Trade-In Punches
The gloves are definitely coming off in the trade-in space...
Things are getting feisty in the trade-in space after a raft of recent announcements. As I discussed back in November1, there are a number of market drivers: new device vs. refurbished device sales; extended primary use phases; (voluntary) network operator commitments and incoming regulation all wrapped up in an economic environment upset by tariff uncertainty. I concluded that article by suggesting the UK market could grow 9.0% (CAGR) between 2024 and 2030 with the process being an important touch point for OEMs.
I wasn’t especially surprised therefore, to read the main news coming out this week from Samsung about launching their Galaxy Club programme in the UK and grabbing the headlines with a 50% guaranteed trade-in value2. This was quickly followed up by Recommerce announcing a forward trade-in solution which, according to Pieter Waasdorp’s excellent Secondary Market News, allows the platforms’ users to offer guaranteed device buybacks to customers at the time of purchase. Likewize then got in on the action promoting their B2B trade-in credentials in Germany3.
Future trade-in values for mobile devices are not new. Kingfisher, acquired by Squaretrade back in October, have been honing their own solutions for a while. However, these guys, much like Assurant’s Hyla4, are specialists and any wider introduction of a future value guarantee is not for the faint of heart. Samsung (albeit the UK programme is a ‘pilot’) and Recommerce are putting money where it’s required to maintain or win market share which indicates a realisation that some risk is needed to get into the consumers’ consideration set. Additionally, Samsung will be hoping to differentiate their approach from Apple’s long-lived iPhone Upgrade Program and address the faster depreciation of their devices compared to iPhones.
As you’d expect, anything with a guaranteed future value comes with some important terms5. In Samsung’s case though, whether the conditions are enough to minimise residual value risk is probably academic given Samsung’s portfolio pricing will likely include a risk premium in the marketing fund from future device launches. From Recommerce’s perspective, running future value guarantees at scale will likely require a specialised insurance product, the parent company’s balance sheet or most likely, both.
Still, after reading the highlights I thought it would be useful to go a bit deeper and figure out what might be driving Samsung’s approach. In order to do so, I ran a consumer survey on Thursday 15th and Friday 16th May 2025 with a nationally representative sample of 500 people from the UK covering 18 named device retailers. Apologies to my European and US readers, but I’ve not found another rapid and cost effective survey tool adequately covering your markets. I am investigating.
Some of the results are interesting. As you might have expected, Apple already tops the bill with 44% of consumers trading in an old device when they purchase a new one. Samsung are not far behind with 40%. O2 lead the carrier channel in third place with EE, Vodafone, Three and Tesco (Mobile) all making the top 10 but with significant variation in effectiveness. The final top 10 constituent is Back Market. I was surprised at the relative performance of John Lewis sitting very comfortably in fourth place. Likewize, MTR Group, Ingram and of Currys are clearly getting something right with these particular programs.
Another interesting data point was the distinct drop-off in trade-in rates based on the age of the device being traded in. The chart below is in the aggregate across all retailers and the total sample.
Deeper analysis of this specific data, however, shows that Samsung significantly outperforms Apple in the 1-2 year window (66.7% vs. 40.0%), whereas the tables are turned with Apple outperforming Samsung in the 3-5 year window (45.0% vs. 20.0%) and additionally maintaining trade-in activity even beyond 5 years, while Samsung sees none. Anecdotally, this makes sense given Apple’s stronger residuals.
With this in mind, Samsung's 12-15 month limitation seems pretty well timed for several reasons:
Addressing a Value Gap: The Galaxy Club offer aims to counter Apple's natural value retention advantage (40% vs. 20%) by guaranteeing a higher return than even Apple users typically receive.
Targeting Peak Responsiveness: The data shows Samsung already performs best in the 1-2 year window (66.7% trade-in rate), so they're amplifying their strongest timeframe rather than trying to fix their weaknesses in longer-term ownership.
Pre-empting Diminishing Returns: The dramatic drop in trade-in rates after 2 years (from 23.2% to 13.5% market-wide) suggests that incentivising trade-ins beyond 15 months would yield diminishing returns on investment.
Inventory Quality Optimisation: By targeting phones less than 15 months old, Samsung ensures a supply of newer, higher-quality devices that can be refurbished and resold at better margins.
Competitive Risk Mitigation: The 12-15 month window hits right when early upgraders begin evaluating competitor devices but before they've fully committed to switching.
It’s clear that Samsung's Galaxy Club with its 12-15 month 50% guaranteed value window is precisely targeted to address Samsung's key market disadvantage (faster depreciation vs. Apple) while leveraging existing consumer behaviour patterns and optimising for the most economically efficient intervention point in the device lifecycle.
