will be. I think this point is much more important than who earns a few hundred yuan more in the short term.

Fourthly, the stratification of the circular economy market is becoming increasingly obvious. The products that are really selling well in the current market are the 99% new and 95% new gears. For devices with lower conditions, such as those with obvious bumps, scratches on the screen, and severely degraded battery health, few people are interested even if the price is very low. There is a very simple truth here: second-hand consumption is never about making do with something bad, but about getting an experience close to brand-new devices with less money. 99% new and 95% new are exactly the greatest common divisor that the market can accept.

It makes sellers willing to sell, and makes buyers feel it is worth the price. The psychological price of both parties is most likely to meet in this range. Products with too poor conditions, even if they are cheap, will eliminate the sense of security of many people. Therefore, the popularity of this market is not a comprehensive boom, but a local high temperature concentrated in the small top segment. A large number of people who originally planned to buy new phones but were discouraged by the price increase now turn their attention here. What they want is not old devices, but the combination of cost-effectiveness and decency. This also explains why low-condition old phones are still difficult to sell at the same time. Demand has a threshold, which is jointly drawn by the product condition and credibility.

In the long run, the popularity of 99% new second-hand mobile phones does not mean that people are short of money in the final analysis, but that consumers are beginning to pay more attention to the recognition of practical economy. Mobile phones have returned to their essence as tools. People are no longer willing to pay excessive fees for brand premium and marketing concepts, but pay more attention to how much real value the product itself can bring. The circular economy will become a more important market supplier in the future, which is the most noteworthy point for us.

This article is from the WeChat Official Account"Jiang Han's Vision Observation", author: Jiang Han's Vision Observation, published with authorization from 36Kr.