As the yen falls in value, gadget-obsessed Japan seeks out used iPhones

For years, Japanese consumers gladly paid for the latest electronics, but a falling yen has placed new iPhones out of reach for some, sparking a booming secondhand trade in a key market for Apple Inc.

The Japanese yen's drop to a 32-year low versus the US dollar has squeezed consumers and hastened a broader spending shift in the world's third largest economy. According to industry observers, Japan's customers have become more open to buying used, thanks in part to the rise of online auction sites.

Apple increased the price of the entry-level iPhone 13 by over a fifth in July. The basic iPhone 14 later arrived at a 20% higher price than the iPhone 13, despite the fact that the US price remained constant at $799. While the dollar has risen in value against other currencies this year, the yen has suffered the most, falling 22%.

Kaoru Nagase, a salaryman, needed a new phone but couldn't justify the price of an iPhone 14, which starts at 119,800 yen ($814). Instead, he paid less than a third of that for a secondhand iPhone SE 2 in Tokyo's Akihabara electronics area.

"At much than 100,000 yen, the iPhone 14 is prohibitively pricey for me." "It'd be fine if the battery lasted ten years," he explained. He described the iPhone SE 2, which was released in 2020 but lacked the dual rear camera of the iPhone 14, as a "excellent mix" of price and features.

Apple has declined to comment for this article. However, in an annual regulatory filing last month, it stated that sales in Japan decreased 9% in the fiscal year ended September 24 due to the yen's depreciation.

Apple Chief Financial Officer Luca Maestri also admitted to analysts last month that the strong dollar had resulted in price rises for its products in some regions, but sales had nonetheless increased by double digits in Indonesia, Vietnam, and other currency-challenged economies.

According to technology industry research firm MM Research Institute, used smartphone sales in Japan increased over 15% to a record 2.1 million in the previous fiscal year and are expected to reach 3.4 million by 2026.

Taishin Chonan purchased a used iPhone 13 after the screen on one of his two personal smartphones cracked. The replacement offers a greater resolution, a longer battery life, and a better camera than the iPhone 7.

"I'd only ever bought new phones up until now; this is my first time buying secondhand," the 23-year-old explained. "The latest models are pricey."

Even after the price increases, the iPhone 14 sold in Japan is the cheapest among 37 nations when taxes are factored in, according to a September poll conducted by MM Research Institute. More yen depreciation, according to the research group, could push Apple to boost prices again, potentially reducing its substantial 50% share of Japan's smartphone market.

According to Daisuke Inoue, chief executive of Belong Inc, a company of trading house Itochu Corp. that sells old phones and tablets online, the latest iPhones are now priced beyond the 100,000 yen level, which is a "huge psychological barrier" for many customers.

According to Inoue, average sales on Belong's Nicosuma e-commerce site have tripled since Apple boosted prices in July compared to the preceding three months. Shipments of used phones were unboxed and sorted at Belong's operations centre outside of Tokyo before being inspected, graded, and cleaned by rows of workers at long tables.

The phones were then photographed from various angles for online sale. According to Inoue, Belong leverages Itochu's global network to help it find old devices both in Japan and elsewhere, depending on where the greatest pricing are.

Some of the gadgets are purchased from businesses, such as tablets previously used for payment at cafes or taxi screens, he explained.

Many Japanese people have always been sceptical of used goods, especially electronics, but this is changing.

According to a Mercari, Inc representative, the marketplace site has witnessed tremendous growth in sales of used cellphones, as well as sales of household appliances and electronics.

With Japan reopening to international tourists, the used iPhone industry is gaining momentum.

In the previous two months, retail chain Iosys Co Ltd has witnessed an increase in international tourists purchasing used iPhones.

"The yen just keeps dropping," said Takashi Okuno, CEO of Iosys. "The trend of visiting Japan and purchasing an iPhone is returning."

(source : Reuters)