“Apple Computer’s retail stores have been a boon to its overall business, but that may mean bust for some of its key partners. A growing portion of Apple’s sales have been coming through its expanding network of company-owned retail outlets. But some of the company’s resellers — independent retailers and businesses that sell Apple products — complain that a portion of those sales are being taken from their businesses,” Troy Wolverton reports for TheStreet.com.
“Apple now has about 120 stores, up from 86 at the end of September last year and just 65 in September 2003. The stores are mostly located in affluent, urban and suburban shopping areas in the U.S., although the company has recently opened a series of stores in Japan, Canada and the U.K.,” Wolverton reports.
“Apple doesn’t break out the retail value of its reseller sales or the wholesale value of its shipments to resellers. But in the first nine months of this year, just 17% of its overall sales came from its own retail stores, implying that a large portion of its business came from its reseller network,” Wolverton reports. “Retail stores’ share of Apple’s overall sales has been climbing rapidly, generating 14% of the company’s overall sales in its last fiscal year and just 10% in fiscal 2003. Some resellers charge that those gains are coming out of their cash registers.”
“Even if Apple’s stores hurt some of its resellers, some analysts think Apple will do what it can to nurture its overall reseller network,” Wolverton reports. “And some argue that instead of being hurt by the stores, some resellers are actually benefiting from them in that they help promote Apple’s products to customers who are considering the Mac platform and allow consumers to test them.”
Full article here.
Couldnt wait until this story showed up here.
Bottom line, if Apple resellers did a better job to begin with they wouldnt have this problem.
I have a friend who is completely non-technical. He’s in sales and had an order for a client for 100 iPods. He goes to the local Apple reseller and gets nothing but an big arrogant attitude from the sales people there when he asked if he could get a break on a volume order. This actually happened TWICE and he got the same attitude from two different people.
He walked out and ordered from Apple directly. Now theres a new Apple Retail store in his area. He’ll never set foot in that reseller again.
MW ‘directly’, as in, when he got an attitude from the reseller he ordered from Apple directly.
Unfortunately for those businesses, Apple had to go into the retail arena. The small guys weren’t doing enough to promote the Apple products, and, at the time, the big guys didn’t want to sell Apple stuff. So, Apple did the right thing. I think it’s up to the little guy to do what he can to sell Macs. Apple is not gaining a price advantage at their store – they have just made their store the place to be for cool products.
The independent stores are mostly good at individualized support. However, if you just want to try to before you buy, they are too expensive. You might as well just order online if an Apple store is too far away. Also, they don’t acknowledge educational discounts (or Apple won’t extend it) for folks who qualify.
The independent stores are certainly between a rock and a hard place.
I’m self-employed, work from home (in the UK) and don’t have a bottomless budget. My nearest reseller is very keen for me to spend several hundred punds just to have a technician visit, let alone do anything. They NEVER advertise, have no interest in selling Macs to private buyers and invariably quote prices far in excess of the mail-order companies so I never purchase anything from them. Also most resellers just aren’t geared up with showrooms for people to go in and try hardware/software and are generally quite unwelcoming, as a result potential purchasers might as well buy by mail order or on-line. If businesses as well as private buyers are going to Apple Stores then obviously resellers aren’t doing much of a job. Please can I have an Apple Store in Southampton.
I have next to no sympathy for these resellers. Until Apple started up their own stores, their market share was stuck in the mud and their products were relegated to the back corner of most retailers. So now that Apple is again successful (thanks in large part to the Apple retail stores) the other resellers want to cry foul? They need to look at themselves and quit blaming others for their problems.
Zupchuck: I just bought my iMac G5 20″ w/ an educational discount at the Apple Store. You must show a student ID, etc to qualify.
I’ve always been a fan of small independents. I will tell you though, recently, I’ve had it with them. We have several Apple resellers in my city. They have had lots of opportunity to improve the quality of their service and stores before the arrival of the APPLE store. I go into some of these stores and their business is going through the roof compared to a year ago. The Apple revolution is very good for them. Problem is, they are not cleaning up their stores, improving their service, etc. When an Apple store arrives, they will be crying when things thin out. I’m looking to spend about 12,000 on pro gear. They still have some of their high end gear running Jaguar! I want to try the pro apps on updated pro machines. Too lazy to upgrade. I’m now buying online through the apple store.
