Samsung plans to sell refurbished smartphones in U.S.

Samsung plans to sell refurbished smartphones in U.S.. September. 06, 2016 06:59. by 김지현기자 jhk85@donga.com. Samsung Electronics will branch out into the refurbished phone market. A refurbished cell phone refers to a used one or a model that has been restored as a fairly new model at a highly discounted price, after being returned to the manufacturer as it failed to function properly.

According to the industry insiders on Monday, the company’s online shopping mall in the U.S. started to sell refurbished Galaxy smartphones including S6 series, Note 4, and S5 on Friday local time. As part of the refurbishment program, the devices, which are directly restored by Samsung engineers, are all sold with brand new earphones and chargers in the box along with the same one-year warranty that new devices come with.

"Many of the Galaxy Note7 phones that were returned to the company after battery fires would be sold as refurbished phones to reduce recall costs," Samsung's senior officer said. Thus, it is expected that 1.4 million units that are used for about 10 days and most of products in corporate and mobile providers’ inventory will be sold as refurbished phones.

However, the point of sales will be next year after the recall crisis calms down and sales of the latest Galaxy Note 7 are renewed.

The recalled Galaxy Note7 will be sold in emerging markets such as India and Indonesia after being tested and featuring new parts at a highly discounted price, which is 25 to 35 percent lower than the launch price. “We didn’t have much time, but the company will review the possibility (of selling refurbished phone),” Koh Dong-jin, head of Samsung Electronics’ smartphone business, told reporters at a news conference on Friday.

It had been widely expected that the company will enter into the refurbished phone market since March when it announced its plan to provide "Galaxy Club," a replacement program of its high-end smartphones. Under the program, subscribers would pay a monthly fee of 7,700 won (6.96 U.S. dollars) in addition to the cost of the device. They can upgrade to a new Galaxy smartphone after 12 months under the plan, in exchange for the original device they purchased. Many people strongly predict that Samsung would then re-sell these phones returned from the Galaxy Club at a lower price as refurbished phones.

The reason that Samsung starts to sell refurbished phones along with Apple is because the company believes that it would be better to lower the entry barrier of premium smartphone in emerging markets rather than engaging in a price war with Chinese rivals. Research firm Strategy Analytics said that the global refurbished phone market will grow by 14 percent year-on-year in 2016.