How Is Coronavirus Affecting The Sale Of Smartphones?

Throughout history, uncertainty has yielded cautious consumer spending habits, and the coronavirus pandemic we’re facing now is a prime example.

While some people are guilty of panic buying essential goods like food and nappies, these are after all essential goods. Non-essential items are very much on the back burner, and you need only look to the smartphone market to see this.

A collapse in smartphone sales

How big of a slump would you say is a collapse in smartphone sales?

10%? 20%? 30%?

… How about 38%!?

That’s right – 38% is the figure that global smartphone shipments have tumbled by year-on-year when we compare February 2019 to February 2020.

This year-on-year sales collapse was calculated by research firm Strategy Analytics, who found that smartphone shipments dropped from 99.2 million units in February 2019 to 61.8 million units in February 2020.

To put that 38% sales slump into context, 38% is the biggest slump in smartphone sales since the iPhone was released in 2007.

But that’s not all. Strategy Analytics also calculated that sales to end users were down 39% year-on-year as well. This is an enormous decrease that has been put down to the outbreak and spread of COVID-19 in China and the rest of the world.

Related article: How To Keep Your Smartphone Coronavirus Free

Looking at these numbers, shipments from OEMs to retailers will have fallen sharply as a result of factories closing down due to the coronavirus.

The social and economic ramifications of the virus are being felt by component manufacturers and assembly plants, and especially those in China who produce many of the components in smartphones, such as chipsets and displays.

The fall in sales to end users demonstrates just how much consumer purchasing habits change in times of uncertainty. People are simply not as willing to part with their money, and many people are struggling to make ends meet. For these people, a new smartphone is a luxury, and such an expensive purchase is not financially feasible.

The refurbished market is faring better

Although new smartphone sales have dropped sharply in 2020 as a result of COVID-19, we can reveal the refurbished market is showing greater resilience.

Sales of refurbished smartphones have slowed by roughly 6%, with no shift in the average spend per customer. It would appear that, for now, consumers are still willing to spend on a great deal for a refurbished phone when they see one.

This backs up our previous article about how and why second-hand smartphones are killing new sales. If you haven’t read it, here’s a primer: people are keeping their smartphones for longer because the gap in performance between new and old devices is shrinking, and because of this, people are also beginning to recognise that there are bargains to be had with smartphones that are only a few generations old.

What is the best way to buy a smartphone during COVID-19?

As we mentioned earlier, with the COVID-19 pandemic well underway, people are not as willing to part with their money for a new smartphone. This is no shock, when you consider a new smartphone will cost at least £500 SIM-free (the new Galaxy S20 is over £700!).

If you don’t want to spend £500 to £1,000 on a new smartphone, we don’t blame you. Thankfully, there are a few options available to you.

Option 1: Take out a mobile contract

Pros

• Gets you a new phone
• No upfront cost (usually)
• Bundles in data and calls

Cons

• More expensive in the long run
• Ties you into an 18-24 month contract
• Mobile networks can raise monthly bills in line with inflation.

For those who need a smartphone, one answer is to take out a low-cost pay monthly contract with a mobile network. Pay monthly contracts bundle a smartphone and data plan together and spread the cost of the handset and data plan over 18 to 24-months.

Pay monthly contracts are the cheapest entry to a new smartphone because there’s often no upfront cost. However, contracts tie a person into a lengthy pay monthly mobile contract, and they always work out to be more expensive than the SIM-free cost of a handset over the length of the contract. In other words, pay monthly mobile contracts do offer you short-term savings but cost more in the long run.

People who have no job or have recently lost work due to COVID-19 won’t find the prospect of paying £30, £40, £50 or even £60 a month for 18-24 months appealing. If you are one of these people, you might like to consider a refurbished phone instead.

Option 2: Purchase a refurbished phone

Pros

• ‘A Grade’ phones appear brand new
• Cheaper than buying new – up to 80%
• Cheaper than a mobile contract in the long term
• Your phone will be yours – not the property of your network

Cons

• More expensive in the short term
• You will still need a SIM-only data plan from a network (although, these do not tie you into a lengthy contract. You can cancel them anytime).

If you want a smartphone that is yours to keep without a pay monthly mobile contract that could go up in price any time, a refurbished phone will be a perfect choice.

Further reading: What to Consider Before Buying a Second-Hand Smartphone

Refurbished phones from reputable vendors like ours are better than used and second-hand phones you can buy on eBay. A refurbished phone is a phone that has been traded in or returned, tested and repaired if necessary, and then graded so it can be put back on sale with a warranty. Essentially, you get a phone that is guaranteed to function as intended with no nasty surprises – just like when you buy new.

Most refurbished phones are network and retailer returns that have been opened and used for less than 30 days. Retailers are obligated to accept returns, but they can’t resell them as new, so they sell them in bulk to companies like ours. We buy these smartphones, grade them, test them, and then sell them to you.

The savings with a refurbished smartphone typically range from 20% to 80% on smartphones that are 12 to 36 months old. If you’re interested in buying a refurbished phone, make sure you read our complete guide to buying a refurbished phone. And if you have any questions, feel free to reach out to us.