One problem the independent resellers have is that it is hard to easy find them. I can readily find an Apple store on the Apple website. How can I find where independent resellers are.
Second problem is that the stores are typically cluttered (at least those in Berkeley). Layout and ability to try out floor models are important factors in the success of the Apple store.
Third problem is that peripherals are expensive. I do not buy anything from the Apple store or other reseller because of the prices. Everything can be bought online for a significant discount.
If resellers want to compete with Apple for customers, they need to increase their visibility, make their stores more attractive and offer good deals on peripherals.
I know these guys kept Apple alive in the past but after all they were in this to make money. No-one can rest on their laurels, if they want to increase their business, they need to consider advertising and remodeling their stores.
You know, I gave the Apple Store 4 chances since it opened up in the Yorkdale Mall in Toronto, Canada. When I first went in I asked if anyone could demonstrate Logic to a couple of friends of mine… no one had the knowledge, I was so disappointed. After visting a few more times and asking if there are any knowledgable people, I was sorely disappointed.
The resellers have a GREAT ADVANTAGE over the Apple Store’s main staff… The resellers employees know a hellava lot more.
Service and knowledge…
IMHO
Jb
hammer:
So… what kind of a discount did Apple offer?
Most resellers I know are also Apple Authorized Service Providers, and its in repairing Macs where they make the most money. Those that are only resellers are probably in more trouble.
hammer – i wouldn’t blame the reseller for not giving a volume discount. I’m not sure how healthy their margins are on iPods. Typically most resellers are more than happy to give a break on accessories to the iPod.
“So… what kind of a discount did Apple offer?”
I dont know the specifics, but they did offer him a volume discount”
The bottom line is, my friend was willing to buy even without a discount, but the arrogant attitude of the employees at the store really turned him off. Me being the big Apple fan and evangelist got an earful about it from my friend. I told him to call Apple directly and that a store would probably be coming to his area soon.
I dont feel any pity for resellers who dont clean up their act.
Good for you! A 20″ iMac is a great machine, and getting an educational discount at the Apple Store is a definite perk of shopping there.
But, as Zupchuck pointed out in his post, the independent Apple resellers either cannot or will not extend an educatational discount to qualifying purchasers, unlike Apple themselves.
I don’t believe that the independents are being slighted by Apple, as they had every opportunity over the past decade to turn things around. And their claims of preferential treatment lack merit. Supposedly, Apple is selling the computers to the independents at the same price they ‘charge’ their own retail or web stores (sure it’s just on paper, but it does come into play when it comes time to budget a store). Add to that the exhorbitant leases that Apple pays to be in high-profile locations, and the relatively higher wages (for retail) that they pay their workers. On top of that, the construction costs of each store must be astronomical, all that slate and metal and wood and glass…
And still, Apple Stores are willing to take 5-15% off for anyone who can flash a university ID. They give their customers a pleasing atmosphere to shop in (the independent I used to frequent was a barely-lit cave on the back end of dead suburban strip mall with outdated software running in last gen machines), and the sales staff at Apple Stores are generally knowlegeable and freindly, unlike the suspicious bunker mentality and superiority complexes I used to have to endure at my local independent.
The independents are shooting themselves in the foot by not keeping up with retail trends, and then they blame the product (which seems to sell fine in the right location) for their woes. I can see why Apple decided to step up and do it themselves…
Tucker,
I am familiar with the educational discount at an Apple Store – my wife and father are teachers, both have picked up equipment there at discount.
The Apple resellers (the independent ones, anyway) are unable to extend the discount to qaulified folks. Apple won’t do it.
For anyone wondering what the discount is, go to the Apple website, enter the store, and go into the educational instituion part. Just pick a school to see what the discounts are. It’s nice!
Ah, thanks for pointing that out… I missed that. I’ve only been to a few independent Apple resellers and I have yet to have a good experience.
To confirm – I have spoken w/ a lead apple corporate sales rep.
