Apple Store eats channel business

Apple Store eats channel business

Apple resellers are becoming increasingly disgruntled with the product expansion and aggressive pricing of the vendor’s online presence, Apple Store.

While a level playing field exists for hardware – allowing resellers to take advantage of face-to-face contact with customers and value-added service levels behind the sale – channel partners are worried about discrepancies appearing in the pricing of some third-party software and peripherals.

Several resellers contacted by ARN said they had noticed a significant increase in the number of third-party products carried by Apple Store. One claimed the number had doubled during the past year.

Apple refused to supply figures detailing the growth in products offered by Apple Store during the past year but said any expansion was only in line with other parts of its business.

“Apple shouldn’t be competing directly because it makes the dealer channel weaker,” Next Byte director Adam Steinhardt, said. “They talk about resellers adding value but the margin on software is important to us and it is being eradicated.”

Apple marketing manager, Arno Lenior, said he was aware that resellers were unhappy with some pricing on Apple Store.

“Resellers are not backward in coming forward,” he said. “They’ve highlighted a few areas where they have to really compete and we are currently addressing the Adobe range.

“We look to work with our resellers and will take their views on board.”

The general manager of Apple Centre Broadway, David Vanderkley, complained some items were advertised on the Apple Store site at cheaper prices than he could buy them from the vendor.

He had also noticed a rise in the number of potential customers complaining about the difference between his prices and those of Apple Store.

“People are coming in and asking us to match the Apple Store price. We never used to get that a year or two ago,” Vanderkley said. There is also a rumour circulating in the reseller community that the vendor is allocating Apple stock to its online store before supplying dealers. The suspicion has arisen from conversations with customers, some of whom have managed to buy products online while resellers have been unable to locate stock.

“Apple has to work out if they are a channel or retail company,” Steinhardt said. “[The current situation] is less than ideal but we are not scared of the competition.

“Most people like to have the retail walk-by experience and realise the Internet is not necessarily the best way to shop. It is more expensive [to visit a shop] but at least you get to speak to someone.”

Vanderkley also remained bullish about the channel’s ability to compete with Apple Store.

“There is no service when you buy from the Internet and there will come a time when you need to speak to someone,” he said. “If people haven’t bought from us then we won’t offer support because we haven’t made any money out of it.”

But he admitted Apple Store’s increased third-party software presence was a worry for resellers.

“There’s not much money in selling computers anymore," Vanderkley said. "We make our money on third-party stuff."

“We are not in this business to put our resellers out of business,” Lenior said. “We are effectively a channel organisation and want to work with our resellers to broaden the Mac market.”

For more on this story, see this week's issue of ARN.

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