As yen tumbles, gadget-loving Japan goes for secondhand iPhones

TOKYO, Nov 8 (Reuters) – For years, Japanese shoppers have been shelling out for the latest gadgets, but now a tumbling yen has put new iPhones out of reach for some and sparked a growing second-hand trade in a major market for Apple Inc ( AAPL ). O).

The Japanese currency’s fall to a 32-year low against the dollar has squeezed consumers and accelerated a broader spending shift in the world’s No.3 economy. Industry observers say Japanese shoppers are becoming more open to buying secondhand, thanks in part to the rise of online auction sites.

In July, Apple increased the price of the entry-level iPhone 13 by almost a fifth. The base iPhone 14 later debuted at 20% more than the iPhone 13, although the US price remained flat at $799. While the dollar has risen against global currencies this year, the yen has been particularly hard hit, falling 22%.

Salaryman Kaoru Nagase wanted a new phone but couldn’t justify the price of an iPhone 14, which starts at 119,800 yen ($814). Instead, he bought a used iPhone SE 2 in Tokyo’s Akihabara electronics district for less than a third of that.

“At more than 100,000 yen, the iPhone 14 is too expensive and I simply cannot afford it. It would be good if the battery lasted 10 years,” he said. The iPhone SE 2, released in 2020 but without the dual rear camera of the iPhone 14, was a “good balance” of cost and features, he said.

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Apple declined to comment for this story. But in an annual regulatory filing last month, it said Japan sales fell 9% in the year ended Sept. 24 due to the weakness of the yen.

Apple Chief Financial Officer Luca Maestri also acknowledged to analysts last month that the strong dollar led to price increases for its products in some countries, but sales still grew by double digits in Indonesia, Vietnam and other markets that face currency challenges.

Sales of used smartphones grew nearly 15% in Japan to a record 2.1 million last financial year and are likely to reach 3.4 million by 2026, according to technology market research firm MM Research Institute.

100,000 YEN BARRIER

Taishin Chonan bought a used iPhone 13 after the screen cracked on one of the two devices he carries for personal use. The replacement has higher resolution and a better battery and camera than the iPhone 7 he used.

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“Until now I’ve only bought new phones, this is my first used one,” said the 23-year-old. “The new models are expensive.”

Even after the price increases, the iPhone 14 sold in Japan is the cheapest among 37 countries when tax is taken into account, MM Research Institute said in a September survey. More yen weakness could prompt Apple to raise prices again, the research firm said, potentially taking its strong 50% share of the Japanese smartphone market.

The latest iPhones are now priced above the 100,000 yen level, which is a “big psychological barrier” for many shoppers, said Daisuke Inoue, chief executive of Belong Inc, a unit of trading house Itochu Corp. and pills online.

Average sales on Belong’s Nicosuma e-commerce site tripled because Apple raised prices in July compared to the average over the previous three months, Inoue said. At Belong’s operations center outside Tokyo, shipments of used phones were removed and sorted before being inspected, classified and cleaned by rows of workers at long tables.

The phones were then photographed from different angles for sale online. Belong uses Itochu’s global network to help it source used devices both in Japan and overseas, depending on where the best prices are, Inoue said.

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Some of the devices are bought by businesses, such as tablets previously used for payments in cafes or displays in taxis, he said.

Many Japanese are traditionally wary of second-hand items, including electronics, but that is changing.

Marketplace site Mercari saw strong growth in sales of used smartphones, while sales of home appliances and electronics also grew, a Mercari, Inc ( 4385.T ) spokesman said.

With Japan reopening to foreign tourists, the second-hand iPhone market is getting another boost.

Retail chain Iosys Co Ltd has seen a surge in foreign tourists buying used iPhones in the past two months.

“The yen just keeps weakening,” said Iosys executive Takashi Okuno. “That trend of visiting Japan and buying an iPhone is back.”

($1 = 147.1200 Yen)

Additional reporting by Kohei Miyazaki in Zama, Japan and Paresh Dave in San Francisco; Written by David Dolan; Editing by Lincoln Fest

Our standards: The Thomson Reuters Trust Principles.

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