Refurbished mobile specialists Envirofone and The iOutlet have been named Recommended Providers in the latest Which? survey of the UK’s best second-hand and refurbished tech retailers.

The consumer watchdog gathered feedback from more than 2,400 consumers, covering over 4,000 purchasing experiences across the UK’s growing used tech market. Retailers were rated on value for money, customer service, delivery, communication, product accuracy and range. 

Brands needed an overall customer score of at least 80 per cent and four stars or more for both value and service.to achieve Recommended Provider status, 

The iOutlet co-founder Matt Green said: “This recognition from such a trusted consumer organisation is a huge endorsement of the hard work and standards we’ve built over the years. Refurbished technology has become a real alternative to buying new, and this acknowledgment highlights the trust our customers place in us.”

Envirofone Director Sam Hargreaves added: “It’s a real endorsement of the standards we set for quality, customer service and sustainability. Recognition from such trusted consumer voices reinforces our commitment to making refurbished tech the smart, reliable choice for everyone.”

The Which? results reflect growing consumer confidence in refurbished smartphones and second-hand devices as credible and sustainable alternatives to new handsets.

Around 200 refurbishers, distributors, retailers and service providers will be discussing the future of the secondary mobile market will be under discussion at Circular Summit next Wednesday (October 22) at The Hilton Tower Bridge, London SE1. Click HERE to see who’s coming and to attend.

The duo that founded The iOutlet have sold the business to its management team.

Matt Green and Liam James, who founded James Green Ltd the company behind The iOutlet in 2012, will however remain involved with the company.

The tech refurbishment firm has sold close to £100million worth of products during this time, to both retail and wholesale customers.

And recently the online retailer relocated to a much bigger warehouse in Mid-October.

Green and James have sold the company to Lewis Cox, Ollie Green, Greg Jones and Russell Jones as part of a management buyout.

The acquisition was advised by the corporate finance team at PKF Francis Clark, who supported James Green’s shareholders in structuring the acquisition and securing a cash flow loan facility from Santander.

In a joint statement, Green and James said: “Having worked tirelessly to develop The iOutlet into the business it is today, we now have an established brand for the management team to continue with the next stage of our development growth plans.

“The team, led by Lewis Cox and including Ollie Green, Greg Jones and Russell Jones, have been integral to the success and growth of the business over the last few years and getting to this stage.

“We believe that the flexible funding structure provided will enable the team to achieve the desired growth ambitions, and we very much look forward to working with them going forwards.”

Lewis added: “They have worked tremendously hard to develop The iOutlet into a leading multi-channel retailer of refurbished phones and we are excited at the opportunity we have been given to continue to grow the business they have created.”

The decline in new smartphone shipments was well-documented even before Covid-19 struck. Across the board, analysts spent the turn of the new decade predicting a global market that would either remain fairly flat or decline slightly this year.

Then, as lockdowns started to take effect across the world, these predictions nosedived. CCS Insight’s most recent prediction from April forecasts a 13 per cent dip globally this year, while IDC anticipates declines of 10.9 per cent and 12.8 per cent in Western Europe and the UK respectively.

What wasn’t so clear, however, was how the situation would impact on the used device market. This January, IDC estimated that worldwide shipments of used devices increased 17.6 per cent year-on-year in 2019, amid a wider forecast that projected the segment  to have a compound annual growth rate of 13.6 per cent from 2018 to 2023.

Naturally, this assumed strong – or at least predictable – economic conditions, something for which Covid-19 has shown little regard. Speaking to figures in the wholesale used phone distribution and consumer trade-in sectors, Mobile News has found a mixed but ultimately steadfast response to the pandemic in the UK, with the closure of physical retail and operator stores providing opportunities as well as challenges.

Wholesale

Wholesale seems to have borne the brunt of the downturn induced by lockdown. Distributors that take on operators’ and retailers’ used stock found their supplies diminished due to store closures.

“The pandemic has had a clear and obvious effect on the supply of used devices here in the UK and globally,” says PCS Wireless president for Europe Fergal Donovan. “We are seeing a lot less supply due to fewer phones being traded in and returned to operators and retailers. For the secondary market to function, there needs to be a consistent supply of devices coming into the system – and with supply numbers down, the secondary market is suffering.”

Drummond Corporations managing director Phil Drummond agrees. “Stock availability has dipped,” he says. “We’ve been unable to buy the usual quantities.”

Yet not everyone has encountered difficulties. Mobile Distribution managing director Chris Taylor says his business has “never been so busy”.

