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Supply Chain Strategy Changes Ahead for the High-Tech Aftermarket

Companies operating post-sales supply chains may need to adjust the types of services they provide or the customer segments they target in order to keep pace with the industry.

For the past decade, the high-tech aftermarket has been fueled by rapid product innovation and high initial costs of goods in the smartphone and tablet market. Today, increasing competition, lower costs and less dramatic product innovation are beginning to impact the high-tech aftermarket.

The connected home has become a reality in the United States, with connected devices now outnumbering US citizens. Broadband penetration, smart TVs, and WiFi-enabled household electronics have all factored into the growth of connected devices.

However, tablets and smartphones have been the driving force behind the growth. At one time, smartphones and tablets represented a large financial and, in some cases, contractual investment for many consumers. Therefore, shoppers began looking for used options to meet their electronics needs and started exploring cheap repair opportunities for issues such as cracked screens.

Innovators and early adopters helped resellers and handset manufacturers meet this demand.

User adoption of smartphones and tablets has been fueled by increased competition among consumer electronics manufacturers for share of wallet, which has led to general price reductions for these goods. Recently, IDC reported that the average selling price (ASP) of smartphones has decreased 26 percent ($116) over the last two years — the company released similar findings for the tablet market, as well.

Partially due to the drop in ASP, smartphones finally eclipsed feature phones in total global shipments this year — further proof of their increased accessibility to a broader audience. To cash in on the growth of smartphones and aftermarket sales, telecommunications companies have started to launch replacement plans that allow subscribers to upgrade to the latest model smartphone for a small monthly subsidy, and it appears that many consumer electronics manufacturers are jumping on the trade-in bandwagon, as well.

While companies providing aftermarket services have not traditionally focused exclusively on smartphones and tablets, these two product categories comprise a significant portion of the market. Companies in this space may also need to need to offer a broader range of services to continue to grow along with the increasing number of consumer electronics categories that may provide additional sources of revenue and prompt increased high-tech aftermarket sales in developed countries. Additionally, operators of post-sales supply chains may benefit from looking beyond developed markets to identify customers seeking aftermarket goods, which will require more sophisticated post-sales supply chains in order to succeed.

As high-tech manufacturers and aftermarket service companies evaluate their business plans and upcoming product launches, it's important to consider these evolutions in the aftermarket and make the right adjustments to their supply chain strategies in order to deliver a positive customer experience, drive brand loyalty, and capture new sales opportunities.

2 comments on “Supply Chain Strategy Changes Ahead for the High-Tech Aftermarket

  1. FLYINGSCOT
    October 12, 2013

    Do you really think there is big growth in the number of after market repair facilities for “throw away” gadgets.  I have always struggled to find decent repair facilities in Europe for phones and tablets and had come to the conclusion that we are now living in a break and dump community.  I truly hope this is not the case though.

  2. Susan Fourtané
    October 13, 2013

    Flyingscot, 

    I'm afraid that's the case. 

    -Susan

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