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

[alhedges]

Your always going to see negative comments on this forum. You are dealing with a lot of teens who do not understand economics and adults who do not understand what it takes to be successful.

The best is when people post statements like "well that's not how Apple does business" or "they should be like Apple" which makes me laugh because it shows how little people know about business.

Don't be hateful about others making a legal living.

Why not? They are exploiting others with while providing no benefit whatsoever. I think a little Schadenfreude is appropriate.

And reselling products you bought from a retailer is not "being successful".

Telemarketers make a legal living, too. But I will continue to despise them.

 

[fruitycups]

Wirelessly posted

That would be a profit of between50k to 100k... Wow! Thats a lot of profit

 

[Wrathwitch]

I think that Apple should have a max 2 device return policy per item type per day.

 

[Rennir]

Why not? They are exploiting others with while providing no benefit whatsoever. I think a little Schadenfreude is appropriate.

And reselling products you bought from a retailer is not "being successful".

Telemarketers make a legal living, too. But I will continue to despise them.

Really you have a right to hate whoever you want, be it logical or not. But your explanation is lacking because you're limiting who you think are the buyers from scalpers and this, from your point of view scalpers offer no benefit. There are many instances when scalpers offer convenience. And really, businesses try to exploit you as much as they can without ruining their public image too.

 

[Hakone]

I wish Apple had a 15% restocking fee for returns of over 3 devices at one time.

 

[liavman]

Good one. There is little to no difference between iPad scalpers on the one side, and the finance sector (i.e. banks and real estate brokers) on the other. Wall Street is packed with parasites of the market (or "scalpers"), but they are called "brokers" instead.

And the mechanism is called Arbitrage. If a stock is trading for a penny differences in two different markets, or an ETF is slightly mispriced, billions of dollars swoop in to make some money, however small per share, of that difference. It is considered a good thing since prices do not go out of balance.

It does not quite apply in exactly the same way here since Apple does not raise prices when there is a short supply. In a true market, the price will rise to the level when Arbitrage is no longer useful. I guess Apple managed to do that by keeping the supply up and made arbitrage not work within U.S. . Chinese import duty played a part in increasing the cost of the product in China

Having said all this, I do sympathize with the frustration of people waiting for weeks to buy a product ( iPad 2 for example ) for their use when these scalpers were picking up the supplies left and right.

 

[Rennir]

Artificially creating supply constraints by buying in bulk with the sole purpose of reselling at higher prices should be illegal.

In some countries it already is.

It doesn't matter if it's iPads, concert tickets, or bonds/securities.

There aren't supply constraints though. Apple is the only one limiting supply by dictating how many to produce and where to send those iPads. The supply of iPads is unlimited unless Apple decided to stop producing them. All consumers have to do is wait a day or a week.

 

[kalsta]

According to our report many of these resellers were returning their iPads with some individuals returning up to 30 devices at one time. We speculated the reason for the returns was due to a an adequate launch supply of new iPads by Apple.

…

The other major factor seems to be an abundance of supply and a simultaneous launch in 10 countries including Hong Kong. As a result, black market prices for the new iPad in China has been falling.

One dealer even said "This whole game is over", due to the overabundance of supply, describing the market as "flooded".

More or less what I've been saying all along:
https://forums.macrumors.com/showthread.php?p=14156250#post14156250
https://forums.macrumors.com/showthread.php?p=14244924#post14244924

The real solution to scalping is simply to meet demand as close to launch day as possible. I speculated that this might not actually be in Apple's interests though, as having an undersupply at launch creates the spectacle of long lines and a consumer frenzy to get one. When something is hard to get, or considered 'rare', it's perceived value goes up, not unlike the value of precious metals.

Most people seem to think artificially limiting purchases per customer is the solution, but in many ways I think this too is just part of the launch spectacle. It sends the subtle message that these devices are so rare and valuable, and so many people want one, that it would just be wrong for us to let you buy too many of them. It's more about creating perceived value and desire for the product.