“Our turnover for March and April was astronomical compared to the year before,” he adds. “We didn’t have a supply chain impact at all.”

Phoenix Cellular’s director Paul Walters also reports solid business, with preparation for Black Friday already under way: “Thanks
to our numerous global supplier networks, we are still able to report a stable supply of stock to support our key customers.

“We are finding in some cases that customers are already buying stock for Black Friday, which is once again fast approaching. We are asking our customers to send us forecasts for the Black Friday and Christmas periods so we can guarantee stock availability.”

Although volumes in the overall mobile device market have suffered, tablets have seen growth, with the larger screen size
suiting remote working.

Strategy Analytics forecasts continuing growth in the sector, which already increased globally by 17 per cent year-on-year.

“The secondary market for tablets has definitely grown over the past few months as consumers and businesses have equipped themselves for working from home and communicating better with colleagues, friends and loved ones,” says Donovan. “This is visible across multiple brands and formats.”

Direct Benefit

While wholesalers have been affected by the decline in physical trade-in at operators and retailers, trade-in companies that buy direct from consumers have seen an uptick in business.

Although it seems likely that mobile trade-ins have seen an overall annual decline due to closure of physical operator and retail stores, big players in the space that don’t rely on a physical presence have reaped the benefits of reduced competition – and not just from the operators.

Envirofone, for instance, stopped operating in March before parent Redeem went into administration in July, prior to relaunching last week under the ownership of TES.

Mazuma Mobile has not only broadened its portfolio to incorporate laptops, tablets and games consoles, but managing director Craig Smith says that the firm’s mobile business has also grown year-on-year: “With people being at home, they’ve had time to do business with us, so our volumes have increased.”

Rochdale-based I Need A Mobile has also seen increased levels of selling from consumers, based on daily benchmarks. CEO Kasim Javed says purchasing is normally split 50:50 between wholesale and consumer, but he started to promote the latter when lockdown started as he knew that wholesale would take a hit resulting from the non-existent supply from physical retailers.

“We were expecting a surge online,” he says. “We’ve been on and off in the past few years with the consumer side because we found it cheaper to buy bulk and sell, but I wanted to have a contingency plan. The big suppliers we buy from that have network partners suffered because they are relying on walk-in trade-ins from network shops.”

Jon Miller, chief commercial officer at musicMagpie, also reports an annual increase in mobile volumes on the back of customers getting increased exposure to the brand through staying at home and being online more. “Physical retail wasn’t open, so people who may have used network stores or Carphone stores weren’t able to go to them,” he says.

“We’ve certainly found that there’s been a benefit in terms of more people going online, and that’s helped us to continue our growth curve.”

Miller also notes that the extended time spent at home may have spurred people to get rid of old devices, trading them in not to help fund a new purchase but to clean out old tech.

A commonly cited 2015 figure from environmental think thank Green Alliance indicates that there are 125 million unused phones sitting unused in UK households.  This number has almost certainly changed, but Miller believes there is an increased awareness of the value of used tech that, coupled with an increasing comfort with online transactions, has fuelled trade-ins.

“You ultimately need new devices to feed trade-in, but there’s a huge untapped pool of used devices sitting round in homes and offices,” he says. “Although we do a lot of trade-ins for iPhone 11s, and Galaxy S20s, there’s still a huge volume of iPhone 7s and 8s, and Galaxy S8s and S9s.”

Increased exposure to third parties promises to have long-term benefits for consumers, who find they tend to offer better value than the networks and official vendors.

Recent data from CompareMyMobile found that the average third-party trade-in prices for iPhones going from the XS range down to the 6S were all better than Apple’s official pricing – with differences for newer devices often being up to £100.

New Rivals

The shift in business to online hasn’t just benefited the incumbents; other players are sensing an opportunity and launching their own consumer trade-in set-ups.

Drummond Corporations had established its consumer offering, Sell My Cell, last year, but only properly launched it this May – a move that Drummond directly attributes to the market conditions brought on by Covid-19 that necessitated an expansion from just wholesale: “With the limited stock levels, we had to start coming up with new ideas.”

Matt Giles, who runs Telford-based corporate tech recycler TradologyUK, launched consumer trade-in site PreLovedTech on September 14. His four-strong workforce already accepted
consumer trade-ins via quotes on Tradology’s site, but he says Covid brought forward the launch of PreLovedTech after lockdown brought on the closure or cost-saving measures of his business and education clients.

In comparison, he viewed the consumer segment as “thriving”. “We had planned to launch [PreLovedTech] at the back end of next year, but we found business naturally migrating to the consumer  industry because businesses and schools have shut down,” he says.

