A healthy circular economy, in conjunction with recycling and lobbying for fair repair (and combating planned obsolescence), is essential in limiting our rapidly growing global e-waste problem. Major suppliers have a huge role in combating this issue. While at first glance a growing refurbished electronics marketplace may seem like a threat to manufacturers peddling their new gadgets, Apple actually has much to gain from the growth and health of the circular economy. Just as well—because for better or for worse, money talks.
Tim Cook has long factored in the refurbished market in Apple’s long-term game plan. He told us so himself in a 2014 Q3 earnings call when talking about trade-ins (which result in traded iPhones being resold to more price-sensitive consumers). Cook said: “The secondary market is very key and we’re doing programs et cetera to try to increase that because we think we wind up hitting a customer that we don’t hit in another way.” Fast-forward to 2016 and we saw Apple rolling out a program selling refurbished iPhones worldwide.
Apple Gets Defensive (A Good Defense Is The Best Offense)
As the smartphone market has matured, new phone sales have dropped and Apple has noticeably relied more and more on services for revenue. When Apple unveiled service after service this past March in lieu of new hardware, many said this was a defining moment that signaled Apple’s transition into a services company.
While there was a lot of buzz about the “new era” being ushered in with Apple’s so-called strategy change, it is arguably just an extension of the previous era—a way to support and protect its current market share. After all, Apple’s services can’t be sold to those that don’t use their hardware and to date, its share of the mobile operating system market hovers at just about 22% to Android’s 76%. With the most dramatic smartphone innovations now behind us, the Cupertino behemoth is optimizing for its current user base and turning to new tactics to win more market share (while continuing to invest massive amounts of R&D to find the next big piece of tech). Suddenly, refurbished is a growth strategy.
Data from Back Market, a refurbished electronics marketplace, shows that 84% of the products it sold are Apple products. A poll of these Apple buyers shows that 12% of them had not previously bought Apple products before, and 87.8% of them would not have purchased an Apple device if it had not been heavily discounted. 80.5% of the respondents said that if their experience went well, they would be more willing to buy new Apple gadgets in the future. As Cook had already anticipated, refurbished is an excellent way to acquire new customers while preserving the brand’s image and premium pricing.
Getting The Green While Going Green
Apple stands to gain a lot by taking this market, currently the fastest growing electronics category, into account in its service-based strategy, and not just because of the additional revenue it brings: incorporating refurbished into Apple’s business model will also give it more legitimacy as it continues to market itself as an environmentally conscious company. In 2018, 44.7 megatons of e-waste was produced worldwide, and of that number, less than 20% has been recycled through formal channels. Overproduction feeds overconsumption (and vice-versa). Supporting the circular economy can make a bigger dent on Apple’s environmental impact than any of its current recycling efforts.
One iPhone 7 for example, can create up to 72 kilograms (159 lbs) of greenhouse gas emissions (excluding shipping and recycling) and uses about 44 kilograms (97 lbs) of natural resources in its manufacture. By extending the life of this phone as long as possible—by continuing to support it on iOS upgrades, and by making parts available and working with the Fair Repair movement instead of against it—Apple can help people waste less and truly make a difference on the e-waste crisis. In other words, Apple can be a Fair Tech champion while still making a buck.
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Disclosure: I am one of the Co-Founders of Back Market and have a direct financial interest in the company, which I use in reference to data and an in-house poll regarding Apple electronics.
