The astronomical hike in the price of brand-new phones has provoked the never-ending demand for used phones popularly known as “London use” in Nigeria.
If you are looking for a lucrative thrift business in Nigeria, then selling used phones whether refurbished or secondhand is a great choice worth your sweat.
Today, we are going to discuss the procedures of launching a successful used phone business in Nigeria down to the working principle of the thrift business.
Table of Contents
The Working System Behind the Used Phone Business in Nigeria
There are two ways smartphones find their way into the thrift market. One, in the UK/US: the majority of the users don’t use smartphones to the core unlike here in Nigeria where we use a phone for 6 years while having undergone a series of repairs and replacements. But in the UK/US, give or take a year they will dispose of the device and purchase a new one.
Another thing is they can’t withstand the sight of their mobile phones with cosmetic or physical damages, it irritates them so they quickly put them up in the thrift market where interested buyers, mostly Africans come to purchase them.
Two, there are brand new phones that are faulty from the manufacturer’s end, these phones are sent back to the manufactory where they are diagnosed and refurbished then put up in the thrift market.
Refurbished or remodeled phones are a bit classy and costlier than second-hand phones since they are second to new and have a warranty.
Now let’s look at categories of phones in the thrift market.
- Second-Hand Phones: these are phones that have already been used for either a long or a short period before being put up for sale. The worth of second-hand phones depends on the brand, neatness, and functionality. You can’t compare the price of an iPhone 14 with battery issues with one that hasn’t.
- Refurbished/remodeled phones: we like to call these–brand new second-hand phones because though they are sold together with second-hand phones, they are strikingly different. Refurbished phones are brand new phones that are faulty from the manufacturer, these phones are then returned to the company where they undergo rigid repair and remodeling. After the problems are resolved, they are sold off to those in the smartphone thrift business. Refurbished phones are cleaner and more costly with all the original accessories to spare, it’s more like buying a new phone.
Here are the most popular used phones In Nigeria
Before starting a used phone business in Nigeria it’s appropriate you know the kind of phones that are common and prosperous.
- Oppo,
- Huawei
- Gionee
- Vivo
- Samsung
- Xiaomi
- Infinix
- Tecno
- Itel
- iPhone(apple)
Step-by-Step Guide on How to Start a Used Phone Business in Nigeria.
#1. Determine Your Mode of Operation.
When it comes to the used phone business in Nigeria there are various modes of operation at your Beck and call.
- Retail Store Model: this involves opening a landed or physical store where customers can come in and patronize your business.
- Online store model: this model involves selling used phones online through online marketplaces like Jumia, Jiji, Konga, Instagram, WhatsApp, and Facebook marketplace.
- Hybrid model: this model involves combining both the retail and online store models. You simply attend to customers in person or on screen. Combining both the Retail Store Model and Online Marketplace Model is a great way to reach a wider audience and maximize profits.
- Reseller Model: in this model, you would procure used phones in bulk from sources(either physical or online stores) at a cheaper rate and then resell them to your customers at a profitable rate.
- Wholesaler Model: unlike in the retailer model where you buy to sell to customers, here, you procure used phones in super bulk and resell them to other retailers or resellers, this means you are a mini supplier whom the retailers are looking to for supply. You must know that this model is capital intensive which requires huge capital to purchase more items.
- Miscellaneous model: this is majorly for those seeking to diversify their income by partaking in anything related to used phones. To get a better perspective, say you are into used phones, you can include phone repair services plus selling of other accessories like earpieces, chargers, batteries, and sensors. Anyone who comes for a phone purchase has a high tendency to purchase other things.
#2. Determine the Phone Brand you Want to Sell.
First thing first, you need to conduct research regarding the types of used that are higher in appeal. For example, we all know that iPhone, Samsung, and Tecno brands are widespread in Nigeria. So It will make sense to specialize in these brands. There are numerous profitable brands in Nigeria, but for starters with a lower-than-average capital — specializing in all kinds of used phones is going to burn you out financially. Instead, focusing on a few brands that are highly in demand will be the best choice.
#3. Establish Your Chain of Supply
After determining the type of phone brand you want to sell, the next thing is to find reliable sources where you can procure second-hand phones in good condition. These sources could be either face-to-face or via third-party online marketplaces like Alibaba, Jiji, Amazon, OLX, Swampa, Jumia, and a whole bunch of others.
On the lee side, the face-to-face mode of supply involves procuring used phones from reputable wholesale marketers within Nigeria—say Computer Village or Alaba market, Lagos, these are popular hubs for used phones. You can make contact with other trusted hubs in Nigeria but make sure to get the value for your money.
We almost left out the one common way of acquiring used phones, which is direct importation from the United States and the United Kingdom. There you will find a wide range of both new, refurbished, and fairly used phones. Just establish contact with a reliable supplier and you are good to go.
Tips
Before you buy any phones from a supplier ensure the following:
- Check if the phones are in good working condition; and that the phone meets the required technical specifications. Check IMEI for the phone’s originality, check the battery’s health, and inspect carefully for any damages or cosmetic imperfections.
- In case you are purchasing online, check customers’ reviews about the suppliers, so you can judge if the supplier or the online store is legit and dependable.
- Do your findings about the price ranges across different marketplaces to ensure you are not being cheated.
#4. Draft Plans for Your Business
You must make plans for your business if you want to attain the height you desire.
