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

[MrNomNoms]

To those throwing around the word 'capitalism':

The term you should be using is free market - the basics being supply and demand. I personally have no problems with these so-called resellers but if I was Apple I'd be sticking the law very rigidly and having a 20% restocking fee. You want to buy up a product to then on sell then be my guest but don't then turn around to play the worlds saddest song on the worlds smallest violin because you took a gamble and lost. The free market is about taking risks - if you win you keep the gain, if you lose you absorb the loss - it isn't up to Apple to 'bail you out' via 'refunds on mass' because you made a bad business decision.

 

[TheBronx]

I think Android Tablets are doing just fine! 45% market share?

http://www.pcmag.com/article2/0,2817,2401531,00.asp

hehe you may be the only one who thinks Android tablets are doing just fine! Even Google admits that they are not. and that they need to change their strategy Shipments do not marketshare make hehe

 

[griz]

Or, people are just getting smarter and realizing they don't need to pay more to get it on launch day when they can just wait a couple of days and end up with the same exact product.

 

[CoolSpot]

They are not resellers they are scalpers. Scalping is illegal for concerts and should be the same for popular deices in short supply.

The true value of a launch day ipad is greater than the price that apple is asking, otherwise there wouldnt be ANY resellers.

Any time Apple completely sells out of a product or have a shortage, they have priced it too low.

Suppose apple has 20 ipads to sell. They price it at $500 there are 40 people interested in buying it. They sell out, 20 people that wanted the ipad (and were willing to pay) weren't able to get it. Apple makes $10K.

Suppose apple has 20 ipads to sell. The price it at $1000, and there are now only 20 people interested in buying it at this price. They sell 20, everyone who was willing to pay gets one, and Apple makes $20K.

In a free market, the person that is willing to pay the greatest amount has the greatest claim to available supply. Resellers are noticing the gap between what people will really pay, what Apple is charging, and making their money on that spread.

If I were apple and wanted to be clever (and make a ****load of money), I'd just auction off the first few batches of ipads to see what people will really pay. As supply exceeds demand, the price can drop off and settle at what is a "normal" (as normal as it can be paying $500 for a $200 item) price.

 

[xfs]

Scalpers create a value. Well, I wouldnt even call them scalpers. Some of them are exporters. They export to countries where the iPad is not officially launched. They help the US with the trade deficit, because $$$s come in the US and iPads go out. Honestly, they help US more than most of you do by closing the trade deficit gap.

They help Fedex/DHL by giving them business.
They help the homeless people by giving them lunch money.

All of you hate them because you are too lazy to wake up before them to stand in line. This is America - survival of the fittest.

 

[Wicked1]

I assume this is good news for regular customers - less people going into stores and buying up as much supply as they can means more for everyone else.

They need to regulate how many one person can buy because it is not all about selling, it is about the customer experience, so if they said max 2 per person, you would see more ppl getting their hands on them then in the black market.

Eventually this will all come to a halt as countries and Apple figure out ways to make it difficult, besides you have to be crazy to pay more than the sticker price for these devices, I would never pay more than the cost of buying it directly from Apple no matter how desperate I am.

 

[scoobydoo99]

Love it. Hope these scammers wasted scores of hours and cried in frustration.

Thank you Apple.

Unfortunately, these people don't think that way. They would think nothing of standing in line all day to make $50. At the end of the day they would feel very accomplished to have made $50 for "free", while you and I would say we lost money after valuing our time. They have no concept of that - it's all about the dollar.

 

[scoobydoo99]

... As supply exceeds demand, the price can drop off and settle at what is a "normal" (as normal as it can be paying $500 for a $200 item) price.

The biggest error in your post is classifying the iPad as a "$200 item". LOL

First, independent tear-downs and parts pricing have estimated the PARTS cost of the new iPad (16GB Wi-Fi) at $364. Then, you have to factor in manufacturing (estimated at $10.75), and distribution. Finally, the original R&D effort should be amortized and factored into the cost of each device.

At $500, the iPad is the bargain of the century. This is a device that, 2 years ago, was predicted by analysts before release to cost $1000. The $500 price point was as shocking when the iPad was released as it is today, and it continues to vex Apple's competitors, who still can't compete on features at that price.

 

[nsayer]

Arbitrage is one of the artifacts of capitalism (at least as presently practiced) that definitely has the scumbag nature to it. Practicers of arbitrage don't add any value to the world for their efforts. They are the quintessential leeches on the market.