Apple is absolutely undercutting the resellers:
– No price protection on inventory
– No volume or education discounts
– No registered directory of resellers
– No incentives at all. Apple direct will offer businesses a discount on a SINGLE server system bought directly. No volume required.
Fine if they want to be the whole retail business, but they should stop pretending they’re still “nurturing” their indie partners. They’re not. They’re crushing them without apology.
Hi,
Yeah, I just bought an iBook from a local reseller in my area and it was a pain – I even gave up my educational discount to support my local economy. The salesperson was totally incompetent. For example, he tried to convince me that Norton AntiVirus 9.0 was the newest version (it is actually NAV 10.0). I bet that I know tons more about Macs than this guy ever did!
From my own experience as a salesperson, I can see two possibilities for the salesman’s poor salesmanship:
1) He hasn’t been trained adequately with the products that he is selling.
2) He was just trying to make a sale and didn’t give a hoot about me as a customer.
Either way, the situation is clearly unacceptable and Apple had no choice but to enter the retail market. Here’s to an Apple store coming to my town soon… :~)
Regards,
Linuxlover
When has Apple ever “nurtured” these resellers? I don’t know when Apple has EVER allowed educational discounts or incentives from these resellers. And Apple does have a registered directory of resellers…
http://www.apple.com/buy/
Question: Do you even know what you’re talking about?
Actually, as an Orange County resident, I’m lucky enough to have a plethora of Apple stores and resellers within 30 minutes of where I live.
I don’t bother with the Apple Stores anymore. My favorite reseller is MicroCenter–a relatively small chain. They have more Mac software than the Apple Stores. They also carry the “hybrid” (Mac & Windows) software in both the Mac and PC areas as well as having a little sign in the Mac section saying that if you don’t see what you’re looking for, check out Aisle 14 (where they keep the hybrid CDs). They’ve always had a separate “Mac room” with all the models nicely displayed and the salesmen are “Mac only” salesmen who know the products.
I actually had to laugh when Doom 3 came out for the Mac. I was down at South Coast Plaza for something else and I figured that, while I was there, I’d pick up a copy of Doom. It had just come out the previous day. So I dropped by the Apple Store–no sign of it. I asked one of the salespeople. He told me it wasn’t available for the Mac. I walked over to one of the Internet-enabled Macs and showed him that it was. “Oh. Well, I guess we don’t have it, then.”
Stopped by CompUSA on the way home. There were a bunch of them sitting out. Apple got beat by CompUSA, f’krissakes!
Another entertaining one: My Mom has an old Performa. I was debating getting her a Mac mini and I wondered if people at the Apple Store knew of anybody who sold those Apple Display Adapter-to-VGA adapters so Mom could use her Apple 1705 display. Heck, even the geniuses had no idea what I was talking about! I definitely had the feeling I was getting brushed off.
Stopped by MicroCenter. The guy at least knew what I was talking about (“Oh yeah! I remember those!”) even though they didn’t carry them. He suggested a web site.
Heck, one time I was in the Apple Store and I overheard someone talking to a salesperson. They salesperson had no clue whatsoever. I stepped in (“I’m sorry, I couldn’t help overhearing.”) and answered their questions while the cute salesperson hung around. They ended up buying an iMac. I got a nice “Thanks for your help!” on the way from the people who bought the iMac. Hardly even an acknowledgement from the salesperson.
I expect to have to do that at Fry’s or CompUSA (when the Apple rep isn’t there), but when I know more than the Apple Store salespeople, there’s something rotten here.
That’s why I’ve given up on the Apple Stores. About the only time I go to one nowadays is for “events” (like the Tiger launch) or to see the latest hardware (like the Mac mini). But to actually buy? I’d far rather give my business to MicroCenter (for the big things) or CompUSA (for the small things).
1. Apple does offer standardized volume discounts. These discounts apply to all Apple products and can be obtained by calling your local Apple store and asking to speak to the Business Accounts Representative (all stores have at least one) or speak to the store manager.