You must make advance plans, like, the estimated capital to start and keep the business running, the range of profit you expect to make, the tendency for loss, possible risks and ways to cushion them, plans for expansion, and diversification, to mention a few.
In summary, a good business plan is like a roadmap, it helps you navigate safely through the pitfalls.
#5. Choose a Suitable Location for Your Retail Store
You have settled for a retail(physical)store model now what next? Your very next step could very well be your descent. Here are factors to consider when choosing a location for your used phone business:
- The intended location should be safe and secured to avoid any theft or damage to properties. If you must have a store within the location, ensure all entrances are heavily secured, install security lights, and leave them on through the night.
- Ensure that the location is nearest to the target customers. It should be closer to complexes, plazas, and even to other competitive services like yours or related to mobile phones(say phone repairs, network service providers). Generally, the store should be closest to a place with high foot traffic where many eyes can see your business.
- The location should be spacious and accessible to customers and suppliers.
- Pick a location that is budget-friendly and has all the necessary utilities (light and water supply) in place.
- If you are just starting, ensure that the location isn’t too far from your residence to mitigate transport expenses.
- This might read counterintuitive, but we would advise that the chosen location should be closer to your competitors here is why. You are likely closer to your potential customers than ever. Your competitors’ customers with expectations in price and quality might one day decide to try your shop for quality and price comparison. And if your brand is of more quality and cheaper, then, congrats you now have a new customer.
If you however decided to set up an online shop then this would be handy…..
You can choose to either create your e-commerce store from scratch or sign up for online marketplaces like jIji, eBay, Alibaba, Jumia, Konga, and other online stores. These are analogous to the bodily retail store only that it’s on screen, not land.
#6. Your Business Should be Legally Approved
No business is an island in Nigeria. Registering your used phone trade makes your business legal to operate. Being legally approved makes your customers see you as a trustworthy and profound businessman. Before you kick start that business you might want to ask around about the procedures to operate legally in Nigeria and also the necessary permits required.
#7. Promote your Business.
You need to promote your business to reach more target markets and make more sales. This can be done the traditional way: billboards, flyers, radio or TV stations, and newspapers. Or it could be online via the internet: social media platforms such as Facebook, WhatsApp, Instagram, TikTok, or even via your websites. You can also promote your business on online marketplaces like Jijí, eBay, Amazon, and Konga. Above all, ensure you offer quality services that way, your business will advertise itself.
Phone Refurbishment–Another Cool Way to Make Money.
As we pointed out on the miscellaneous model, you can include other phone-related services jointly with the sale of used phones. Although phone refurbishment works differently. Here, you source for damaged phones in bulk and hire a trusted technician to repair the phone while you provide the necessary parts required.
After the phones have been checked and repaired, you can now add them to your collection of second-hand phones where you sell them at a profitable price. To save you the headache, you can either learn how to repair phones or hire someone full-time to reduce the likelihood of shrewdness.
Related: How to Buy a Business in Nigeria
Challenges Faced in the Used Phone Business in Nigeria.
- Naira to the dollar exchange rate: The exchange rate has a ripple effect on the prices of used phones in Nigeria. When our currency depreciates, imports become more expensive hence reducing the demand for such a brand.
- Customers’ tastes and preferences:
Consumer tastes are influenced by market trends. If a company releases a new version of an existing phone, due to the demand for the newer version, the marketers will be forced to lower the price of the older version to clear out the stock so they can procure the newer version.
This price reduction could impact their profit especially if they have a significant amount of unsold stock when the new model launches.
- Import traffic: Government regulation can have a significant impact on the used phone business in Nigeria. High import tariffs increase the cost of used phones making it more difficult for businesses to sell at a competitive price.
- Possible thievery: there are chances that the used phones you procure are stolen or counterfeit. If customers become aware of this dishonest act, it damages your reputation and may also lead to jail time.
- Economic Factor: Finally, economic maladies such as low-income levels, unemployment, and recession can greatly clip down the purchasing power of customers since the price of your used phone has gone up astronomically.
Conclusion
Brand-new phones are costly, so most Nigerians have resorted to second-hand phones, making used phones trade in Nigeria very lucrative.
Before Starting the used phone business you will want to choose the model you want to employ: you can choose to operate a physical store or online store or a hybrid where you run both offline and online stores.
As with all business, there isn’t a risk-free ride to success. You will encounter theft and fraud. Your goods will be damaged or seized, we can only mention so few.
On your part, be sure to do some research to better understand the risks therein and how to set up a buffer to mitigate these risks.
Frequently Asked Questions:
What are the key factors to consider before starting a used phone business in Nigeria?
Before starting a used phone business, it’s crucial to consider factors such as market demand, competition analysis, sourcing reliable suppliers, understanding legal and regulatory requirements, and establishing an achievable marketing strategy.
How can I ensure the quality of used phones I sell in my business?
Ensuring quality involves thorough testing and inspection of used phones, ensuring you are giving warranties or guarantees, and sourcing from reputable suppliers or certified refurbishers.
Are there opportunities for growth and expansion in the used phone market in Nigeria?
Yes, there are growth opportunities, such as offering value-added services like phone repairs or accessories sales.
What are the potential challenges faced by used phone businesses in Nigeria?
Challenges may include–fluctuations in market demand, competition, counterfeit products, regulatory compliance issues, and supply chain disruptions.