Closing the loop: Samsung’s circular play through trade-ins

Background: as competition in the premium smartphone segment intensifies, Samsung is ramping up its trade-in strategies to narrow the long-standing value perception gap with Apple. In early 2025, it expanded its program lineup with Galaxy Club in the US and UK, and Galaxy Trade-In in Korea and France, building on its established Overtrade incentives. All three initiatives share a common goal—boost resale value, accelerate premium adoption and improve user retention.

The stakes are clear. According to Canalys (now part of Omdia), the iPhone 15 retains 50% of its value after one year, compared to just 40% for the Galaxy S24. This depreciation gap erodes Samsung’s pricing power and limits its competitiveness in the second-hand market. In Q1 2025, Samsung held 22% share of the premium segment (above US$600), far behind Apple’s 59%.

This report explores how Samsung’s trade-in stack, Galaxy Club, Galaxy Trade-In and Overtrade, is designed to close this gap and reshape the dynamics of the new-to-used device lifecycle.

Overtrade to upgrade: understanding the mechanism behind premium growth

Samsung “Overtrade” incentives: even before the launch of Galaxy Club and Trade-In programs, Samsung has long used “Overtrade” incentives—extra trade-in value on select models—as a key promotion tactic to boost premium device sales. These campaigns, sometimes branded as “Trade-in and Trade-Up,” are typically funded as sales or marketing expenses tied to new product launches. For example, a customer purchasing a Galaxy S25 may receive an additional US$100 above the market value of their old device.

Samsung’s use of trade-in incentives has been instrumental in driving premium segment growth. By subsidizing higher trade-in values, Samsung reduces the upfront cost of its flagship Galaxy S and Z series, boosting adoption and supporting higher ASPs. From 2022 to Q1 2025, its global ASP rose 45% (from US$389 to US$528), while the share of devices above US$600 increased from 18% to 32%. These trade-in incentives not only ease launch price friction but also promote circularity and open access to Samsung’s premium ecosystem for second-hand buyers.

Samsung Galaxy Club: Samsung’s Galaxy Club, active in the US and UK, guarantees users 50% buyback value within 12 to 15 months, paired with 0% financing, SamsungCare+, and reward points, aimed at shortening the three- to four-year upgrade cycle, particularly in mature markets like the UK. Unlike Apple, which ended its hardware subscription program, Samsung sees Galaxy Club not just as a hardware play but as a potential vehicle to grow future services revenue. Unlike Apple’s iOS ecosystem, Samsung lacks strong software lock-in for easy revenue-making. The Galaxy Club is a key tool to drive retention through device-linked bundled services.

However, early adoption remains a challenge. Overtrade incentives already offer a high trade-in value equal to or above the guaranteed 50% trade-in value. Also, telcos currently dominate the device financing space with internet data bundles. To build a stronger value proposition, Samsung’s Galaxy Club must offer unique and differentiated services. Bundling premium Galaxy AI features could help achieve that.

Galaxy Trade-Ins: Samsung’s new Galaxy Trade-In program, launched in Korea and France in early 2025, allows users to trade in their Galaxy devices at any time of the year, even without purchasing a new phone. The program aims to enhance long-term value for Galaxy users by offering a convenient, secure way to unlock savings and extend the device lifecycle. This program gives Samsung more control and visibility over the devices traded in, which helps prevent misuse of its trade-in promotions and subsidies, eroding trust in new and used device pricing.

How Galaxy Club, Galaxy Trade-In and Overtrade work together: Samsung’s trade-in programs are designed to maximize device trade-in value and drive premium upgrades. While each program varies in execution, they all serve a common purpose—subsidizing the upfront cost of a new device by enhancing the residual value of the old one. When combined with 0% financing, these trade-in mechanisms significantly improve affordability for consumers, effectively lowering the barrier to entry for high-end models. The program now covers only the Galaxy S25 series, but may likely expand to include the upcoming Galaxy Z Fold 7 and Flip 7.

Although there is some overlap between Galaxy Club and existing Overtrade offers, Samsung appears to be segmenting these programs by channel and customer profile. Galaxy Club is aimed at premium users through Samsung’s direct-to-consumer channels, bundling guaranteed buyback, financing and services like SamsungCare+. Overtrade, by contrast, is deployed more broadly across open channels and retail partners to support time-bound promotions. Meanwhile, the Galaxy Trade-In supports all trade-in programs by improving traceability and reducing misuse of subsidies, ensuring that Samsung’s resources are efficiently disbursed toward genuine device replacements.

Together, this layered approach not only enhances affordability but also increases conversion rates across different customer segments, reinforces loyalty and supports higher ASPs.

Balancing act: new sales versus circular growth

Smartphone vendors face a core dilemma. While they rely heavily on new device sales to meet quarterly financial targets, they also benefit from a growing second-hand market that expands their software ecosystem and supports sustainability goals. The challenge lies in the fact that most second-hand transactions occur outside of vendors’ direct channels, meaning little to no revenue is recognized from them, even as these devices bring new users into the fold. This creates conflicting incentives—driving new shipments can erode second-hand value, while prioritizing second-hand circulation may slow new device sales, which are vital for achieving quarterly sales targets.

Samsung’s trade-in programs offer a practical short-term solution to this tension. By subsidizing the trade-in of older devices, Samsung lowers the barrier to entry for premium models while seeding the secondary market with higher-quality used phones. However, trade-in schemes alone are not a silver bullet. Vendors must look beyond hardware sales and build service-driven revenue models that engage both new and second-hand users. AI offers a strategic entry point—monetizing AI features through subscriptions can generate recurring revenue across the device lifecycle and support long-term growth. A more integrated approach will be essential for balancing short-term financial performance with long-term ecosystem growth and sustainability goals.