Korean giant Samsung is reportedly planning to start a refurbishment program by early next year that’ll see users spending less on Samsung’s Galaxy range of smartphones. According to a report by Reuters, Samsung is yet to confirm the program officially, though the report cites “a person with direct knowledge of the matter.” Besides the news of the program, other details about the program are still unknown. The scheme is essentially aimed at offering discounts on Samsung’s older flagship models like the Galaxy Note and the Galaxy S range. Other details about the program, however, remain scarce, such as the amount of discount that consumers might avail, or the countries where Samsung might implement the program.
The report further adds that Samsung is trying to maintain its recent high earnings streak after the Korean manufacturer restructured its mobile product line. The company wants to ensure that its operating margins are above “10 percent” to maximize cost efficiency. The report also suggests that reselling high-end smartphones at lower prices could help the company bolster profits in countries like India, where a majority of users cannot afford high price Samsung’s top-of-the-line smartphones.
The program could help Samsung generate additional revenue from older models that have been returned by users upgrading to newer models, while also bolster sales of its mid-tier offerings. Though the report also suggests that selling refurbished phones could stifle sales of Samsung’s other mid-tier offerings.
However, selling refurbished phones in India might not be a walk in a park for Samsung, as Apple wanted to do the same with refurbished iPhones. Though, the Indian government blatantly rejected Apple’s plans since it undermines the country’s “Make in India’ program, which encourages companies to manufacture and sell their products in the country.
As Apple’s iPhone growth going through a decline, the company is looking at new markets to increase sales. The strategy did work in China, where Apple’s sales saw a significant rise in 2014 and 2015.
The ability to sell refurbished phones in India would have helped Apple compete with the barrage of low-cost offerings from Xiaomi, Lenovo, along with a number of domestic manufacturers that already have a strong presence in the Indian market. Apple typically markets itself as an upscale brand offering an optimized ecosystem to attract consumers as opposed to competing on prices. India, however, is a different ball game, as the average selling price of phones is much lower than in China.