Business Owners, Does This Sound Suspicious? Part II

Status
Not open for further replies.

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
Okay, so my previous thread was closed some time ago and I didn't plan on reviving it but I've been itching to provide some massive updates. For those of you that aren't aware of the situation, here's the original post from the old thread:
I was getting a bit of work done during the 3 months I was away (was still a dreadful 3 months). For those of you that don't know, my brother owns a retail site, AC Electronic Outlet; it's down at the moment so you can't access it. Nonetheless, that's not exactly the issue at hand.
Senior year of high school, he knew a security guard who has partial share of a large third party Apple retailer in Poland. No idea how the conversation started since I wasn't there but it sounds very promising, almost too good to be true (like one of those once in a lifetime deals). Prices of Apple products are very expensive in Europe, which is why they say they're taking advantage.
Gets a bit confusing. My brother is essentially acting as a middleman and getting paid. He has a license with another Apple distributor based in CA whom supplies from Apple. Apple ships the stuff (or so I hear) but first has to go to my brothers US address. The Europeans are paying a substantial amount of money, approximately $160,000 on their first deal with him - eight pallets of product consisting of iPads and iPhones. They're paying the sales tax here, 20% VAT tax to Poland, and still managing to score a profit. The money is in my brother's possession but apparently, the Europeans have access. Full $160,000 in a local bank, whom my friend works for and couldn't find the transaction. Now, there are twelve partners for the Apple stores in Poland so it could be a simple name mistake. I just don't want my brother to get scammed for something in the six-figures (he's also very nieve). He'd turn a profit of about $20,000 on this order IF it works. I have plans of partnering with him and we're still in the negotiation process. Does this sound too good to be true? Sorry, might be a bit scattered...
Now, I haven't bothered to read through the old thread again; that would take a while. May be easier to start where I left off, where maflynn added the few updates I gave after the thread got closed:
Update #1
As a final update, I talked to my brother and had a brief discussion for an update. The Poles have no idea that he's getting $20,000 in profit from this, it's simply tied into the price of each iPhone and iPad. It was never deliberately stated. I do not know why they don't bother going through Apumac. He met up with the security guard again, although I don't know what was said during the conversation. It's been a nice thread, overall. Maybe another update soon, if the mods allow it.
Update #2
New update:
3 pallets have been shipped and delivered to Poland. My brother released the pallets from UPS in California to them. I haven't been told how much he made but there are 6 on hold by UPS. My brother is apparently being paid via Citadel (don't know what happened with PFCU). That's the very latest.
Present

I didn't get the chance to explain myself too well in the updates, specifically the second. There are a whole lot of inaccuracies that have been filled in over the last four months. I'll keep it brief again, then elaborate fully.
As far as update #2 goes, apparently only one pallet made its way to Poland. The others have been left behind, still in storage until a later date. From the fighting in the original thread, I'll try to make it easier. The math didn't add up and there's a big reason for that which I don't believe was mentioned in the original thread: the Poles have a markup of 25%-30% on each product. ie. iPad Air goes for $500 here, they sell it for the equivalent of $800 or so there. I don't have the prices they get the products for but assume it's around $440 for an iPad. My brother makes 10% off of each item sold.
Second, bigger piece. There is now a contract underway which is almost finalized. My brother no longer deals with Apumac and buys directly from Apple in large orders with a maximum purchase order of $2 million per order, from what I've heard. He now has the ability to sell Samsung products although none have sold yet with a line of credit with Samsung of $500,000 (a large stepping stone). An even bigger, and interesting, piece of the deal is a little "bonus" he's getting. I don't know the full story behind it but the Poles are sending him $50,000 as per the contract deal they're making. It's not for exclusively selling to them, but the ability to maintain a selling relationship. As per the contract, he sells them an item six months after its release or later, meaning the iPad Air is not included in the current deal as six months has not passed yet.
His site is still not up as he's looking for a server to host it under, possibly via our ISP, which is a rip off (I keep trying to convince him to use a third party). Also, another thing you were all concerned about was the $20,000 clearing. Well, it did in three different payments (two of $7500, one of $5000, I believe). PFCU isn't being used, he's using Citadel although I have no clue as to what funds are in there. The family is noticing the success of the business and, as I've expressed here, I've been long interested in joining him. We're working out a deal now, and my eldest brother is about to join with him too. My brother will still have 60% control, we would each have 20% - this is no where near final, just rough estimates. I'd handle Internet-sales and some of the international sales, he'd do everything including those two, my oldest brother would market it, spread the word, advertise, and help with the international deal. Nothing is confirmed. The buyers in Poland own a chain of 40 pawn shops (I forget the name) with one main location. Why they're using my brother, I don't know, but they are making incredible profits, even after customs, shipping, and insurance fees.

