The Economics of Used Apple Products
We all have come to know Apple’s product release cycles very well. They typically update every product line about once a year, which keeps retail prices pretty steady. But what happens behind the scenes, in used marketplaces? One thing we’ll look at is the relationship between used inventory (the amount of listings on Amazon Marketplace) and the average price of all listings. Economics 101 tells us that when supply increases, prices will go down. We expect this to be at least somewhat true, but exactly how much variance is caused by increases in supply quantity? Luckily, at Shopobot we have all the data we need to find that out. The three Apple Products we'll be analyzing are:
Lets dive in and take a look at what we’ve found:
There is definitely some relation between used supply and price, but exactly how much? Well, the r-values (a measure of correllation) for the three data sets are -.69, -.69, and -.75. The r-squared values (r*r) are .48, .48, and .45. Without getting too much into the statistics, this measurement states that about 45-48% of the variance in price can be attributed to changes in supply (the amount of used listings on the Amazon Marketplace).
This is definitely interesting, but what else can the variance in price be attributed to? The most obvious other factor is devaluation over time. We assume that all products in consumer electronics devalue at some rate. But exactly how consistent is this devaluation and can it be measured? With Shopobot’s data, of course it can.
Here is a time series graph for the price of two iPod Touch products on the Amazon Used Marketplace.
Over the long term, the devaluation in the used market is pretty consistent across products. By getting the linear regression for both data sets, we can find the slope, or average price drop per day. For the more expensive iPod Touch 3 32GB, the average price drop per day is −.223. For the iPod Touch 2 8GB, this value is -.101. This means that, over the long term, you can expect the lowest price for all used listings to decrease at a rate of about 22 and 10 cents per day, respectively. For the Macbook Pro, because the price is much higher, we can expect it to devalue at a higher rate. By using the same model as before, we can put this at -.96. Over the long term, the daily low price of this Macbook Pro in the Used Marketplace dropped at about 96 cents per day.
So now we have seen the relationship between supply, time, and price. How do the three work together? An important point to notice is that, over time, there are increasingly more used listings as people upgrade to newer models. You cannot simply peg the variance in price to supply or devaluation, because in reality it is a mixture of these and countless other unmeasureable outside forces that affect the market. Check out this graph comparing supply, price, and time for the Macbook Pro. The jump in used listings starts at about April 1st, 2011, right after the release of a full new line of Macbook Pro's.
How do these numbers help me in the real world?
Imagine you are considering buying a used Macbook Pro. This data suggests that for every day you wait, the average price of used listings will decrease at about 96 cents a day. So if you wait a month, the average price should drop about 28 dollars.
Perhaps you are thinking about buying an iPod Touch. Depending on the model, you can expect the average used listing price to drop 10-20 cents per day. If you buy one, use it for 6 month, and then sell it back on Amazon, you can expect the selling price to have dropped only about $27. This is a pretty good option if you are the type of person who likes to keep up-to-date with Apple gadgets.
How does this apply to other products?
Many different products in consumer electronics follow similar trends, but the actual values have to be analyzed on a product-by-product basis. They all act differently; for example, check out this graph illustrating the relationship between time, quanity, and price for the newer model Xbox 360.
As you can see, both time and the amount of used listings have almost zero effect on the selling price. This is an example of a used market where the price is very consistent. In this case, the price drops at only about .8 cents per day! So if you bought a used Xbox 360 in February, you could expect the average low listing price to have dropped only about $1.50 total! If you paid attention and sold on a day where the average listing price was relatively high, you could actually make money in this situation.
We hope you’ve liked some of our data analysis at Shopobot. Our entire mission is making you a smarter consumer, so if you have any ideas for what you think might be interesting in our data, let us know!