“The corporate market was slowing down as it did for everyone, but the consumer market was buoyant, with lots of people working from home or being furloughed and wondering how to generate some more money.”

Despite the riches enjoyed by the established recycling players, Giles thinks there is an opportunity for a nimble smaller company to carve out its own customer base: “Our research says people make their trading decisions based on price, and we haven’t got the overheads the big players have got – so we’re able to offer slightly more value.”

Refurbished Apple products retailer The iOutlet also launched a trade-in proposition in May, with director Matt Green and his team starting to develop the service during lockdown when they saw the shift in market patterns.

“We were always thinking of going into consumer trade-in, but the opportunity was really born out of Covid,” he says. “We had previously bought stock from Redeem – and once it shut down, we decided to get our own recycling up and running.” The iOutlet also buys from Brightstar, which has encountered difficulties due to operator and Apple store closures.

As it is the company’s debut year for consumer trade-ins, Green has no point of comparison to gauge turnover, but he says he is pleased with current results.

Looking ahead

While it seems that the used device sector has found a level of stability in the months following the initial lockdown, the future is murky.

With the furlough scheme set to expire at the end of October, and local lockdowns increasing amid rising cases, uncertainty prevails. Despite seeing broadly similar trade to last year, I Need A Mobile’s  Javed has noted monthly declines.

“April was busy, May was less busy, June was less busy, July was less busy, August was less busy, and September hasn’t really picked up,” he warns. “It shows that the true effects of Covid come in after a few months, so it’ll be interesting to see what happens.”

However, PCS’s Donovan is more upbeat, as retailers begin to reopen and the economy tentatively starts to find its feet. “The frequency of relevant auctions is growing and the volume within these auctions is also growing, which is a good sign that things are getting back to normal,” he says. “Coupled with the fact that retailers are beginning to reopen, we expect to see the supply of pre-owned devices grow again.

“There is still some way to go to get back to pre-Covid levels, but there are clear signs of things getting better.”

Apple’s new iPhone SE could be a potential threat to the second-life market according to CCS Insight chief of research Ben Wood.

“The new iPhone SE will be met with dismay by companies that refurbish and sell second-hand iPhones as it will dent the second- hand price for all previous iPhones”, said the analyst.

Wood says the discontinued the iPhone 8 could prove a challenge for resellers to shift.

“What price delta do you need between an iPhone 8 and iPhone SE to make a used 8 more attractive than a new SE with updated specs. However, Apple will also not want the second-hand market to become too big as it needs to keep selling new devices.“ added Wood.

But Nick Muir, MD of the UK arm of French iPhone refurbishing company Remade, is an optimist.

“There seems to be an underlying commentary that somehow this is a dark day for second life sellers. I disagree with that. Certainly
I wouldn’t be happy if I had a huge amount of second-hand or refurbished iPhone 8 stock.

“That is not is a good position to be in right now. That said, the market for second-hand iPhones is used to seismic shifts at the launch of a new product. Every time it resettles and moves on.

“I don’t expect the SE will threaten second hand resellers. Today’s new iPhone is tomorrow’s second hand product”.

Matt Green, director of the iOutlet director thinks the new iPhone SE could be more of a problem for distributors rather than resellers of refurbished equipment.

“I wouldn’t say it’s a worry for resellers, as ultimately the product always ends up with the public and the customers.

“It’s only a worry if your business has a commitment to hold a certain level of stock under contract where prices are agreed before this came to fruition. The SE will likely impact distributors where things are done on a contractual basis”.

Mazuma managing director Craig Smith says it is a “good thing” that Apple has launched a more affordable device.

“Some people may decide to buy a brand-new iPhone SE rather a second-life model that has upgraded specs.

“But I don’t believe that it will have a massive impact on used sales. There will always be people who would rather have a higher quality phone, albeit as a second-life one.

“This will push us to deliver the best in second life devices. We have to be aware of what’s going on, but there’s not much we can do about it.

“We could see this product come back to us in 12 or 24 months time. People who don’t buy Apple may buy this and potentially become Mazuma customers in the future”.

Apple has traditionally been cautious about device repairs by independent menders.

The Cupertino-based giant has always preferred products needing a fix to be repaired in-house to help ensure the highest level of care – whether for an iPhone, iPad or iMac.

With Apple seeing a recent fall in smartphone sales, from 216 million in 2017 to 209 million in 2018, and being leapfrogged by Huawei, it now sits third for global shipments according to IDC.