What'd I miss? I'm sure you guys have more questions. Also, let's not make this a mess to cause another thread closure. Again, if you want to revisit the previous thread, it can be found here.
 

Astroboy907

macrumors 65816
May 6, 2012
1,387
13
Spaceball One
The simple fact that there are incaccuracies with this and the bank couldn't fine your transaction makes me just not trust these guys. Tread carefully, Squilly.
 

GoCubsGo

macrumors Nehalem
Feb 19, 2005
35,743
141
The simple fact that there are incaccuracies with this and the bank couldn't fine your transaction makes me just not trust these guys. Tread carefully, Squilly.
Words to fall on deaf ears, rest assured. There is no reason for this savvy businessman to take any advice that has a backbone of logic and general sense.

Squillster, there is just so much missing and most importantly is the fact that as far as I know, Apple has an online store in Poland. Why would anyone pay a markup of 25% when they can sit down and open a browser and pay retail?

I still feel someone is going to wind up broke and in jail.
 

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
Words to fall on deaf ears, rest assured. There is no reason for this savvy businessman to take any advice that has a backbone of logic and general sense.

Squillster, there is just so much missing and most importantly is the fact that as far as I know, Apple has an online store in Poland. Why would anyone pay a markup of 25% when they can sit down and open a browser and pay retail?

I still feel someone is going to wind up broke and in jail.
Simple: it's cheaper to go through my brother than Apple directly.
 

GoCubsGo

macrumors Nehalem
Feb 19, 2005
35,743
141
Simple: it's cheaper to go through my brother than Apple directly.
No it isn't. Your brother isn't getting some deeper discount by mere percentage. Apple offers bulk discounts that are pretty much across the board. So with his discount he buys things here but by the time they've shipped to another country, there are other fees, including freight shipping.

You mean to tell me that the Apple store online in Poland has a higher markup than that of a US-bought iPad (with bulk discount) + shipping + $ to your business savvy brother + taxes?
 

SlovakApple

macrumors 6502
Jul 4, 2010
335
0
In the heart of Europe
...You mean to tell me that the Apple store online in Poland has a higher markup than that of a US-bought iPad (with bulk discount) + shipping + $ to your business savvy brother + taxes?
I think we have covered that in the previous thread already, but without sucess. But I also like the part about the pawn shops.
 

heehee

macrumors 68020
Jul 31, 2006
2,462
223
Same country as Santa Claus
The math didn't add up and there's a big reason for that which I don't believe was mentioned in the original thread: the Poles have a markup of 25%-30% on each product. ie. iPad Air goes for $500 here, they sell it for the equivalent of $800 or so there. I don't have the prices they get the products for but assume it's around $440 for an iPad. My brother makes 10% off of each item sold.
Straight from the Polish Apple Store, they sell them for 2099, that's a equivalent of $680, not $800 you claimed.

How would the poles make any money after paying 10% to your brother, 23% VAT, shipping/freight, retail space/online, insurance, etc?
 

