The importance of consumer trust in the second-hand mobile market

58 percent of global consumers have yet to trade in an old mobile device, though almost two-thirds (64%) globally reported they would be willing to do so if more stringent data management processes were in place. These are the results of an exclusive global consumer research study examining consumer sentiment and actions for trading in mobile devices, released by Blancco Technology Group.

This is good news for mobile operators, OEMs and third-party logistics providers (3PLs) who, according to Counterpoint Research, have seen revenues for the used device market grow faster than the market for new devices. According to IDC, the worldwide refurbished phone market is estimated to be worth $52.7 billion by 2022.

Blancco’s study, titled “The Critical Importance of Consumer Trust in the Second-Hand Mobile Market,” proves the need to maintain consumer trust if the secondary mobile device market is to meet current expectations. In fact, 66 percent of respondents globally revealed some concern that data on their old devices might be accessed or compromised after trade-in. This mistrust among global consumers could be attributed in part to recent high-profile incidents of data misuse, such as the Facebook and Cambridge Analytica scandal.

“The secondary mobile device market is a huge success story,” said Russ Ernst, EVP, Products & Technology, Blancco. “Each of its major stakeholders – operators, OEMS and 3PLs – have so much more value to extract from it as more global consumers choose to sell or buy used equipment if they trust in the process of used device collection and redistribution. Our study makes it clear, however, device collections will accelerate only if operators, OEMs and 3PLs remain fiercely committed to data management and device erasure best-practices.”

Additional global findings

• 40 percent of global consumers experiencing a data breach would switch operator or OEM provider, while 54 percent of global consumers wouldn’t trust the brand and 49 percent wouldn’t use the company again
• Almost half (48 percent) of consumers would seek legal advice if they were to fall victim to a data breach after trading in an old device
• 59 percent of global respondents called for stronger regulation to ensure tighter data controls are implemented to prevent breaches of their personal information

Specific U.S-based findings

• 35 percent of respondents have never been offered the option to trade-in their device, the lowest percentage of any of the countries surveyed
• 68 percent of respondents said they’d consider trading in their old devices if there were tighter controls to ensure responsible data management
• 17 percent of respondents are concerned that the data on their old device might be compromised/accessed after trade-in, indicating a false sense of security

The need for tighter regulation for the secondary device market is highlighted by the sheer quantity of illegitimate mobile retail organizations currently looking to buy and sell used devices. These operations regularly buy and sell used devices from consumers without complying with any data security guidelines.

Interestingly, when consumers were asked where they would consider selling their used devices, 36 percent admitted they would prefer to sell them directly on eBay or Amazon rather than via mobile operators or specialist online trading sites where consumers have no assurances their data is being properly erased before the device is resold. These often-illegitimate, ungoverned practices undermine trust in the secondary device market and must be properly regulated to preserve and maintain consumer confidence.

“Without a common, mandated and regulated rule book for smartphone processing, the ecosystem will be subject to abuse and malicious attack,” Ernst said. “The current ecosystem is made up of multiple stakeholders that collect devices from various touchpoints and redistribute them to many other parties. Since the speed of device processing is the only critical success factor, and as more devices flood the market, the chances of data breaches or issues related to data misuse will become increasingly likely. The secondary device market remains an amazingly lucrative and exciting opportunity for everyone, but only if it retains full consumer confidence built on trust and data integrity.”