While smartphones have traditionally led the way when it comes to connected devices, the rapid rise of hearables and wearables and their growing popularity amongst tech savvy consumers is widening the breadth of consumer connected devices. According to the International Data Corporation (IDC), in 2021 the wearables market grew 20 percent year over year with total shipments reaching 533 million units.
With more hearable and wearable product options being introduced to the market at a variety of price points, retailers can offer customers more opportunities to upgrade to the next generation of smart watches, fitness trackers, earbuds, etc. It’s a great time to begin cultivating the secondary device ecosystem for these devices, using the thriving trade-in market for smartphones as the blueprint for capturing the latent value in pre-owned products while providing incentives for customers to upgrade to new devices.
Factors Driving Market Growth
The growth in the hearables and wearables markets over the last two years is, in part, an outcome of the COVID-19 pandemic, which precipitated a shift in consumer behavior and habits. The pivot to working from home, increased consumption of digital and audio media, and rise of tele-health and virtual fitness have led to more people exploring the possibilities and advantages these products offer.
It’s also a result of technological advancements. While smartphones have been the epicenter of a connected lifestyle, the next era of interconnectedness will leverage 5G, AI and the internet of things (IoT) to create a more central role for wearable technology. The cumulative progress of R&D investments will also bring about products with longer battery life, more features and ease of use and better ergonomic designs.
Another factor that will continue to drive growth of hearables and wearables is sustainability. According to WEEE Forum, the worldwide mountain of electronic waste in 2021 was predicted to be 57.4 million metric tons — that’s greater than the weight of the Great Wall of China.
The question of sustainability is top of mind for many consumers who are increasingly concerned with the lifespan of their electronic devices and how they can reduce the amount of toxic e-waste that finds its way into landfills. In fact, 75 percent of consumers would be more likely to trade in their electronic device if they knew it would be properly reused or recycled, according to Assurant research.
Keys to a Successful Trade-In Program
In light of these trends, now is an opportune moment to begin taking advantage of the secondary market for hearable and wearable offerings. Building on the lessons from the used smartphone market, retailers can expand the scope of their trade-in programs to include hearable and wearable devices. And in doing so, provide incremental value to their customers, accelerate the adoption and upgrade to newer generations, improve their customers’ shopping experience and create new revenue and profitability centers as well.
This launch of hearable and wearable trade-in can be successfully accomplished so long as the retailer’s current trade-in solution is built on a solid foundation of technology, logistics and secondary market capabilities. The software used to power the current in-store and online trade-in journey must be adapted to support the unique aspects of wearable and hearable device trade-in.
Additionally, the downstream logistics and device operations centers must be equipped to securely manage and destroy all residual customer proprietary data stored on these devices. And of course, the operations center must also be equipped to effectively and safely clean the units in preparation for downstream reuse by a new owner. Lastly new channels of distribution need to be established to effectively shepherd these units into and through the secondary markets to a new owner in a way that reclaims maximum value from the inventory.
Millennials and Generation Xer’s are Most Likely to Upgrade
As you might expect, Millennials and Gen Xer’s are the most likely to buy a newer version of their connected devices. Seventy-nine percent of Millennials and 77 percent of Generation Xer’s said they are highly or somewhat likely to upgrade to newer models.
They aren’t the only customers to target for trade-in promotions, however. Across generations people have become accustomed to upgrading their smartphones as new models become available. That same behavior is starting to transfer to connected products.
Among those who own a connected product, the likelihood of upgrading to a newer version is more than 50 percent for a broad range of product categories. This is especially true within product families, as consumers tend to become loyal to one brand. Repurchase intent is highest for the same brand or type of product.
Given recent inflationary pressures, being able to transfer value from existing hearables and wearables towards the purchase of new models could be a timely incentive to get customers to upgrade. Combined with the knowledge that they can also help alleviate the growing e-waste problem, consumers have never been more primed to trade in.