Reselling Apple Products on Launch Day: "This whole game is over"

[thundersteele]

This is hilarious:
When Apple buys out the market for touch screens or other components, everyone here is happy. Yet when some people try to make money on those who neither want to stand in line nor want to wait for two weeks for a new electronic toy, everyone hates them!

I wonder how much of Apple's "record sales" are being returned right now?

 

[UK-MacAddict]

So it's wrong for Apple to buy up all the supplies of LCDs and force other manufacturers to pay outrageous prices to make their own products? Note that this is exactly what has been happening for a while now.

Also Apple has been taking up all the manufacturing time and facilities to make aluminium unibody cases for their laptops forcing other companies to struggle to make their products.

 

[crazy dave]

Nope, I'm not in favor of resellers, but in the US this is not a crime

Actually it is certain areas - but often it is by municipality and scalpers get around the laws by reselling just outside those municipalities where it is illegal to do so.

http://en.wikipedia.org/wiki/Ticket_resale#Legal_responses

 

[TheBronx]

This is hilarious:
When Apple buys out the market for touch screens or other components, everyone here is happy. Yet when some people try to make money on those who neither want to stand in line nor want to wait for two weeks for a new electronic toy, everyone hates them!

I wonder how much of Apple's "record sales" are being returned right now?

You can't really believe anywhere near the majority of sales was to scalpers, right? Hehe

 

[tirerim]

They don't use retail channels and take the inventory away from you though.

Let me give you this scenario.

It's hot and Maschil is thirsty but there's no store in the sight. Luckily he finds a small corner store and goes in to buy a bottle of drink.

Suddenly another man cuts in front of you and he buys all the drinks in the corner store. Then the man tells you, "you pay me double the price and I'll sell you the drink. It's just business"

Would you still feel the same?

(Yes I know this analogy is ludicrous but I'm sure that's how many of us felt)

Yes, it's ludicrous. Let me give you a similar but better analogy. Maschil feels like he wants a drink, and finds a bar that has some very nice single malt Scotch, all of it selling for upwards of $20 a glass. Suddenly someone cuts in front of him and buys all the Scotch, and offers to sell him a glass for $30. Maschil might feel a bit put out, but honestly, he was already willing to spend $20 on a glass of alcohol (even if it's *very* good Scotch), what's another $10? Or, maybe he doesn't have an extra $10, so if he really wants that drink right now he could try some rum, or if he still particularly wants the Scotch he could just wait until the next day or week when the bar gets resupplied -- it's going to be exactly the same then, and it doesn't hurt him anything to wait a bit longer.

 

[UK-MacAddict]

The outrage against resellers in this forum is laughable. I wonder if these people get as upset over child or animal abuse.

I like to compare it to a stock IPO. Are the people that get in early "scalpers" when they sell the stock for a profit?

Everyone knows when and where iPads will be sold. If someone is there before you, then they have the right to do whatever they want with the product that they're buying. If you're wanting one solely for the purpose of using it yourself, then get to the store and buy it before that guy. It's an equal opportunity situation.

Agreed. First come first served.

 

[bwrairen]

They don't use retail channels and take the inventory away from you though.

Let me give you this scenario.

It's hot and Maschil is thirsty but there's no store in the sight. Luckily he finds a small corner store and goes in to buy a bottle of drink.

Suddenly another man cuts in front of you and he buys all the drinks in the corner store. Then the man tells you, "you pay me double the price and I'll sell you the drink. It's just business"

Would you still feel the same?

(Yes I know this analogy is ludicrous but I'm sure that's how many of us felt)

Ahhhh....but what if the other man was there first?

 

[tirerim]

Actually it is certain areas - but often it is by municipality and scalpers get around the laws by reselling just outside those municipalities where it is illegal to do so.

http://en.wikipedia.org/wiki/Ticket_resale#Legal_responses

That applies to tickets; iPads are just ordinary goods, that don't have remotely the same legal considerations or supply constraints. (Namely, that when all the tickets for a particular game or concert have been sold, there aren't going to be any more, but when Apple has sold all of the iPads it has, it just makes more as long as people keep buying them, and they're all exactly the same.)

 

[thekev]

anyways i thought i'd just share my thoughts...in a business like this where you can generate $400 to $1000 per day...its hard not to join in the party so to speak...no matter how short it is

It's not so much of a legitimate business. The guys who do this are most likely not set up as any kind of resellers, and it's doubtful that they report such sales as income. When you're getting into five figure and above numbers, the IRS could technically come after you on such a thing. It's quite obvious in such quantities that you're not buying for personal use, but rather to resell.

