Trade-in volume signals ‘tremendous’ sales for iPhone 6

Gregg Keizer
25 August, 2014
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iPhone-6-apple-rumours-macworld-australiaApple will have a “tremendous” opening of the iPhone 6, buy-back vendors said over the weekend, basing their predictions on activity so far by consumers locking in prices for their old smartphones.

“There’s tremendous pent-up demand for a larger-screen iPhone,” said Jeff Trachsel, chief marketing officer at NextWorth, a US-based company that buys used consumer electronics devices, including tens of thousands of iPhones each year, and resells them domestically or overseas.

Trachsel and others based their opinions on an increase this week in the number of quote requests for used iPhones.

“We’ve seen a lift of about 350 percent from the baseline this week,” said Trachsel, referring to quote volume since last Monday compared to the average of the month prior to that. “That’s up from a lift of 182 percent last year, or almost two times the acceleration.”

NextWorth mined its data for last week because it marked the beginning of its 30-day lock guarantee – where it promises to pay a quote of today for up to a month in the future – that would carry customers through the expected sales launch of the iPhone 6. Most analysts, Apple watchers and pundits believe Apple will unveil its new iPhone(s) on 9 September, and begin selling them on 19 September.

Boston-based Gazelle has seen a similar boom in quote volumes. “We’ve seen a 50 percent increase compared to 2013,” said Alyssa Voorhis, a senior tech analyst at Gazelle, in an interview.

Last Monday, Gazelle kicked off its own lock-in that guarantees quotes through 10 October. Like NextWorth, Gazelle offers the price lock-in so that customers know how much they’ll be paid for their used iPhone, but have enough time to buy and activate a new phone before they have to ship their old one to the company.

It’s normal, said both Trachsel and Voorhis, for their companies to see a spike in quotes in even-numbered years, because that’s when Apple historically introduces new iPhone designs. 2012′s iPhone 5, for example, was far different from 2011′s iPhone 4S – a bigger display for one – but much more similar to what Apple unveiled last year in the iPhone 5s.

The every-other-year phenomenon is well know, of course, because Apple capitalises on the exterior redesign – a “form factor” change in Trachsel’s words – to sell more iPhones. “The form factor is the single biggest reason to trade up,” said Trachsel in an interview. “If the new model looks the same as last year’s, we don’t see the same interest in trading in.”

So part of the upswing in quote volume – and thus interest on the part of consumers to trade in their current phones for cash – is driven simply by the fact that everyone anticipates an iPhone design refresh, and would have even if the talk of larger screens had not been incessant.

But Trachsel and Voorhis were both confident that, from the early data, the iPhone 6 would be a much bigger hit than either last year’s iPhone 5s or the preceding year’s iPhone 5, at least in part because it will come with a larger screen. Apple sold 51 million iPhones in the first full quarter after the introduction of the iPhone 5s/5c last year, and 48 million in the same period of 2012 and the iPhone 5.

One reason for that confidence, said Voorhis, is that Gazelle has already seen a 15 percent to 30 percent jump in quotes for used Android smartphone compared to the benchmark of the 30 days prior to last Monday. “Apple might finally offer what some Android users have been clamouring for, a larger iPhone,” she said.

The speculation about bigger iPhones has centered on one with a 4.7in screen, another with a 5.5in display.

As the expected 9 September announcement approaches – that date has been widely reported for at least the last two weeks – they will get on the trade-in bandwagon. In the past, trade-in volume has climbed at the reports of a definitive announcement date, then soared as soon as Apple’s introductory event concluded.

“Announcement day is Gazelle’s Christmas,” said Voorhis.

That has shown up in the mix of iPhone models people are requesting quotes for. NextWorth, for example, has seen a big shift in the mix: In the 30 days prior to last Monday, 69 percent of the iPhone quotes were for the iPhone 4 and 4S; last week 61 percent of the quotes have been for the iPhone 5 and iPhone 5s.

“Early adopters,” said Trachsel of the latest quotes. “Before it was people looking to get a new discounted 5s [iPhones], not the early adopters like this week. Early adopters are willing to pay termination fees to get the very newest.”

Voorhis also cited a recent survey commissioned by Gazelle to back up her contention that the new iPhone would be a hit.

“Forty-six percent of all smartphone owners want an iPhone 6, and they’re particularly interested because of the larger screen, even though they haven’t seen it yet, only bits and pieces of [leaked] components,” Voorhis said. Another 21 percent said they were undecided, but she suspected that many of those were only waiting for confirmation of the rumours.

“I have no doubt that this season will eclipse trading volume [records] for us,” Voorhis said.

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