2. Currently, Apple does not serve the middle-income areas of the planet, so this is a huge opportunity for ANY Apple reseller. Granted, the resellers that are next to high-income malls are seriously hurting (as are Apple’s own stores within 20 minutes of a new store), but any good business person knows the motto of high sales; “Find a need and fill it!” Stop whining, embrace the fact that there is now a walk-in service center near you that is the highest rated in the computer industry, and then relocate a bit further out where Apple wouldn’t dare to go.
3. Yes, it is true that new Apple stores do not come fully loaded with personnel that are experts in all applications. The managers try to create a staff with diverse knowledge. This may even include a few people with little Mac experience at all, but have excellent people skills (it’s easier to teach someone about a Mac than to teach someone not to be a prick to strangers). There is nothing stopping a reseller to emulate exactly what Apple does by offering free classes and seminars about Tiger and various applications. This gets people into the store and forms business relationships.
4. Apple does NOT do on-site repairs. They have a small list of authorized local business that they refer to customer. A reseller can offer much more than Apple does and do it better.
5. You won’t see Apple supporting the local Little League team, have a “Free iPod & Mac Clinic” booth at the town’s Harvest Day Festival, or donating iTunes Music Store gift cards to the local Business Association’s fund raiser. Resellers should contact Apple’s Marketing department for Apple-logoed freebees for these charitable events. You’d be amazed how much Apple will give to these organizations… perhaps a free iPod for the raffle if you just ask.
Resellers should stop whining about the big splash Apple caused and work WITH Apple to try to be more of a big fish in your own pond.
By the way…
Regarding ” I wondered if people at the Apple Store knew of anybody who sold those Apple Display Adapter-to-VGA adapters so Mom could use her Apple 1705 display. Heck, even the geniuses had no idea what I was talking about! I definitely had the feeling I was getting brushed off.”
This is a lie or a strong exaggeration at best.
The Mac mini COMES WITH the adapter and every Mac sales person and Genius knows that!!
“They salesperson had no clue whatsoever. I stepped in….”
As I stated earlier, the Mac Specialists are not infinitely wise in all things Apple but they do know where to find the answers. The salesperson should have thanked the individual for the information, but missing one piece of information does not make a person an idiot and hardly represents the entire Apple staff.
But, if that is what it takes to keep your ego fully inflated out of all proportion, I am sure the Apple staff was happy to assist you.
We have five or seven Apple resellers in my city. Two are Apple only. They have very poor layouts, uninformed and surly staff, and little or no inventory. When you’ve decided what you want they have to order it.
The others are general computer stores or general computer and electronics stores. If you want information on a Mac you have to ask for the Mac specialist, who isn’t there every day and isn’t there all day for the days he does work. I once waited over 45 minutes for the Mac specialist to get to me. I wasn’t desperate, just curious as to how long it would take. I still don’t know. I gave up. The other sales staff refuse to talk to you about Macs. (Don’t ask me why. I don’t know.)
The service departments in all of them suck.
I have gotten educational discounts from resellers in Canada.
Our local resellers are very, very bad at what they do. The only reason they manage to stay in business is people want Macs and seek them out. If they actually had to sell the product – convince someone to buy it – they would be out of business in six months or less.
I buy online, but I’m considering a day trip to the Apple Store in Lynnwood just to see all the shiny toys. We’re too small for an Apple store, but one across the water would probably shake things up. Lots of locals would take the ferry ride for an actual retail experience.
Apple doesn’t owe our local resellers anything. They have added nothing to the brand, failed to increase market share, and can be said to have damaged Apple’s image with their shoddy practices. They have gotten a free ride with a product that sells itself.
A follow up on all the people who have had good reseller experiences.
Good resellers don’t have to worry about competition from Apple Stores unless the stores are within five minutes of each other. Good resellers will in fact help keep Apple Stores on their toes.
As an Apple Reseller, I would like to address some of these comments ( I apologize for the length):
1) Apple is a large corporation and has the money to spend on their own stores. Their stores get display items we (resellers) do not get or have access to. That’s the way it is – it’s not a big deal. According to our customers, while the Apple Stores look excellent, they shop at *our store* because of superior product knowledge, competitive prices and lower total cost of ownership.