 

[Buckeyestar]

It's amazing how ignorant some people are. The resellers are simply taking part in capitalism. It's what the U.S economy is based on. All companies do it. Buy things at one price, sell them at a higher price, make a profit. The resellers do nothing wrong. They wait in line, they use real money, they find workers to wait in line, they (presumably) pay them to do so. They find buyers, they pay expenses, they make a profit. Sound familiar? Is it just because many of them may be of Asian descent that we view them with such disgust? Or is it jealousy, because we didn't make a buck ourselves. Stop being such hypocrites. Don't you think Apple uses its muscle to buy up parts and get cheap prices for labor and other things to raise their profit margin? What's the difference?

You just don't get it. When there's limited supply, people who want an item for themselves get shut out because of resellers and scalpers. THAT is what enfuriates people.

 

[Rennir]

That's still not considered an acceptable practice and indeed as Rafterman pointed why scalping is illegal in certain US states and jurisdictions. Scalpers can constrain supply on anything - there just has to be enough of them and they just have to buy enough to do so. If every scalper bought say 1000 new iPADs and there were 1000s of scalpers then even Apple's launch wouldn't have been able to distribute them efficiently enough. Scalping is considered to be the disruption of normal supply. Yes the larger the supply, the larger the disruption must be to affect it, but that doesn't make the attempt any less legal in those areas sane enough to outlaw its practice.

Further for those arguing that this is like say Apple cornering the market on the supply of components - it is not. That analogy only works if all Apple did was to then never use those components to build anything and then simply resold the individual components at higher prices to other people - that would be scalping and in fact would probably result in a host of international trade violations.

But scalper's can't (or won't) buy 1000 new iPads. They're limited by their amount of working capital and their willingness to put X amount of it into buying iPads.

How do you define normal supply? And would you consider every instance where an entity disrupts normal supply to be unacceptable/immoral/illegal?

I can't respond to your other arguments until you define "normal supply".

 

[iEvolution]

There is nothing wrong with buying hot products and selling them for profit. Every retail company in the world sell their products at marked up prices. Apple make these iPads very cheaply in Asia and then sells them with a huge profit margin. How do you think they amassed $100 billion in cash.

There is a difference, Apple made the product they can do what they choose to do with the product.

Resellers piggyback on a companies success. Its not a business.

They grab supplies that others could have had at the retail price.

 

[jdcbomb]

It's not so much of a legitimate business. The guys who do this are most likely not set up as any kind of resellers, and it's doubtful that they report such sales as income. When you're getting into five figure and above numbers, the IRS could technically come after you on such a thing. It's quite obvious in such quantities that you're not buying for personal use, but rather to resell.

believe me i don't claim that the business is legitimate or illegitimate...my intent was to communicate how wide scale and intense the drive there is for resellers to capture huge volumes of these items for profit...the big time resellers who can drive volume already have the tax system figured out and other ways in ensuring they report correctly

 

[friedmud]

It's amazing how ignorant some people are. The resellers are simply taking part in capitalism. It's what the U.S economy is based on. All companies do it. Buy things at one price, sell them at a higher price, make a profit. The resellers do nothing wrong. They wait in line, they use real money, they find workers to wait in line, they (presumably) pay them to do so. They find buyers, they pay expenses, they make a profit. Sound familiar? Is it just because many of them may be of Asian descent that we view them with such disgust? Or is it jealousy, because we didn't make a buck ourselves. Stop being such hypocrites. Don't you think Apple uses its muscle to buy up parts and get cheap prices for labor and other things to raise their profit margin? What's the difference?

I love how you got downvoted... you are exactly right.

I _really_ love the guy that says this "should be illegal"

Why are people against others making profits?

What we were basically seeing is a disparity in supply / demand. Essentially, Apple was selling their iPads for too _little_ money. Others noticed this and decided that there was room to make some money.

Apple handled the situation properly. If they don't want others reselling their goods for more profit then Apple is making themselves... then the way to deal with it is to make that activity unprofitable. In this case increasing supply. But they also could have increased the price. Basically, just manipulate the supply / demand curve until it balances.

It's this "law" of supply and demand that balances our entire economy and makes our modern way of life possible.

 

[fertilized-egg]

Ahhhh....but what if the other man was there first?

There in lies my point. If he does that would you think "well, he was there first so he can hog the supplies even just to make money, he's just doing business" or "What a jerk, I'll tell him to piss off!"?

It's certainly not illegal and some specially enterprising people think that's perfectly OK but I just have to side with those who think the iPad scalpers are jerks.

 

[crazy dave]

That applies to tickets; iPads are just ordinary goods, that don't have remotely the same legal considerations or supply constraints. (Namely, that when all the tickets for a particular game or concert have been sold, there aren't going to be any more, but when Apple has sold all of the iPads it has, it just makes more as long as people keep buying them, and they're all exactly the same.)