That arbitrage is possible isn't to blame on the arbiters, of course, but rather indications of imbalances that we should work to eliminate. It would well appear that Apple is becoming fairly adept at doing just that where their products are concerned.

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They need to regulate how many one person can buy because it is not all about selling, it is about the customer experience, so if they said max 2 per person, you would see more ppl getting their hands on them then in the black market.

The workaround for that is hiring 10 homeless line-sitters to buy two of them for you and paying each with a bottle of Thunderbird.

 

[dgree03]

hehe you may be the only one who thinks Android tablets are doing just fine! Even Google admits that they are not. and that they need to change their strategy Shipments do not marketshare make hehe

All I did was post a link that talks about marketshare, its not me that believe that android tablets are doing well, its the analyst. I own a iPad, so I did not contribute to those android numbers

 

[TheBronx]

All I did was post a link that talks about marketshare, its not me that believe that android tablets are doing well, its the analyst. I own a iPad, so I did not contribute to those android numbers

Oh ok, well you did say "I think Android tablets are doing just fine!" so you can understand why I assumed that you "thinking" something meant you "believed it" hehe

 

[Rennir]

To those throwing around the word 'capitalism':

Image

The term you should be using is free market - the basics being supply and demand. I personally have no problems with these so-called resellers but if I was Apple I'd be sticking the law very rigidly and having a 20% restocking fee. You want to buy up a product to then on sell then be my guest but don't then turn around to play the worlds saddest song on the worlds smallest violin because you took a gamble and lost. The free market is about taking risks - if you win you keep the gain, if you lose you absorb the loss - it isn't up to Apple to 'bail you out' via 'refunds on mass' because you made a bad business decision.

They do take a loss in the form of opportunity costs. Although I agree that the loss is less than what businesses are forced to take when they make a bad investment. But when we compare losses relative to income or working capital, would scalpers actually be losing less? I have no experience with scalpers so I don't know if scalping is their only source of income. If so, then a week's loss of profits due to not being able to sell iPads is a pretty big deal IMO.

But would this restocking fee apply to everyone then? Or would they only ask people who return more than X number of iPads to pay this? Personally, I think if Apple can meet demand, then they won't even have to worry about scalpers. No one will.

 

[alhedges]

The true value of a launch day ipad is greater than the price that apple is asking, otherwise there wouldnt be ANY resellers.

Any time Apple completely sells out of a product or have a shortage, they have priced it too low.

Suppose apple has 20 ipads to sell. They price it at $500 there are 40 people interested in buying it. They sell out, 20 people that wanted the ipad (and were willing to pay) weren't able to get it. Apple makes $10K.

Suppose apple has 20 ipads to sell. The price it at $1000, and there are now only 20 people interested in buying it at this price. They sell 20, everyone who was willing to pay gets one, and Apple makes $20K.

In a free market, the person that is willing to pay the greatest amount has the greatest claim to available supply. Resellers are noticing the gap between what people will really pay, what Apple is charging, and making their money on that spread.

If I were apple and wanted to be clever (and make a ****load of money), I'd just auction off the first few batches of ipads to see what people will really pay. As supply exceeds demand, the price can drop off and settle at what is a "normal" (as normal as it can be paying $500 for a $200 item) price.

Yeah, this is stupid. Maybe when you have your own billion dollar company, you can sell things at retail by auction and see how far that gets you.

The fact is that consumers - for most goods, particularly those sold new at retail - demand fixed prices and want everyone to pay the same price. The result of your "auction" proposal would be that the iPad's sales would rival the sale of the Xoom, since consumers just want to buy the product for the advertised price and be done with it. They won't mess with a product whose price might be $300...or might be $800.

And what if you buy one for $800 on the first day, then return it after 10 days and buy a new one for $400?

It's also weird how people who think they know something about economics don't grasp fundamental concepts like transaction costs.

 

[Maschil]

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)

i would go somewhere else.... you dont need an ipad to live... give me a break.... my point is that apple spends maybe 250 on an ipad 3 and sales it for 500 you buy for 500 and sale for 700..... hard to see what anyone is doing different from apple..... sorry dude aint seeing your point.

 

[britboyj]

I worked in an Apple Store last year for the iPad 2 launch (going as far back as the original iPhone) and all I can say is GOOD! If they'd have tried to return them to my store, I would have made it as hard as possible. You came in with 5 family members and brought 2 each? I need each of those 5 family members to return the 2 that they bought, not just the sleazy middle-aged father.