Attachments

GoCubsGo

macrumors Nehalem
Feb 19, 2005
35,743
141
Okay so I went to Apple's Poland site. They want 1699 Zloty for an iPad 2. You mentioned this 6-month thing so I avoided newer models. Apple US wants $529 USD for the same iPad. Converting 1699 Zloty to USD looks to be about $549. As such, the markup to sell the same iPad in Poland is $20 USD.

If Apple discounts bulk purchases 10% (just a #) then there is only a little wiggle room for profit. That is, say he buys 100 iPads at $529 a piece, that is $52,900 with 10% off that is $47,610 USD or $476.10 USD per iPad. That gives a selling price of 1474.51 Zloty per iPad.

Is that right thus far? This is assuming the Apple discount is 10% and the iPad purchase is 100. What is the count of iPads on a pallet? I'm sure it was covered somewhere.

I can obviously see the difference between 1699 Zloty and 1475 Zloty, but then you have to consider shipping, VAT (right), paying the savvy businessmen, and someone else has to make money. It is my opinion that by the time you add in everything so everyone gets rich while sitting on their asses, that 1699 Zloty price for the iPad 2 is going to look better than the price tag this pawn shop or whatever guy is going to charge.

Anyone know the volume discount for Apple? Is it 3%? That is actually a # floating around my head. You factor this in at 3% then this blows any chance at profit out of the water.

My math can also be wrong but it is Wednesday and on Wednesdays I do not mind being wrong in public.
 

snberk103

macrumors 603
Oct 22, 2007
5,484
87
An Island in the Salish Sea
The Poland connection, per the OP, seems to be a chain of pawnshops. Is it possible that Apple is using this conduit to dump old, unsold, product into a backwater market? If they're being sold at pawnshops, do they come with a warranty? If Apple was selling them warranty-less - basically as 'used' and 'unsupported' then they might be giving this whole operation a deep discount. Though my next question would be whether Squilly just violated a non-disclosure agreement by posting here. That would be ironic... that he was in fact reporting an actual arrangement, but then messed it up by reporting something Apple didn't want publicized.

Squilly: Have you checked with your brother about ND agreements?
 

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
Care to elaborate? Please provide some specific numbers that lead you to this conclusion. Thank you.
The margins for Apple products (in the US) for brick and mortars are next to nothing. By nothing, I mean a few dollars. B&M's sell them for the accessories and protection plans consumers may buy with them. Whereas online, the margin is much higher, like 20% compared to 1-2%. Don't know how it works in another country but I'd assume it's universal.

----------

No it isn't. Your brother isn't getting some deeper discount by mere percentage. Apple offers bulk discounts that are pretty much across the board. So with his discount he buys things here but by the time they've shipped to another country, there are other fees, including freight shipping.

You mean to tell me that the Apple store online in Poland has a higher markup than that of a US-bought iPad (with bulk discount) + shipping + $ to your business savvy brother + taxes?
Look above.

----------

Straight from the Polish Apple Store, they sell them for 2099, that's a equivalent of $680, not $800 you claimed.

How would the poles make any money after paying 10% to your brother, 23% VAT, shipping/freight, retail space/online, insurance, etc?
From his business relationship with them, he says there's a 25%-30% markup. I don't know.

----------

Okay so I went to Apple's Poland site. They want 1699 Zloty for an iPad 2. You mentioned this 6-month thing so I avoided newer models. Apple US wants $529 USD for the same iPad. Converting 1699 Zloty to USD looks to be about $549. As such, the markup to sell the same iPad in Poland is $20 USD.

If Apple discounts bulk purchases 10% (just a #) then there is only a little wiggle room for profit. That is, say he buys 100 iPads at $529 a piece, that is $52,900 with 10% off that is $47,610 USD or $476.10 USD per iPad. That gives a selling price of 1474.51 Zloty per iPad.

Is that right thus far? This is assuming the Apple discount is 10% and the iPad purchase is 100. What is the count of iPads on a pallet? I'm sure it was covered somewhere.