Yes it applies to tickets (and tickets only) - but it's still scalping and the same principle applies, a disruption of supply to the actual customer.

The scalper is not in fact participating in a value-added service by leveraging his ability to buy more of the product than a normal customer to then resell that product at higher costs to customers. That the good is not perishable or necessary is immaterial to this. From a purely economics standpoint, the scalper is indeed a parasite on the market system.

 

[alhedges]

What they are doing is not exactly representative of capitalism and a "free market." Stop saying that. When enough resellers buy in large enough quantities, they are artificially inflating the market price. They are also not doing what "large, multinationals" do. Companies (most, like Apple) are actually providing a service or product that they have made by combining other components. These resellers and scalpers are just taking one product, inflating its price, and trying to sell it to someone else by constraining supply below demand.

This, basically.

The economic system of the US (and of all modern western democracies) is based on capitalism, but it has never been based on pure capitalism. It has always been a mixture of capitalism and what the anglo-american world tends to call "fair play." That's why contract terms are sometime thrown out by a court; it's why ambiguities in insurance policies are construed against the company; it's why we have a lot of consumer protection laws; and it's why we have anti-trust laws.

(As an aside, it's also why Russia had (and is still having) a hard time transitioning to a modern civil society - it's a lot easier to institute capitalism than it is to institute the moderating principles of fair play.)

It's the violation of the "fair play" principle that has caused most jurisdictions to establish anti-scalping laws: the idea is that if a company offers tickets to the general public, these tickets should not be bought up en masse by scalpers and resold to the public with a price hike. Particularly where the shortage of tickets is caused by the scalpers buying up all the tickets in the first place. (See the Miley Cyrus ticket scandal for a good example - tickets originally offered at $30-$60 became unavailable at any price less than $300, which was particularly hard on her youngish fans without much disposable income).

This is why, intuitively, people don't like the Apple scalpers. Apple set a reasonable price for its products and offered the products to the general public at this price. Of course people are outraged if organized scalpers buy up everything available and your only option is to pay a multiple of the msrp.

It is also - as a matter of economics - highly inefficient, since the only service scalper's provide is to mitigate the shortage that they themselves caused. The analogue is setting someone's house on fire and then charging them to put it out.

 

[zzLZHzz]

apple finally beat those people.

so as long if HongKong get launch early, there will definitely be less demand from the open market.
perhaps Tim Cook have some credit to this?

 

[friedmud]

You just don't get it. When there's limited supply, people who want an item for themselves get shut out because of resellers and scalpers. THAT is what enfuriates people.

That's only possible as long as it's possible to make a profit as a reseller. If the product becomes undesirable because you're trying to jack up the price too much (ie demand goes down)... then it doesn't matter how much you've constrained the supply... you won't make a profit.

The whole problem is _not_ the scalpers. Any problems in this area are with the initial _seller_ (ie Apple in this case). _They_ either failed to produce enough supply or failed to properly price the item with respect to the demand (ie sold it too cheaply). The scalpers are merely a _symptom_ of a supply / demand imbalance.

So if you want to be mad at someone... be mad at Apple...

 

[crazy dave]

But scalper's can't (or won't) buy 1000 new iPads. They're limited by their amount of working capital and their willingness to put X amount of it into buying iPads.

How do you define normal supply? And would you consider every instance where an entity disrupts normal supply to be unacceptable/immoral/illegal?

I can't respond to your other arguments until you define "normal supply".

The point is they're leveraging their higher capital than the normal consumer has to buy up supply and it's risk-less because they can return supply they don't sell at no cost to Apple. Normal supply is when a consumer product reaches its intended destination - a consumer. Deliberately constrained where a company has a monopoly or scalpers have obtained a monopoly. It's an artificial constraint of supply - the supply could be greater, but someone is deliberately soaking that supply up in order to raise prices. In fact when businesses do that, that's considered fraud, not capitalism. Now here we have a slightly different situation where there are multiple, independent agents doing it rather than a single one, but that makes it no more a part of a healthy capitalist system. Heck it's even why Apple tried to make it as hard as possible to do by limiting the number of purchases per card per time point. The scalpers aren't doing a value added service but merely getting between Apple and its customer base.

 

[tirerim]

You just don't get it. When there's limited supply, people who want an item for themselves get shut out because of resellers and scalpers. THAT is what enfuriates people.