Resellers are the scum of the Earth.

 

[Maschil]

No. Official resellers, like Best Buy, sign agreements with Apple that involve various other services and Apple gets a cut of that sale beyond the inventory purchase. Apple loses money out of the retail chain due to scalpers.

so its ok for a official reseller? LOL give me a break how about apple charging a ridicolous amount for products that cost 1/2 of that.... i mean where do we start having issues with people selling things.

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Where I work isn't all that relevant here. I just hate knowing a product is out of stock because some selfish prick sent all of his buddies to buy out all of the stock when all I wanted was one. Again, I'm glad the game is over!

would you consider apple a selfish prick????

 

[redkamel]

Wirelessly posted

A lot of people here need to read up I. Capitalism (and ayn rand apparently).

Scalping is not capitalism. It is not a service. iPads are not difficult to acquire, even on launch if you are online quick enough. Scalpers do not climb mountains not dig mines to retrieve iPads. They essentially interfere with a supply chain that is acceptable to the market, and deliberately drive up its price. They provide no service and no value. A scalper does not "wait in line for me" any more than the guy selling tickets for 5x list is.

Profit and opportunity do not equal capitalism.

iPad scalping is different than when apple buys components because components are offered on a contract basis, and are sold for the purpose of making electronics. This similar to how iPads are sold to authorized resellers on a contract basis, and are then sold to customers. Authorized resellers also
add value: location, shipping, salespeople etc. A scalper has no contract, no limits, and no legitamacy when reselling a product they add no
value.

Also someone mentioned "Ayn Rand would approve of this". While I certainly do not agree with her views, I at least understand her philosophy and she certainly would NOT approve. She was a proponent for people who produced things or provided tangible service controlling their work and value. Constraining supply artificially, and reselling someone else's work for profit while adding nothing to it are exactly what she was against.

 

[0dev]

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?

Couldn't agree more.

And redkamel, profit and opportunity is exactly what capitalism is.

 

[gloryunited]

Scalpers won't go away until Apple starts selling in China at the same time as US and Hong Kong.

Those rich Chinese would pay any price to get something they couldn't have had on the US launch day (or some time between US launch day and China launch day)

 

[Rennir]

Wirelessly posted

A lot of people here need to read up I. Capitalism (and ayn rand apparently).

Scalping is not capitalism. It is not a service. iPads are not difficult to acquire, even on launch if you are online quick enough. Scalpers do not climb mountains not dig mines to retrieve iPads. They essentially interfere with a supply chain that is acceptable to the market, and deliberately drive up its price. They provide no service and no value. A scalper does not "wait in line for me" any more than the guy selling tickets for 5x list is.

Profit and opportunity do not equal capitalism.

iPad scalping is different than when apple buys components because components are offered on a contract basis, and are sold for the purpose of making electronics. This similar to how iPads are sold to authorized resellers on a contract basis, and are then sold to customers. Authorized resellers also
add value: location, shipping, salespeople etc. A scalper has no contract, no limits, and no legitamacy when reselling a product they add no
value.

Also someone mentioned "Ayn Rand would approve of this". While I certainly do not agree with her views, I at least understand her philosophy and she certainly would NOT approve. She was a proponent for people who produced things or provided tangible service controlling their work and value. Constraining supply artificially, and reselling someone else's work for profit while adding nothing to it are exactly what she was against.

Scalping does provide a service, if you don't limit who you think scalpers sell to. Who exactly do you think are scalper's customers, just to be clear?

Have you ever been to online websites that sell tickets to events? While I agree that ticket scalping is unethical, the websites still provide a service to some people. People who don't have the time to drive all the way down to wherever the tickets are being sold can pay for them online at a higher price. Let's say I was taking a trip to Florida and I wanted to go see a concert there. Problem is, tickets aren't being sold in my state, so I would effectively have to drive all the way to Florida to purchase a ticket in person. That's where ticket scalping comes in.

And no, they don't. They just happen to be willing to use more of their time by getting to the Apple store earlier than others.

But when someone who has no other form of access to an iPad or does not view lining up on launch day as a valuable use of his/her time and instead, buys an iPad from a scalper, the scalper essentially is lining up for them. The reason that said person doesn't just hire someone outright is due to risk. Risk that the hired person may not be able to get an iPad. To reduce risk, said person only pays after the scalper has the item on hand.