So, with all that said, hats off to Apple for rolling out a more responsible launch for the new iPad, where the gap between initial supply and demand was lower.

 

[discuit]

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.

A scalper is not a parasite, he is just allowing the market to reach equilibrium by bringing a good's price up to its true market value. If rich people think an iPad is worth 2x as much on the first day, than shame on Apple for not pricing it higher. [EDIT: I just remembered they actually did this with the first iPhone] "Scalping" is actually a well-established economic concept called arbitrage that is an actual value-added service, it helps match producers and consumers between markets with price disparities.

As other posters have noted, this is basic to capitalism, Western companies buy cheap goods from China and then resell them at a higher price, making a profit. Are you saying that international trade of that sort should not exist and that people are being scammed by not buying stuff cheaply from the manufacturer in China? Or the oil well in Kuwait?

 

[class77]

It would be fun to require an Apple ID to return any iPads with no more than 5 returns in any 2 years. That would force scalpers to eat their excessive products or not make exorbitant profits. No way in the world should they be allowed to return 30. You go for the gusto, you suffer the consequences

 

[benhollberg]

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

In no way is selling iPads scamming.

You can't police it, if somebody wants something that's not available then people will pay over the odds for it.

Capitalism.

Should be 1 per I.D.

Then the scalpers would actually have to wait in line instead of hiring homeless guys or using their dirtbag workers.

It is two per person to begin with, after two hours and the line was gone Apple let anyone go in and buy as many as they could.

Creating jobs and helping out people in need of money is a good thing in my opinion.

The idea is that you do something of value and get paid for that. Scalpers don't do anything of value...

As a ticket broker people often give me money before hand to get them tickets so they are guaranteed to get them. A service so they don't have to wait in line and use their time. Many people are happy to pay for that.

I only wish that anyone who bought to resell, would have been subject to a restocking fee.

If they were to do a restocking fee it would apply to everyone. AT&T for example charges 10% restocking fee for iPad returns. Not just resellers.

Scalping is a crime in most US states.

Not true, last I checked it was legal in one form in 32 states. This goes for tickets and events and in no way covers iPads.

so as long if HongKong get launch early, there will definitely be less demand from the open market.

Hong Kong availability killed the iPad reselling market in the U.S. this year. Same for last year, once the iPad 2 hit Hong Kong the market in the U.S. went to nothing.

How is that a service? Did anybody ask for it?

Yes, people ask for it.

Apple, like any other business in the US, reserves the right to refuse service to anyone. They should have exercised that right more often in the past. It's clear who the scalpers are. I'm sure that store managers and staff were able to identify them but simply weren't given the proper authority to send them to the back of the line.

At the local Apple Store here the managers, and some employees, know me by name and exactly what I do because I am there for every launch. After the line was gone I went back in to buy more iPads, I even told one employee "you'll probably see me returning these by the way it looks so far." They had enough supply for everyone so they didn't care if I was selling or not.

The managers have refused service to me in the past, for the iPad 2 launch on the fifth day myself and about ten others were no longer allowed to purchase iPad 2s. I still got dozens of iPads for weeks because I had employees but this shows that they will refuse service if they must.

 

[Frisco]

Game over Apple. Android will eat your tablet lunch just like did with the iPhone.

 

[noteple]

As a past business owner I don't want to take back stock.
I cannot just resell it. Now I have to re-certify it.
I don't know if it has been mishandled or dropped.
I don't want to lose a customer reselling something that may have been adulterated and re-wrapped.

Restocking changes create ill-will with legitimate consumers.

Open box sales are also done at a loss.

Its all time, effort, and income from my bottom line.

These entrepreneurs insert themselves without welcome into the supply chain to extract a living out of other peoples misery.

Good riddance to these parasites

 

[Gav2k]

Wirelessly posted (iPhone 4s)

Good on apple for having the supplies and china for clamping down on it!

Just ashame apple has to open every box then repackage them! I can see restocking fees coming next year!

