Why Japanese Consumers Choose Secondhand iPhone Models

Japanese consumers have been eager for the latest gadgets for years, but now the weakening yen has put new iPhones on the back burner and sparked a booming second-hand trade in Apple’s biggest market.

The Japanese currency’s plunge to a 32-year low against the dollar has weighed on consumers and accelerated spending in the world’s No. 3 economy. Industry watchers say Japanese consumers have become more open to buying secondhand, thanks in part to the rise of online auction sites.

In July, Apple raised the price of the entry-level iPhone 13 by nearly a fifth. The base iPhone 14 was later priced at 20 percent more than the iPhone 13, as the US price remained low at $799 (roughly Rs. 65,400). While the dollar has risen against global currencies this year, the yen has been hit hard, falling 22 percent.

Salaryman Kaoru Nagase wanted a new phone but couldn’t justify the price of the iPhone 14, which starts at JPY 119,800 (roughly Rs. 66,800). Instead, he bought a used iPhone SE 2 in Tokyo’s Akihabara electronics district for less than a third of that.

“Over 100,000 yen the iPhone 14 is too expensive and I can’t afford it. It would be good if the battery lasts 10 years,” he said. The iPhone SE 2, released in 2020 but without the dual rear cameras of the iPhone 14, was a “good balance” of cost and features, he said.

Apple declined to comment on this story. But in an annual regulatory filing last month, it said sales in Japan fell 9 percent in the year ended Sept. 24 due to a weaker yen.

Apple Financial Chief Luca Maestri also admitted to analysts last month that the strong dollar had led to higher prices for its products in other countries, but sales had grown by double digits in Indonesia, Vietnam and other markets facing currency challenges.

Sales of used smartphones grew nearly 15 percent in Japan to a record 2.1 million last fiscal year and are likely to reach 3.4 million by 2026, according to technology market research firm MM Research Institute.

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Taishin Chonan bought a used iPhone 13 after the screen cracked on one of the two devices he owned for personal use. The replacement has a higher resolution and a better battery and camera than the iPhone 7 he used.

“Until now I have only bought new phones, this is the first time I have bought used phones,” said the woman, 23. “New models are expensive.”

Even after the price hike, the iPhone 14 sold in Japan is the cheapest in 37 countries when taxes are taken into account, MM Research Institute said in a September study. Further yen weakness could prompt Apple to raise prices again, the research firm said, potentially giving away its massive 50% share of Japan’s smartphone market.

The latest iPhones are now priced above the JPY 1,00,000 mark “which is a big psychological barrier” for many buyers, said Daisuke Inoue, chief executive of Belong Inc, a unit of trading house Itochu Corp. which sells used phones and tablets online.

Average sales at Belong’s Nicosuma e-commerce site have tripled since Apple raised prices in July compared to the average three months ago, Inoue said. At Belong’s operations center outside Tokyo, shipments of used phones were boxed and sorted before being inspected, sorted and cleaned by a list of workers on long tables.

The phones are then photographed from multiple angles to be sold online. Belong uses Itochu’s global network to help it find used devices in Japan and overseas, depending on where the best prices are, Inoue said.

Some of these devices are bought from businesses, such as tablets that were previously used to pay in cafes or displays in taxis, he said.

Many Japanese used to be wary of used items, including electronics, but that is changing.

The Mercari marketplace has seen strong growth in sales of used smartphones, while sales of home appliances and electronics have also grown, a Mercari, Inc. spokesperson said.

As Japan opens up again to foreign tourists, the second-hand iPhone market is getting another boost.

Retail chain Iosys Co Ltd has seen an increase in foreign tourists buying used iPhones in the past two months.

“The yen continues to weaken,” said Iosys CEO Takashi Okuno. “That trend of going to Japan and buying an iPhone is coming back.”

© Thomson Reuters 2022

Apple launched the iPad Pro (2022) and iPad (2022) alongside the new Apple TV this week. We discuss the company’s latest products, and our iPhone 14 Pro review on Orbital, the Gadgets 360 podcast. Orbital available Spotify, Ghana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts from.
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