Thinking of secondary market phones? How to buy and what to avoid.

There are two routes your company can go when looking to purchase phones for your employees.  You can go through the normal carrier 

process which requires multi-year contracts, long wait times to upgrade, high deductibles for broken or lost phones, early termination liabilities "ETL".   The other way is through the secondary market.  Many companies do not realize that there is a very large market for refurbish devices on the secondary market.  

The secondary market can be a great alternative for low cost, contract free devices. New releases of popular handsets ensure availability and attractive pricing for previous releases of these same devices on the secondary market.

There are a few things you need to know and some pitfalls to avoid when buying on the secondary market:

Device Grades

• Grade A: Grade "A" should deliver a device that appears like new.
• Grade B: Grade "B" allows for moderate surface scratches etc.

What comes with the phones?

When ordering from a supplier make sure you specify what comes with the device.  The final price of the device will be determined by whats included.  If you get a "too good to be price", they will send you a phone and battery and nothing else.   You need to specify the things included:

Accessories.

• Battery
• Power cord - Ask if it is a factory unit or a Chinese produced replacement  (The Chinese produced unit will save you about $10/unit)
• Factory box
• Factory instructions
• Factory ear bud head phones. 

Best Practices

Standardize on a device that is extremely popular in the market place and appears to offer longevity. This will help ensure reorder availability and price competitiveness in the secondary market. The Apple iPhone current falls into this category but, the Samsung Galaxy S will follow suit as they are following the same new release structure as Apple.

• Order in bulk.  If you know your going to need 200 or 500 phones in then next 3 months, order them all at once to negotiate a better price.
• Get an extended warranty.  If you order in bulk you can negotiate and extend the warranty period. 
• Get the most current software release.  If you do not specify this, you will get a variety of releases.  If you specify this in your agreement you will save a lot of time having to update devices.
• Unlocked phones.  Be sure to request that the supplier provides unlocked devices.  This will allow you to use the phones on different carriers for flexibility. 
• Specify the carriers you want to use the phones with.  Each carrier operates on different platforms.  An Sprint Iphone will not work on Verizon's network etc..
• Testing - Specify that the supplier provides tested devices.  Have your vendor test the camera, switches and primary features. 
• Return policy - Make sure your agreement specifies that if a device does not meet your criteria or is not working they will provide a free replacement and pay for shipping. 
• Accessories - be sure to specify the accessories that come with the phone.  Battery, power cords, original box, instructions etc...
• Reputable supplier - make sure to ask the vendor how long they have been in business, how many clients and phones do they sell and ask for a few references. 

If you go this route, order a quantity of cold SIM cards from your carrier.  They can be inserted into the phones and will be come active when the phone is used.  

In summary, there are many benefits to ordering on the secondary market.

• Price- You can purchase an A grade Iphone 4s and Samsung Galaxy S3 for approximately $135-$175 depending on accessories.
• Flexibility - By getting an unlocked device, you can use it on more than one network.
• Reduced carrier costs and no contract pricing. Since the carrier is not subsidizing a $600-800 device, You can get a month to month plan from your carrier for less money and no ETLs.

The downsides are very small if you follow the best practices above or work with a company that has experience working with various secondary market suppliers.