I don't know how many times I've stood in line to see people in groups mass purchasing and trying to cut in!

 

[ghostface147]

Game over Apple. Android will eat your tablet lunch just like did with the iPhone.

Because the iPhone is struggling?

 

[antseg]

Game over Apple. Android will eat your tablet lunch just like did with the iPhone.

Mmmyes, because lunch was eaten with the iPhone:
http://www.reuters.com/article/2011/10/11/uk-apple-iphone-idUSLNE79A02B20111011

I mean Android has a fine crop of phones, but that's a bad way to look at what's happening in the smart phone market. Apple is doing worse in China, though, which might be what you were pointing at?

But, honestly, the iPad takes up such a market share that the only way to go is down. Plus, Android will catch up sooner or later and will put out a decent product at a good price (a la Kindle Fire).

 

[Born2run45]

People make a living everyday off reselling products. They are on a site called eBay. They go to garage sales and resale products for triple or more what they pay. Not to mention the people who buy electronics on sale and resale it.

My mistake. I though we were talking about people reselling Apple products on launch day.

 

[8281]

Exploiting a supply shortage to turn a quick profit isn't capitalism. It is scalping, and it's borderline fraud.

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.

 

[AppleScruff1]

I'm glad that Apple had an adequate supply at launch. Well done.

 

[AidenShaw]

I'm glad that Apple had an adequate supply at launch. Well done.

Or, that demand wasn't that high.

Two ways of looking at the same data.

 

[kingtj]

Wrong, wrong, wrong ...

This is just like concert or sporting event ticket scalpers.... May or may not actually be "illegal" (and personally, I don't think it should be) -- but it's still morally questionable at best.

There are proper channels to go through if you wish to resell a company's product. When you opt not to take part as a product reseller, and instead act like an end-user/consumer, only to turn around and mark the goods up, above the retail price - you're trying to take advantage of someone to make your money.

I think this is perfectly justifiable in the right situation -- such as when you perform a service for a customer, but part of that service includes buying and reselling them a product they need to go with the service. (EG. You do on-site computer service and someone asks you to upgrade their computer's memory so a piece of software works properly that you were paid to install and configure. That means you're offering the convenience of saving THEM a trip to the store to buy the RAM they need. So fine -- buy it at a store for them and mark it up a bit for your effort.)

But simply trying to create artificial scarcity by buying up a limited supply of a newly released product, only to turn around and ask more than MSRP price when supplies run out? Not the same thing.

You may not be breaking a law in my eyes, doing it -- but I won't cry when the gamble fails to work for you!

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?

 

[rdlink]

Exploiting a supply shortage to turn a quick profit isn't capitalism. It is scalping, and it's borderline fraud.

Agreed. It's not quite as bad, but along the same lines as someone raising the price of ice and bottled water after a hurricane. Scalpers are scumbags, and deserve whatever bad happens to them. It might not be illegal, and shouldn't be. But it's all about karma.

 

[AdonisSMU]

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?

Please no one is faulting them for playing the game. They are saying the resellers should eat their losses like everyone else who makes a bad investment. Why should these people get a bailout from Apple? Why should Apple eat the cost of restocking the item? I have been seeing a number of people around town with their iPads.

 

[Rennir]

Please no one is faulting them for playing the game. They are saying the resellers should eat their losses like everyone else who makes a bad investment. Why should these people get a bailout from Apple? Why should Apple eat the cost of restocking the item? I have been seeing a number of people around town with their iPads.

Actually I think that's what a lot of people here are saying. But they do lose something due to opportunity cost. I don't know how much operating capital is, but I'd guess that buying 30 iPads takes a big dent out of it. That means they can't use that capital to buy and scalp other items. The fact that they made no profit from scalping iPads means that they lost X days worth of expected profit until they returned the iPads.

 

[AdonisSMU]

If Samsung wanted to be dirty they would do a commercial showing people lining up to return merchandise.

That would be priceless!!!

It would be their merchandise. Plus it would mean Apple would reduce orders from them in the future.