I can obviously see the difference between 1699 Zloty and 1475 Zloty, but then you have to consider shipping, VAT (right), paying the savvy businessmen, and someone else has to make money. It is my opinion that by the time you add in everything so everyone gets rich while sitting on their asses, that 1699 Zloty price for the iPad 2 is going to look better than the price tag this pawn shop or whatever guy is going to charge.

Anyone know the volume discount for Apple? Is it 3%? That is actually a # floating around my head. You factor this in at 3% then this blows any chance at profit out of the water.

My math can also be wrong but it is Wednesday and on Wednesdays I do not mind being wrong in public.
All depends on his margins. It may not be 30% markup but he sure as hell made it sound that way. From the price they pay my brother to their "$800 base", we're at what, 50% or 100% gains? Unless they can't work with Apple directly which may be because they're classified as a pawn shop.
 

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
The Poland connection, per the OP, seems to be a chain of pawnshops. Is it possible that Apple is using this conduit to dump old, unsold, product into a backwater market? If they're being sold at pawnshops, do they come with a warranty? If Apple was selling them warranty-less - basically as 'used' and 'unsupported' then they might be giving this whole operation a deep discount. Though my next question would be whether Squilly just violated a non-disclosure agreement by posting here. That would be ironic... that he was in fact reporting an actual arrangement, but then messed it up by reporting something Apple didn't want publicized.

Squilly: Have you checked with your brother about ND agreements?
No, but the pawn shoppers don't deal directly with Apple. Again, my brother is a middleman and they churn out a profit. It's a full warranty just like you'd get anywhere else. Only difference is they'll see (based on serial #) that it's a US iPad going abroad, which may lead to warranty issues. Don't know about the ND.
 

GoCubsGo

macrumors Nehalem
Feb 19, 2005
35,743
141
The margins for Apple products (in the US) for brick and mortars are next to nothing. By nothing, I mean a few dollars. B&M's sell them for the accessories and protection plans consumers may buy with them. Whereas online, the margin is much higher, like 20% compared to 1-2%. Don't know how it works in another country but I'd assume it's universal.

----------



Look above.

----------



From his business relationship with them, he says there's a 25%-30% markup. I don't know.

----------


All depends on his margins. It may not be 30% markup but he sure as hell made it sound that way. From the price they pay my brother to their "$800 base", we're at what, 50% or 100% gains? Unless they can't work with Apple directly which may be because they're classified as a pawn shop.
Are you implying that your brother is getting a pallet of iPads at a 20% discount directly from Apple? And you didn't answer all of my questions. How many iPads in a pallet?

I think you are 100% wrong. There is no 20% off discount for bulk iPads from Apple for resale that I can see. Apple US purchases that is.

Again, there is no profit here unless someone is not using their money and there is possible theft in play.
 

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
Are you implying that your brother is getting a pallet of iPads at a 20% discount directly from Apple? And you didn't answer all of my questions. How many iPads in a pallet?

I think you are 100% wrong. There is no 20% off discount for bulk iPads from Apple for resale that I can see. Apple US purchases that is.

Again, there is no profit here unless someone is not using their money and there is possible theft in play.
About 50 iPads per pallet, that's an answer coming directly from him. Another coming from him:
iPad air 16gb wifi (if he orders one) is $395
iPad air 16gb wifi (if he orders 50 (1 pallet)) is $385
If more than one pallet is ordered, it goes down to approx. $373.

----------

You don't know and make assumptions but then also make "simple" claims that it's cheaper. Seems like pretty flawed logic to me.
Above is not an assumption. That's from him.
 

Shrink

macrumors G3
Feb 26, 2011
8,914
1,596
New England, USA
I've read the thread fairly carefully, and fully acknowledge I'm not understanding all the figuring, finances, etc.