No, people get shut out because there is limited supply. If there are only two iPads in the world, and there are three people who want one, one of those people isn't going to get one. It doesn't matter whether everyone lines up to buy one from Apple, and the first two people in line get their iPads, or if someone else buys both the iPads from Apple first and offers to sell them to the highest bidders, one of the three is not going to get an iPad. The only difference is in whether the iPads go to the people with the most time (to get in line first) or the most money (to buy them from the person who got in line first. And since time is money, those are still the same.

And then Apple will make another iPad the next day, so the worst that happens to the loser is that they have to wait a little longer.

 

[bwrairen]

There in lies my point. If he does that would you think "well, he was there first so he can hog the supplies even just to make money, he's just doing business" or "What a jerk, I'll tell him to piss off!"?

You can absolutely tell the guy to piss off. Nobody is forcing anyone to buy from a scalper. If this situation happened to me, I would be forced to do one of two things. Pay the man what he wanted, or continue my search for a drink elsewhere. After which I would probably spend some time contemplating how I could find myself on the other end of that transaction.

 

[jdcbomb]

This, basically.

The economic system of the US (and of all modern western democracies) is based on capitalism, but it has never been based on pure capitalism. It has always been a mixture of capitalism and what the anglo-american world tends to call "fair play." That's why contract terms are sometime thrown out by a court; it's why ambiguities in insurance policies are construed against the company; it's why we have a lot of consumer protection laws; and it's why we have anti-trust laws.

(As an aside, it's also why Russia had (and is still having) a hard time transitioning to a modern civil society - it's a lot easier to institute capitalism than it is to institute the moderating principles of fair play.)

It's the violation of the "fair play" principle that has caused most jurisdictions to establish anti-scalping laws: the idea is that if a company offers tickets to the general public, these tickets should not be bought up en masse by scalpers and resold to the public with a price hike. Particularly where the shortage of tickets is caused by the scalpers buying up all the tickets in the first place. (See the Miley Cyrus ticket scandal for a good example - tickets originally offered at $30-$60 became unavailable at any price less than $300, which was particularly hard on her youngish fans without much disposable income).

This is why, intuitively, people don't like the Apple scalpers. Apple set a reasonable price for its products and offered the products to the general public at this price. Of course people are outraged if organized scalpers buy up everything available and your only option is to pay a multiple of the msrp.

It is also - as a matter of economics - highly inefficient, since the only service scalper's provide is to mitigate the shortage that they themselves caused. The analogue is setting someone's house on fire and then charging them to put it out.

You can certainly argue the merits and ethics of scalpers...but I don't think the US government or local governments here will even care enough to pass laws to outlaw this activity.

Also to compare an LUXURY item that is made up of precious metals, plastics, and glass to a house being set on fire (which is a CRIME in most cases) is ludicrous at best.

There ARE anti-scalping laws here that prevent price gouging of necessities during a disaster...but they have rarely if ever been enforced.

Just don't compare and iPad to bread or water...or felony behavior.

 

[caoap1]

Best Buy and Radio shack are resellers, too

 

[crazy dave]

This, basically.

The economic system of the US (and of all modern western democracies) is based on capitalism, but it has never been based on pure capitalism. It has always been a mixture of capitalism and what the anglo-american world tends to call "fair play." That's why contract terms are sometime thrown out by a court; it's why ambiguities in insurance policies are construed against the company; it's why we have a lot of consumer protection laws; and it's why we have anti-trust laws.

(As an aside, it's also why Russia had (and is still having) a hard time transitioning to a modern civil society - it's a lot easier to institute capitalism than it is to institute the moderating principles of fair play.)

It's the violation of the "fair play" principle that has caused most jurisdictions to establish anti-scalping laws: the idea is that if a company offers tickets to the general public, these tickets should not be bought up en masse by scalpers and resold to the public with a price hike. Particularly where the shortage of tickets is caused by the scalpers buying up all the tickets in the first place. (See the Miley Cyrus ticket scandal for a good example - tickets originally offered at $30-$60 became unavailable at any price less than $300, which was particularly hard on her youngish fans without much disposable income).

This is why, intuitively, people don't like the Apple scalpers. Apple set a reasonable price for its products and offered the products to the general public at this price. Of course people are outraged if organized scalpers buy up everything available and your only option is to pay a multiple of the msrp.

It is also - as a matter of economics - highly inefficient, since the only service scalper's provide is to mitigate the shortage that they themselves caused. The analogue is setting someone's house on fire and then charging them to put it out.

Although arguments analogy should be avoided - that was explained better and more completely than what I was capable of. Beautifully explained.

----------

Best Buy and Radio shack are resellers, too

authorized resellers where Apple has calculated how much supply to give them in order to reach the customer and each abides by conditions negotiated with Apple concerning price and availability - a big difference