So it has made sense for the company to shift attention to developing the repair side of the business via the likes of AppleCare, which customers can purchase on top of devices they buy.

This no doubt also provides Apple with an additional revenue stream as the smartphone business declines slightly.

For independent repairers, acquiring good- quality replacement parts for Apple products has proven difficult because the company has made it hard to get hold of them.

But on August 29, Apple confirmed that it will begin selling parts, tools and repair guides to independent menders so they can fix damaged iPhones, providing those shops have an Apple-certified technician who has received training from the company.

The move comes after the company was pressurised in a number of US states to be more open with its parts business through a ‘right-to-repair’ bill that would see Apple supplying these parts to independent firms.

The move could also aid the market for recycled phones by prolonging the life of devices.

While this is set to initially launch in the US, the plan is to later extend the strategy to other markets – which industry observers believe could include the UK. So what does the industry make of the move?

Why do you think Apple has chosen to sell parts to independent repair firms?

Mobio Distribution founder and director Josh Harrison: I think there were a few motivations for Apple to make this change. For one, it was probably a response to the right-to-repair movement that has been gaining traction in the US for a while now. Apple has been under a lot of pressure from independent repairers to relax its policies on non-Apple repairs. By allowing these firms into official supply channels, the company is acknowledging that you don’t have to have an Apple badge to be a trustworthy repairer.

I suspect that another contributing factor is lacklustre recent handset sales. A reduction in sales through Apple’s main channel is probably causing the company to look elsewhere for revenue. By allowing third parties to purchase parts from Apple directly, it will be earning from repairs that would usually have been completed using aftermarket parts.

NSYS Group COO Vadim Tim: In the past few years, the pre-owned mobile device market has been developing rapidly all over the world. And the forecasts are positive, with emerging markets actively developing the secondary market. The service level of independent repair shops is also increasing dynamically. In the UK in particular, there is a huge number of repair shops, from large retailers to small kiosks.

Apple understands that by not working with independent repair shops, it is losing a huge segment of aftermarket customers who want to get an iPhone at a more affordable price. By supplying official parts, the company is able to return revenue from this segment. Moreover, it’s a matter of reputation. Apple devices repaired with unofficial parts can damage the reputation of the company, which has already begun to lose ground compared to its direct competitors Samsung and Huawei.

IDC research manager Marta Pinto: Apple is really good at managing its installed customer base – shown by its repricing of older iPhone formats such as the 5S, SE and 6S. These users need to be served with a reliable aftersales service. Apple’s repair strategy should also help change brand perception, as the customer now knows that it can trust Apple to fix the devices rather than viewing them as rapidly disposable items.

In addition, customers with environmental concerns will often prefer their device to be fixed rather than having to dispose of it. Access to an official aftersales service is also important for those who buy devices second-hand, as they might not be direct Apple customers, but are still on the radar and Apple will want to provide them with the same level of customer service.

The iOutlet director Matt Green: I thought it was about time. We’ve seen similar things with car manufacturers in the past, and it’s good that the option is there for the Apple parts to be available. From my understanding of what I’ve read, it seems to me that Apple may have chosen to outsource this to help handle the volume of repairs, but will want to keep the quality so supplying its parts will help. The move makes good business sense for Apple.

iSmash founder Julian Shovlin: I think the pressure has been put on them by various states in the US – so maybe Apple is trying to get ahead of the game and do things on its own terms. It does seem like this has been building for some time, and is good news for the industry.

Do you expect Apple to make the same move in the UK?

Mobicode CEO Peter Kirby: I think in the EU, Apple will have a similar policy, but maybe won’t introduce it in the UK if Brexit goes ahead. The UK is quite a small market despite being a big Apple market. I expect it to come to the UK once right-to- repair becomes UK legislation.

Pinto: That is part of the brand value, while the customer expectation is to have the same product and service quality as in other countries. Some of Apple’s services are rolled out in different geographies to accommodate market segmentation, but I would argue that for a service that brings value to all customers like official repair centres, this should be available everywhere Apple devices are distributed with the same level of service.

Tim: Absolutely. This year, the iPhone is one of the UK’s most popular phones. The market for used devices in the country is also one of the largest in the world, while the customer base in independent repair shops is huge.

Green: I hope so; there are a lot of similarities between the UK and US markets, and the US always tends to get pilot schemes first. It really depends on how successful the move is in the US, but the right-to-repair campaign over there suggests it can be.

Do you welcome Apple’s initiative on repairs?