 

[CoolSpot]

Yeah, this is stupid. Maybe when you have your own billion dollar company, you can sell things at retail by auction and see how far that gets you.

The fact is that consumers - for most goods, particularly those sold new at retail - demand fixed prices and want everyone to pay the same price. The result of your "auction" proposal would be that the iPad's sales would rival the sale of the Xoom, since consumers just want to buy the product for the advertised price and be done with it. They won't mess with a product whose price might be $300...or might be $800.

And what if you buy one for $800 on the first day, then return it after 10 days and buy a new one for $400?

It's also weird how people who think they know something about economics don't grasp fundamental concepts like transaction costs.

You can huff and puff all you like, but if demand exceeds supply, the the price charged wasn't high enough. If ipads sold out at $500, they probably would have sold out (or been close) at $700.

People want a new ipad, and its worth more to them than what Apple is asking so resellers get to pocket the cash.

----------

Wirelessly posted

A lot of people here need to read up I. Capitalism (and ayn rand apparently).

Scalping is not capitalism. It is not a service. iPads are not difficult to acquire, even on launch if you are online quick enough. Scalpers do not climb mountains not dig mines to retrieve iPads. They essentially interfere with a supply chain that is acceptable to the market, and deliberately drive up its price. They provide no service and no value. A scalper does not "wait in line for me" any more than the guy selling tickets for 5x list is.

Scalpers provide the service of acquiring goods or services that would otherwise be unavailable.

 

[ChrisTX]

so its ok for a official reseller? LOL give me a break how about apple charging a ridicolous amount for products that cost 1/2 of that.... i mean where do we start having issues with people selling things.

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would you consider apple a selfish prick????

That's completely different first off. Secondly, check the market. Apple is no longer that expensive compared to other vendors. They secure components that give them higher margins based on a lower cost of parts. The iPad, and MacBook Air are very competitively priced IMO.

 

[CodeJingle]

Sorry Apple

The iPad has oversaturated the market, time for android tablets to rise!

The point is that Apple cranked out iPads fast enough and in enough countries at once that the market for scalpers and the black market fell flat. This is great news for Apple and means they are doing better than ever. There is nothing to say about oversaturation.

 

[emulator]

Had the same problems this year. Last year buying dozens of iPads a day making $500-$1000 per day for two weeks and this year I still have inventory and will be lucky to break even.

heh, even the Leappad was better, but the Wii-U, knowing how Nintendo marketing operates, could be huge profit vise.

That's completely different first off. Secondly, check the market. Apple is no longer that expensive compared to other vendors.

True for tablets (because the rest set their prices following Apple) but their PCs are still overpriced or underpowered.

 

[URFloorMatt]

But when Apple buys displays to prime their supply chain and frustrate competitors, we call it "leveraging capital to solidify your market position," right?

Or when bottled water companies charge you double, triple, or ten times the price of tap (which is just as clean, or cleaner in most instances in the US), we don't call it fraud, do we?

Don't misconstrue this as a knock against Apple or anyone else. I'm just pointing out that these so called scalpers are just satisfying demand in countries that normally don't have access to these devices, and behavior labeled illegitimate by some may be defended as a free-market strategy by others.

If Apple really felt these buyers were so nefarious, they would have capped purchases, but Apple didn't.

Do I agree with what they're doing? Not really, but it isn't fraudulent.

Ugh. If I thought it was actual fraud, I wouldn't have used the word "borderline." This kind of practice can be fraudulent in certain circumstances, but it wasn't here. Resellers are not doing anything illegal. But they're not being capitalists; they're being exploitative idiots. And they got what they deserved.

Also, this isn't satisfying demand. It's distorting demand to take advantage of an undersupply and inefficiencies in the supply chain. The "free market" doesn't work when people take advantage of an undersupply. Anyone frustrating the efforts of the free market to operate as it should is about as far from capitalist as you can get. They're just fleecing consumers for personal gain.

Your other examples are poor. If Apple is buying supply and sitting on it? Then, as a matter of fact, that is restraint of trade and possibly illegal--certainly worthy of investigation by regulators. But if they're just buying up supply because they have demand to satisfy, then that's just working smart.

As for bottled water, nobody's forcing you to buy bottled tap water if you don't want it. I can't even conceive how that relates at all to this scenario in any informed and sensible way. The production of bottled water doesn't affect the price of tap water.