What I am getting (I think), is that Apple has accepted Squally as an official vendor (or they wouldn't be selling him stuff at a dealer price), and that Squally is then acting as a middle man for a bunch of pawn shops in Poland...which are paying him a ****load of money for his time and efforts, and are making pretty much diddley on the deal.

Assuming any of what I said above is true...

1) Convince me that Apple has approved Squally as an official vendor of their products. Yes, I understand he is a middleman, but Apple still has to approve him for him to get a discounted price.

2) Convince me that Apple is happy with the idea that their stuff is being sold through pawn shops! Not exactly the image Apple has cultivated worldwide...especially considering the appearance of their stores.

Not being a business prodigy, as both OP and Squally apparently are, I can sum up my opinion of all that OP has reported as...well...just a bit sketchy.
 

heehee

macrumors 68020
Jul 31, 2006
2,462
223
Same country as Santa Claus
About 50 iPads per pallet, that's an answer coming directly from him. Another coming from him:
iPad air 16gb wifi (if he orders one) is $395
iPad air 16gb wifi (if he orders 50 (1 pallet)) is $385
If more than one pallet is ordered, it goes down to approx. $373.

----------



Above is not an assumption. That's from him.
While I can't confirm this, but these two articles is way off on the wholesale price Apple gives.

http://www.macworld.com/article/2024257/how-apple-sets-its-prices.html

http://www.techrepublic.com/blog/tech-sanity-check/the-ipads-other-big-advantage-retailers-only-get-3-off/7880/
 

GoCubsGo

macrumors Nehalem
Feb 19, 2005
35,743
141
About 50 iPads per pallet, that's an answer coming directly from him. Another coming from him:
iPad air 16gb wifi (if he orders one) is $395
iPad air 16gb wifi (if he orders 50 (1 pallet)) is $385
If more than one pallet is ordered, it goes down to approx. $373.

----------



Above is not an assumption. That's from him.
Wait, you said he can't do the air because he has to wait 6 months after a product is released.
 

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
That's for B&M. He isn't B&M.

----------

Wait, you said he can't do the air because he has to wait 6 months after a product is released.
Yeah, I know. Was using it as an example. Let's say iPad 4 then, as if it were still at $500 USD.
 

GoCubsGo

macrumors Nehalem
Feb 19, 2005
35,743
141
That's for B&M. He isn't B&M.

----------



Yeah, I know. Was using it as an example. Let's say iPad 4 then, as if it were still at $500 USD.
So you're still holding onto this idea that he gets a deeper discount from Apple because he is not a legit I mean B&M business?

So you're saying if I open my garage and "apply" to be vendor my discount per iPad is greater because I operate out of my mom's garage?
 

Macky-Mac

macrumors 68030
May 18, 2004
2,589
1,142
...
As far as update #2 goes, apparently only one pallet made its way to Poland. The others have been left behind, still in storage until a later date.....
Simple: it's cheaper to go through my brother than Apple directly.
well maybe not if only one pallet shipped........4 months later and 8 (?) are still stored at UPS? So far the Poles have paid for 9 (?) pallets but only received 1??

LOL......have you ever wondered if your brother is scamming these Poles? :D
 

Squilly

macrumors 68020
Original poster
Nov 17, 2012
2,258
3
PA
well maybe not if only one pallet shipped........4 months later and 8 (?) are still stored at UPS? So far the Poles have paid for 9 (?) pallets but only received 1??

LOL......have you ever wondered if your brother is scamming these Poles? :D
Still don't know about those 8. Pretty sure he's waiting on clearance from the Poles and has been ready. For all I know, they've all been shipped out already. He hasn't told me that.

----------

So you're still holding onto this idea that he gets a deeper discount from Apple because he is not a legit I mean B&M business?

So you're saying if I open my garage and "apply" to be vendor my discount per iPad is greater because I operate out of my mom's garage?
Well... yeah. It's fact. Someone said it here with a couple article links.
 

Status
Not open for further replies.