We have been keeping a keen eye on trading activity this holiday season, watching for seasonal trends and paying special attention to the way this year's economic slowdown is affecting our industry. While we know that the market is more restrained this season than it was in 2007, we have not seen the kind of sharp drops one might have expected to see in a year of consumer doom and gloom.
Some definite trends have emerged in the statistics generated between early October and the last week of November this year. Trades on gsmExchange (the individual listings of phones for sale and phones requested) are a good indicator of market activity. In the same time period in 2007, 54% of the trades posted on our trading floor were requests from buyers and 46% were offers from sellers. We now have 54% of traders selling and 46% buying, indicating that there is less buying going on than last year.
Another telling statistic is the number of phones offered or requested per trade. We have seen the number of phones offered in each listing drop by 11% since 2007, and the quantity of handsets requested per listing has fallen by 23%. So, if last year companies were looking to buy an average of 1,300 phones at a time, this year they are buying approximately 1,000.
This supports the anecdotal evidence we have gathered that suggests traders are taking far fewer risks this year, and scaling down the volume of their business in the face of uncertain returns during the holiday season. Maintaining liquidity seems to be a bigger priority for wholesalers than aiming for
The worldwide credit crunch is also a factor for traders, who rely on credit to fund the big purchases they make on a regular basis. A reduction in access to credit globally means that traders may be forced to reduce the size of the deals they are doing. Demand from the end consumer may also turn out to be lower this Christmas than last year.
The reduction in quantities could suggest that wholesalers are betting that consumers, who are also feeling pinched and whose credit card limits are lower than ever, will not be spending as much on mobile phones this season.
A decidedly upward trend is the average price of the handsets being traded – up 8% from 2007. This upswing mirrors the growing popularity in smartphones that we have observed this year.
At the end of November, four of the top five requested phones were smartphones, including the Apple 3G iPhone 8GB and 16GB, the Nokia N95 8GB and the BlackBerry Bold. During the same period last year, just two of the top five phones were smartphones.
A mid-range phone that seems to have weathered the downturn very well is the Nokia 6300; it made a strong showing in both 2007 and 2008. While its price has decreased, it remains incredibly popular. At the budget end of the spectrum, the number of phones under 100 remained consistent from year to year (four out of the top 10).
In terms of market share among the top seven manufacturers, Nokia continues to lead the market with 50%. Apple is strong, with twice as many requests for iPhones this holiday season. Another winner is HTC, whose share has tripled, clearly boosted by its G1 Google Android phone. Motorola has less to celebrate this season, with its market trading share shrinking by half.
In spite of the decrease in certain types of trading, we have observed a general increase in activity on gsmExchange. The number of trades is up 24% from the same period last year. I think we have to consider that our current traders are more vigilant than ever when looking for competitive prices and profitable deals. This kind of shopping around benefits our platform and we hope that it invigorates mobile phone trading.
Essam Bishara is the founder and CEO of gsmExchange.com, a mobile phones wholesale trading platform.