2) With the profit margin we work on there isn’t enough to make our store(s) ‘like an Apple Store’. On the other hand, there *is* enough to make sure we have current, fully operational Macs on our sales floor, an excellent supply of peripherals and software (500+ *current* software titles in stock in our case), and also that our store(s) are clean, well organized and well lit. If I went to a ‘reseller’ that had outdated equipment I would question whether they were actually an Authorized Apple Specialist reseller. None of the ones I know of are like that. i.e. the guy at our local flea market has Macs, that doesn’t mean he is an Authorized Reseller.
3) Instead of spending thousands of dollars buying teak bookcases, *our* dollars go toward training our staff to ensure that our customers have the best possible buying experience and the highest level of service possible – Apple Specialists have some of the best service scores for ANY computer dealer/reseller in the world.
4) Our pricing the about the same as mail order.
5) Apple resellers are NOT given academic pricing, so therefor we cannot offer it to customers – even if we wanted to.
6) If you want to find an Apple Specialist reseller, go to
http://www.applespecialist.com
Apple Specialists are the top rated Apple resellers.
7) As far as Apple Specialist Resellers improving ourselves and doing a better job: Most of us do an excellent job at representing Apple and Apple products. If you go to an Apple Specialist and have a problem or issue, PLEASE tell the manager or owner. I can tell you from first hand experience that a majority (all?) of Apple Specialist owners *want* to hear from you if there is an issue – that’s the only way they know there’s a problem. I have visited many Apple Specialists across the county and as a whole we do a darn fine job.
8) In general, Apple treats us fairly and has some programs in place that help us sell more of their products. Is it ideal? No. But we appreciate their efforts and continue to look for ways to jointly get more Macs into the hands of more people. There is always room for improvement on both sides and sometimes it takes a while for the corporate wheel to turn.
9) In some cases, Apple competes with resellers on price. That’s the way it is. But there’s more to it than price for many people. Assuming many of you have Macs, you probably paid more for it than a windows box. Why? Because its better- waaaay better. Even though we don’t have the ability to offer academic pricing, many of our customers are teachers and buy from us anyway. Why? Because all-in-all its a better experience for them in the long run – it’s the total cost of ownership. It costs them less (time, money) over time to do business with us than direct.
10) Bottom line is that our customers are THE most important aspect of our business. Without our customers (you), we would not BE in business. Most, if not all, Apple Specialists feel the same way. I am not sure that any large corporation can have that same perspective due to their size. They can say it, but we can ACT on it.
Please note that these comments are strictly my opinions based on my experiences. Check out your local Apple Specialist and see what you think.
To A Reseller’s Point of View
You sound like a good reseller. You also sound as if you are planning to stay in business. Are you upset about Apple running its own stores? Are you expecting to be driven out of business?
My experience on your points.
1) No comment as no local Apple Store to compare to except the local resellers do not display knowledge available from the Apple website.
2) The local resellers are not clean, well organized or even – in one cse – well lit. They sell current models, but they don’t stock them. They all have the Authorized Reseller sticker and stationary. I think the most software titles is ~50.
3) The local resellers, including the two Apple only resellers, do not share your philosophy. I wish they did.
4) Yeah, the locals are price competitive with mail order. The shipping time is actually longer. (I suspect orders are bundled.)
5) In Canada you used to be able to get education discounts through resellers, but I haven’t tried it for over six years. If this is something Apple does hold back from resellers, its not a nice practice. I would accept it being limited to campus stores, but not all institutions have a campus store, certainly not K-12.
6) Is this U.S. only? How thick on the ground are they compared to Authorized Resellers or Apple Stores?
7) Very good. The way business should be done. Not, sadly, they way many people do business.
8) Has Apple cooperation declined with the introduction and growth of Apple Stores? Are there signs that Apple is preparing to eliminate you from the market?
9) Unfortunately not my experience with my resellers.
10) Would you be available to give a training seminar to the local yahoos? It’s a very nice city (and gave birth to the number one yahoo.)
Are resellers like yourself (the good ones who build a loyal customer base with quality service) upset with the success of Apple Stores?