Before you walk into a phone retail outlet  for a phone swap, ensure that you are not quick to anger and that you are an individual with few words. These are important because the response of the staff in charge might just push you over the edge.

In most cases, customers who wish to upgrade their current mobile gadgets through phone swap are stunned by the valuation of their phones. Nairametrics received its own share of the wow experience when an inquiry was recently conducted in two famous phone retail stores.

The black market has never had the upper hand in the sales of new phones and accessories. But when it comes to the sales of second-hand mobile products (aka London-used), it is a delight for those looking for favourable deals.

Bua group

Unfortunately, this is eating into the profit margins of small and medium phone retail businesses in Computer Village and elsewhere.

Computer Village, as known to many people, is an Information and Communications Technology (ICT) accessory market located in Ikeja, the capital of Lagos State, Nigeria. The market is arguably the largest ICT accessory market in Africa. So, it is understandable that it houses two of of the biggest names in phone retailing – Slot and 3C Hub.

Why people swap phones

Phone swapping became popular when Slot entered the phone and accessories market in Nigeria, providing customers the opportunity of swapping their used phones for brand new ones. But it came with a catch.

Customers are advised to cough out some extra cash along with their used phones to get brand new phones that match the total amount of the extra cash and their used phones. Phone outlets value the used phones, determine the market price, and ask customers to add the balance to purchase the new products.

But the valuation soon discouraged customers from engaging in the transaction as it didn’t create a win-win feeling for them. Now, customers prefer to sell in the black market, then return to any of these phone retailers to purchase their preferred phones.

Valuation’s role in black market rise

The valuation method among phone retail companies is rated poorly by customers, and this has reduced the prospect of customers reaching phone swap deals with these companies – the discussions often end after each enquiry by customers.

Coronation Research

Phone retail companies are losing this market segment to the black market because of what some customers tag, “greed and exploitative measures” by known phone retailers.

During the above-mentioned visit to these phone stores, Nairametrics learned that there are no universal methods of valuation among retail companies; to each, its own procedure. For 3C Hub, there is no actual process of determining the condition of a phone.

When the staff in charge of phone swap was handed an Infinix Zero 4 smartphone, he just ran a quick visual appraisal and named a price without assessing the phone’s performance. In his ‘professional’ assessment, the phone that was purchased brand-new for N75,000 in 2017, was valued at N10,000,  two years after.

While the Slot representative went a little further compared to her colleague at 3C Hub, the retail company’s valuation price was just a little above the asking price of 3C Hub. She scribbled some incoherent calculations, then offered to swap the smartphone for N14,000.

Slot’s offer came after the staff made it known that the phone’s screen had a fault. If Slot is willing to offer N14,000 for a phone with a faulty screen and 3C Hub offers N10,000 for the same smartphone, without checking for faults or damages, what then is the perfect valuation process?

Mr Jide Ogunrinde, the Co-Founder of WiFix which is a repair and retail company, gave a traditional assessment which is also used in the black market.

“We value phones while considering the value of the brand-new phone, used value and also based on the neatness and cleanliness and also the functionality of the phone.”

But Mr Ogunrinde’s insight is different compared to what was observed at Slot and 3C Hub.

The absence of a universal valuation method births confusion which pushes customers to the black market where buyers need just about fifteen minutes to confirm a previous online/offline discussion about the phone’s functionality. Ogunrinde also believed that black market gives more value when it comes to reselling smartphones.

“For customers, the black market is better because they can sell for a higher value. Most times, we do advise them to use black market options because it’s better for them. Also, retail companies are mainly interested in high end phones.”

Why retail companies offer less value than black market

For customers, the valuation process of phone retail shops is nothing to write home about. But these tech startups take pride in their procedures, believing that their offering prices are the best value customers can get despite the availability of black market options.

“Customers prefer to do so because they can get better value for their phones. Most retailers will purchase phones at a very reduced price because they have to resell and make profits.” -Ogunrinde 

And this is exactly what differentiates retail companies from the black market – the fact that they still intend to make profit after purchasing the product. In the black market, the buyer could purchase it for personal use.

Negativity associated with the black market

Most black market prices are usually against approved market prices, unlike what obtains with the organised phone retailers. And this is one of the major problems associated with the black market.

Note although someone cannot be sure if the prices offered by phone retail outlets are approved or not, there are usually similarities in their asking prices. However, there’s no similarity in their valuation methods.

Consequently, the black market always has doubts trailing it, unlike phone retailers who tend to  apply the market-accepted procedure highlighted by Ogunrinde of WiFix. In other words, phone retailers are very much concerned about protecting their brands. And one of the methods they deploy to this effect is by conducting thorough checks on any phone and accessories within their stores.

This is why customers are eager and confident to do business with phone retailers such as Slot and 3C Hub.  However, as already stated, their valuation method for products is pushing customers to the “uncertain” black market.

In the black market, the history and reviews of the seller are unknown, as most only converse with buyers for the first time on social media platforms before transactions take place. As a result, there are greater chances of customers getting defrauded.

“The major advantage in selling to retail companies is that you avoid getting defrauded.” -Ogunrinde

Can phone retailers compete against black market?

Although Ogunrinde is pleased with how phone retailers conduct their phone swap business segments, he thinks the valuation process can be improved upon in order to curb the takeover threat posed by black market operators.

“Generally, the process is good but can still be improved upon. Because of the trust issues, retail companies only offer swap services for phones purchased from them.

Meanwhile, in efforts to better compete against the black market, WiFix is launching an online platform that will help it claim a share from the phone swap market segment.

“We are looking to develop a swap service process that can be done online”.

Note that, for every business transaction conducted by these phone retail companies, taxes are collected. But for the transaction in the black market, it’s a secret deal done behind closed doors. No one knows, so the government cannot commercialise the activities to boost revenue.

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