Samsung is preparing to launch a new program selling refurbished, used versions of its high-end smartphones, in a bid to maintain its earnings momentum and smartphone market share around the globe.
According to Reuters’ sources, Samsung wants to maximize its cost efficiency and keep operating margins above 10 percent. As such, it will refurbish high-end phones returned to the company by users who’ve signed up for one-year upgrade programs in markets like South Korea and the US; it will then sell these devices at lower prices.
The idea of getting a refurbished premium handset directly from Samsung should be attractive to many consumers, especially considering the plaudits the company has won in recent years for its design work. Devices like the Galaxy S7 and Galaxy Note 7 have been praised by reviewers for their look and feel, but their prices — around $800 — will put off many.
“Selling used phones could help Samsung fend off lower-cost Chinese rivals that have been eating into its market share, and free up some capital to invest elsewhere or boost marketing expenditure”, reuters suggests.
It’s unclear as to how deep the discounts for refurbished phones will be, and where they will become available. However, it’s worth noting that not every country welcomes the sale of secondhand goods; the Indian government has blocked Apple’s plans to sell refurbished iPhones, even though the company is set to open retail stores there in the near future. India is important for Samsung as it is one of the key markets driving smartphone sales growth. Although, even highly discounted High-end Galaxy phones would be expensive for many customers with the average smartphone price in India being₹4706 ($70).
Perhaps this strategy will be more effective in markets like China where the local brands are effectively undercutting Samsung offering high-end specs at lower prices. It may as well entice the customers in the United States and Europe who find cost effective flagships such a the One Plus 3 more lucrative.
There is, however, a risk of devaluing the Samsung brand in countries where high-end phones are regarded as status symbols.