Tim: Of course. First of all, if this programme came to the UK, it would help support the business of our direct clients. It will be free for shops to join and will offer a free training course that allows companies to get an Apple-certified technician. These factors, combined with working with official parts, will improve the quality of the repaired product and increase customer confidence and loyalty.

Ultimo MD Joshua Hannan: I think this is a positive change that should allow wider access to original Apple parts, while also giving the consumer more choice on where to have their handset repaired.

Pinto: Yes as customers hold onto devices for longer, being able to prolong product life is key. That way, Apple can continue to engage with its customers and diminish the risk of losing them to the competition – which has pretty affordable devices with very good specs. It is an additional service that will help the brand keep its installed base satisfied and hold on to the other services that Apple rolls out.

Kirby: I welcome this with caution. It is a good thing but I am cautious with Apple because I know their main objective is selling new phones. It will be a positive thing if Apple does embrace this properly and treats it like a parts business. That would no doubt help our industry.

Shovlin: Yes, I do. Hopefully this will give customers more choice and options to go and get high-quality repairs. I think Apple has been over-controlling the market for too long now, so it’s good news for companies and customers.

Green: It’s really good news for the industry. However, it really depends on the pricing. An example would be the motor industry, with the way it prices car parts differently between third parties and original equipment manufacturers. Ultimately, it gives the consumers another option and a bit more flexibility.

Harrison: Having the option to buy official Apple parts can only be a good thing for repairers and the public too. It’s positive for the industry.

What difference will the move make to your business if it comes to the UK?

Shovlin: I don’t actually think it would make much of a difference to our business. The biggest issue with this scheme will be the cost of parts, and I expect Apple to price itself out of the market. For us, I expect we would continue to source from our own supply chain, however we will keep an eye on how this develops in the early stages.

Kirby: It helps the recycling industry to become more accepted and recognised. If Apple is supporting and endorsing third- party repairs, people’s views of previously owned phones will change to be more positive and there will be more demand for these devices.

Hannan: It should allow us the opportunity to offer the consumer both original and second hand parts, offering us a great selling point. I’d expect that many more consumers who have previously only had their phone repaired directly by Apple would be willing to use independent repairers, which is a huge positive.

Harrison: At Mobio Distribution, we supply aftermarket parts to repair centres around the UK. If the repair programme is successful in the US and is introduced in the UK, I suspect that a small portion of repairers would want to buy from Apple direct, but overall there would not be a huge change to our business.

Tim: We can expect the number of Apple devices being repaired in independent stores to increase. For us at NSYS, it would directly increase the number of devices that need quality control with our set of tools.

Green: It’s hard to say right now as it all depends on the costs of the parts and how successful the initial uptake is. As long as it’s reasonably priced, then it could be positive and offer greater choice.

Do you expect Apple’s biggest rival Samsung to react by making any changes to its own repair strategy and diversifying to use more third parties?

Harrison: Samsung-approved repair centres have access to genuine replacement parts and their relationship tends to be a little less strict than that between Apple and its authorised resellers. I don’t think we will see any changes from Samsung in how it approaches repairs.

Shovlin: I think Samsung is quite controlling, like Apple. However, it has more authorised repair centres and distributors, so has been more open when it has come to repairing handsets. It’s been genuinely easier to source Samsung parts than Apple parts to date, so I don’t necessarily think Samsung will follow its strategy given that it has a better- developed repair service. I would expect Samsung to continue focusing on its own repair infrastructure.

Pinto: Samsung has a different portfolio to that of Apple. With wider diversification of elements such as components and screen sizes, and a faster rollout of new devices, supplying parts is more challenging for Samsung. Also, the lifecycle and second-hand value of a Samsung device differs from that of an Apple one. Before tapping into that business, Samsung will need to evaluate the benefits: for the S and Note series, it is an easy sell, but for lower-price devices, the balance between the cost of fixing the phone and buying a new one is hard to weigh up.

Will you be training your technicians to deal with Apple-specific repairs?

Shovlin: We’ll see how this develops and what the cost of the parts will be. We’ll need to assess it and see if this is something worth pursuing.

Hannan: Yes, absolutely: the opportunity would be too good to pass up for Ultimo.

Green: If it’s not extortionate then that’s definitely of interest to us. As long as it’s something that can drive business for us, then it’s something we’d consider, but we’ll wait and see initially.

Kirby: Our technicians have a broad experience of all manufacturers. However, in the past training from other big manufacturers for my team has been very welcome and it’s important that repairs are at a professional standard for this industry to get broad acceptance.