The Rise Of Recommerce: How The Secondhand Electronics Market Is Growing In The GCC And Beyond
With the rise of the purpose-driven consumer, we see a mindset shift, which has caused the recommerce-d goods to break into the mainstream market.
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There is no doubt that we live in an era of rapid transformation. In the last decade, technology has become an intrinsic part of human existence, driving change across almost every major industry. We find ourselves amidst "the new normal"- a world where our smartphones have been an extension of our bodies, and an experience is deemed void unless it was shared on social media.
In the UAE alone, the consumer electronics market has grown by 15% in 2021. With the growth of consumer electronics market, we are also experiencing a boom in the secondhand electronics market. For example, between 2016-2020, used smartphone sales grew by a compound annual growth rate of 26% in North America and 20% in Europe. Going forward, for the next five years, the used smartphone market is expected to grow three times faster than the new smartphone market.
In order to tap into the market's potential, we must first understand the reasons for its recent growth. In recent years we have experienced a dramatic shift in mindset towards recommerce and second-hand goods. Recommerce used to be associated with the likes of eBay and thrifting, largely dependent on peer-to-peer platforms to drive growth. However, with the rise of the purpose-driven consumer, we see a mindset shift, which has caused the recommerce-d goods to break into the mainstream market. Particularly for used electronics, recommerce is now mainstream, with major ecommerce and telecom players now selling used devices as well.
This is for three clear reasons. Firstly, devices are becoming more expensive and are capturing a much larger wallet share of the household. Affordability is driving usage of used devices. Second, device life has become longer and improvements in new generation devices are now marginal. Hence used devices fulfill requirements for a large number of users. For these reasons, consumers are comfortable using a two-year-old phone with a higher specification model than what they could otherwise afford. Lastly, selling and buying (yes- purposefully mentioned reverse) used devices is now being facilitated digitally by new generation players such as NorthLadder, which make it easier for consumers to encash their used devices at very attractive prices.
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Furthermore, secondhand goods are increasingly associated with improving product lifecycle and enhancing sustainability. Shopping in the re-commerce market has grown attractive to consumers as not only is it more sustainable, but a dirham can go much further. They also expect the same from the brands they buy- a whopping 73% of millennial consumers prefer to purchase from sustainable brands. In 2020 alone, 7.7 billion mobile phones were in use worldwide with a carbon footprint of roughly 580 million tones. Not to mention, the growing amount of used electronics that overwhelm our landfills year after year, making e-waste the world's fastest growing waste stream and projected to increase by approximately 30% by 2030.
Given the deep social and environmental cost of producing and using smartphones, the most logical solution is to extend their lifespan for as long as possible. Current estimates place smartphone recycling below 15% in developed countries. Users are hoarding their old electronics, which lose value every hour they spend locked in a drawer. The UAE currently has more than 10 million smartphones in circulation; however, less than 2% are traded in. The secondhand electronics market is an important part of making the tech industry more sustainable. Due to its rapid nature of advancement, it's likely one of the most difficult industries to keep green. That's why consumers and electronic retailers alike are keen to extend product lifespan, and support a more circular economic model.
At Northladder, we are lucky to have spotted the market potential for secondhand electronics retail and become part of this growth. Going forward, we expect the secondhand online market to grow at a rapid pace, for which we are well placed to provide both consumers and retailers with ample support. Since our launch in 2019, we've served over 25,000 customers, and a significant number of them have been in 2021. The UAE is a global hub; there is not just demand for devices in the local market but also in the international market. We serve this rise in demand through our innovative online platform that taps into a network of global bidders, allowing us to deliver 50-60% more value for the sale of used devices. Not only do we enable consumers to sell directly on our platform, but we have also partnered with key electronics retailers across the UAE such as Jumbo Electronics, Emax, iStyle, ECity, Carrefour, and Lulu, to name a few, to enhance their trade-in offering.
Moving forward, we will continue to align with the Middle East's vision for the future, using our platform to better support sustainability and drive forward a circular economy. We have plans to expand market reach in both UAE and Saudi Arabia to grow by 40-50% month on month in these key markets, namely by securing more retail partnerships. We will also continue to invest in cutting-edge technology to facilitate electronic trade-in, and we expect to have more than 300 locations in the UAE and KSA where customers can trade in their devices for instant cash. Watch this space!
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