Looking beyond the Apple-Samsung comparison, there were a few other notable insights from the data:
The premium retailer advantage. John Lewis shows a remarkably high trade-in rate (30.8%) despite not being a manufacturer or carrier. Perhaps upmarket retailers have more success with trade-in programs due to their customer demographics, sales approach or credibility.
The online vs. physical store divide. Physical store locations generally show higher trade-in rates than online-only channels. Amazon's extremely low trade-in rate (2.3%) despite being a major phone seller6 was particularly striking. This suggests the in-person sales experience may be crucial for trade-in programme success.
Carrier Performance Variation. The wide gap between best performing carrier (O2 at 34.8%) and worst (Three at 6.7%) indicates significant differences in programme execution. This suggests trade-in success is not inherent to being a carrier, but depends on implementation. Whilst the GSMA pace setting targets7 are voluntary, some carriers would have a long way to go.
New vs. Refurbished vs. Secondhand. New phones were traded in at a 17.8% rate. Refurbished phones had a 10.3% trade-in rate and secondhand phones, a 0.0% trade-in rate. This suggests consumers who buy new are more likely to participate in the formal trade-in economy, while those buying secondhand phones may operate more in informal exchange networks.
Circular Economy Participation Gap. People who purchased refurbished devices are less likely to trade in their old devices. However, they are more likely to have the option available (46.2% had option but didn't use it). This suggests a potential missed opportunity to create "circular consumers" who both buy and sell in the refurbished ecosystem. Although I’m not yet suggesting a residual guarantee for the second sale just yet.
The Missing Middle. The steep drop-off in trade-in rates suggests a significant opportunity to improve the ‘middle-aged’ phone trade-in market (2-3 years), which represents a sweet spot or trade-off between volume (30.1% of consumers) and potential value.
The 5+ Year Challenge. While only 10.3% of phones kept for 5+ years are traded in, this segment is growing (16.0% previous vs. 25.7% intended). If this trend continues, it could significantly reduce trade-in volumes unless programmes specifically target these long-term owners.
"Not Sure" Responses as a Market Indicator. Respondents who were "Not sure" about purchase location, condition, etc. showed consistently lower trade-in rates. This suggests that consumer awareness and knowledge may be a significant factor in trade-in participation.
Missed Opportunities. 29.5% of respondents had the option to trade in but didn't use it. This represents the largest immediate opportunity to increase trade-in rates without requiring additional program availability
Now, I fully accept this is just one survey. I might be convinced to conduct it again in a few months time and while manufacturer-specific strategies like Samsung's 12-15 month focus make sense for individual players, there appears to be distinct opportunities for improving trade-in rates across the different segments, channels, and time windows.
I'm convinced we'll see more market moves over the next few months, especially as we head towards the seasonality bump. The trade-in landscape has clearly evolved from a nice-to-have afterthought to a strategic battleground where OEMs, carriers and retailers are all jockeying for position in the circular economy. Those who craft their trade-in proposition most effectively – finding the sweet spot between consumer appeal, operational efficiency, and financial sustainability – will emerge with a significant competitive edge. For manufacturers like Samsung, the stakes are particularly high: it's not just about recovering devices, but about securing the next purchase in an increasingly extended replacement cycle market.
Perhaps that 9.0% CAGR is achievable after all and I'll be watching closely to see who throws the next punch.
Peace,
sb.
Interesting results from the survey.
Assume the higher trade ins at physical stores vs online is due to convenience of being able to settle the process of transitioning to new phone much more easily?
Samsungs galaxy club. Samsung gets a customer upgrading to a new device every 12 months and the secondhand market gets consistent supply of phones less than 15 months old.
Great write-up Stuart! I love seeing the EU/UK markets actively pushing for guaranteed trade-in. Back in the 2017/2018 timeframe when we launched the first OEM trade-in program at Samsung US, we had considered this feature. Ultimately though, US GAAP rules got in the way, and auditors didn't allow us to recognize the full value of the new device sale right away. This is a tough pill to swallow for any company built around the sale of new products!
And one other comment, regarding the drop off in trade-in numbers for older devices this time: it is purely a problem of economics.
Older devices aren't worth very much, the whole reverse logistics process has fixed costs (shipping, processing, triage & grading) so any trade-in credit offered would be impacted that much more.
TI program managers don't want to offer value on hundreds of SKUs and be left with onesies and twosies they can't monetize, and consumers don't really feel the incentive to get rid of their old devices for just a few bucks (or quids for you brits). Ergo, tiny TI rates :)