TOKYO, Nov 8 (Reuters) – For years Japanese shoppers have eagerly shelled out for the latest gadgets, but now the falling 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 fall of the Japanese currency to its lowest level in 32 years against the dollar has put a strain on consumers and accelerated a broader shift in spending in the world’s third-largest economy. Industry watchers say Japanese buyers have become more open to buying second-hand, 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 basic iPhone 14 later debuted 20% higher than the iPhone 13, although the US price held steady at $799. While the dollar has surged against global currencies this year, the yen has been particularly hard hit, falling 22%.
Employee 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 second-hand iPhone SE 2 in Tokyo’s Akihabara electronics district for less than a third.
“At over 100,000 yen, the iPhone 14 is too expensive and I just can’t afford it. It would be nice 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.
Apple declined to comment for this story. But in an annual regulatory filing last month, it said sales in Japan fell 9% in the year to September 24 due to the weak yen.
Apple’s chief financial officer Luca Maestri also admitted to analysts last month that the strong dollar had led to price increases for its products in some countries, but sales were still up double digits in Indonesia. , Vietnam and other markets facing currency issues.
Used smartphone sales rose nearly 15% in Japan to a record 2.1 million in the last fiscal year and are expected to hit 3.4 million by 2026, according to the market research firm technologies MM Research Institute.
100,000 YEN BARRIER
Taishin Chonan bought a second-hand iPhone 13 after the screen cracked on one of the two devices he carries around for personal use. The replacement has a higher resolution and better battery and camera than the iPhone 7 it was using.
“So far I have only bought new phones, this is my first time buying used phones,” the 23-year-old said. “New models are expensive.”
Even after the price hikes, the iPhone 14 sold in Japan is the cheapest among 37 countries when taxes are taken into account, the MM Research Institute said in a September survey. Further yen weakness could prompt Apple to raise prices again, the research firm said, which could reduce its market share by 50% in the Japanese smartphone market.
Prices for the latest iPhones are now above the 100,000 yen level, which is a “major psychological barrier” for many buyers, said Daisuke Inoue, chief executive of Belong Inc, a unit of trading house Itochu Corp. (8001.T) which sells used phones and tablets online.
Average sales at Belong’s Nicosuma e-commerce site have tripled since Apple raised prices in July compared to the previous three-month average, Inoue said. At the Belong operations center outside Tokyo, shipments of used phones were unpacked and sorted before being inspected, sorted and cleaned by rows of workers seated at long tables.
The phones were then photographed from multiple angles to be sold online. Belong uses Itochu’s global network to help source used devices from Japan and overseas based on the best prices, Inoue said.
Some of the devices are purchased from companies, such as tablets previously used for payments in cafes or screens in taxis, he said.
Many Japanese people have traditionally been wary of second-hand items, including electronics, but that is changing.
Marketplace site Mercari saw strong growth in used smartphone sales, while sales of home appliances and electronics also increased, a Mercari, Inc. (4385.T) said the spokesperson.
With Japan once again open to foreign tourists, the second-hand iPhone market is booming again.
Retail chain Iosys Co Ltd has seen an increase in foreign tourists buying second-hand iPhones over the past two months.
“The yen continues to weaken,” said Iosys executive Takashi Okuno. “This trend of visiting Japan and buying an iPhone is coming 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 Feast
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