Retailers Get the Short End of the iPhone 5

Discussion
Sep 25, 2012

This story sounds familiar, doesn’t it? Apple launches a new iPhone. People go crazy to get it, and demand outweighs supply. Supply shortages are particularly noticeable in stores and websites of companies not owned by Apple.

Days after officially rolling out its iPhone 5, it appears that demand for Apple’s new phone may be even greater than expected. Apple announced that it sold five million units of the new iPhone since it launched last Friday. JPMorgan Chase has forecast sales of eight million iPhone 5s by the end of the year.

Many non-Apple stores ran out of stock almost as soon as they opened as chains such as Best Buy got as few as 10 iPhone 5 units on launch day, according to a Wall Street Journal report. The consumer electronics retailer sent an email from senior VP Shawn Score to customers who had preordered the phone to let them know: "It could take as long as 28 days to find the iPhone you want."

Best Buy was not alone in experiencing shortages as RadioShack, Sprint, Target and others ran out as well. While it may be easy to conclude that Apple shorted resellers of its iPhone, Shaw Wu, an analyst at Sterne Agee, told the Journal that the explanation for out-of-stocks may be in store count numbers. Apple operates 249 locations in the U.S. while its partners have thousands of stores.

While not seen as immediate and direct a threat to retailers as is Amazon.com, decisions by chains such as Target and Walmart to delist the Kindle raises the question if retailers will eventually follow a similar path with Apple products.

What is your take on the shortage of iPhone 5 units in stores not operated by Apple? Will short supplies damage relations between the parties?

Join the Discussion!

17 Comments on "Retailers Get the Short End of the iPhone 5"

Notify of

Sort by:   newest | oldest | most voted
David Biernbaum
BrainTrust

Relationships might be damaged, however, most retailers will refrain from killing the golden goose that lays the eggs. It would be stupid for any retailer not to sell new versions of iPhones when they come onto the market. The events are profitable for retailers on so many levels.

Dick Seesel
BrainTrust

My neighborhood Best Buy store has no idea when it will be receiving more supplies of the iPhone 5 and I’m not sure whether it received any in the first place. (On the other hand, my college-age daughter stood in line for 10 minutes at her local Apple Store on Friday and bought her new phone.) The “short supply” tactic seems to work every time for Apple by whipping demand into a frenzy — but, curiously, some of the evidence suggests that sales were not quite as high as expected. Hard to tell whether this is an outcome of how Apple seems to treat its retail partners or whether they were truly caught flat-footed by demand. And it will also be interesting to see whether the “Google Maps” backlash has any long-term effect on unit sales in the coming months.

Bill Emerson
Guest
Bill Emerson
4 years 10 months ago

5 million units in 4 days? Even with their past success, Apple would be unlikely to produce enough units to fill that kind of demand. Also, there is value to having a feeding frenzy. What’s everybody talking about?

Max Goldberg
BrainTrust

Every time Apple releases a new iPhone or iPad there are shortages. Even Apple itself sold out its September 21 online allotment in one hour. The iPhone is not the Kindle. Retailers would not be wise to punish Apple for the shortages. With the pipeline now open, consumers will be able to buy the iPhone 5 at all of the usual retail locations in the near future.

Ken Lonyai
BrainTrust

Is there any surprise to this story? Apple is about Apple. Stores that are allowed to sell their products effectively “are privileged” to get the opportunity. Shoppers that are disappointed by those stores will likely form some resentment towards Apple as well as the store, but Apple will not suffer for it in the long run. The retailers will always get the short end of the stick. Just yesterday, there was a headline asking if Apple will be the first trillion dollar company. They are on such a roll that they can afford to make enemies and not care, so long as they don’t lose mobile carriers, which they won’t. The carriers desperately need the iPhone.

Interestingly, this phenomena fits with some research I’ve been doing gauging the future of independent sellers vs. company stores and is proving my thesis that generalists have an ever tougher, less opportune future.

Ed Rosenbaum
BrainTrust

There is no way we should have expected anything different. This is the fifth version of the same story. Guess what, it is going to happen again with the next announcement of an updated, new iPhone. And we will be saying the same thing again, as Apple continues to make the march to the bank.

W. Frank Dell II
BrainTrust

I think it is called profit. Apple makes more selling the iPhone in their own stores than when they sell it to Best Buy and others.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
4 years 10 months ago

I love the new commercial for the Samsung Galaxy S-three, mocking the lines outside Apple stores awaiting the iPhone 5.

I’m a Galaxy S-two user, and can hardly wait until my AT&T contract allows me (in a year) to upgrade to the newest Samsung for the lowest price at that time. Maybe it will be the Galaxy S-four! The commercial says it all.

As any of us who are breathing air know, “launch shortages” is part of the Apple marketing plan. It’s the essence of the game for acolytes and Apple evangelists — predictable and expected.

iPhones are simply status symbols, no longer able to “out-technical” or “out-entertain” competitors. Not the biggest or best screens. Not the most apps. Not the most features.

Charles P. Walsh
Guest
Charles P. Walsh
4 years 10 months ago

Shortages on hot products are ubiquitous in retail…lest we forget, how about Apple 1,2,3 and 4; the Kindle; XBox 360, Playstation 3, Atari 2600, etcetera ad infinitum.

Nothing drives demand fever like shortages…it’s marketing 101.

Cathy Hotka
BrainTrust

The shortage is a huge windfall for Apple. The queues and allover frenzy have been terrific publicity.

The flip side is that no company would ever plan to fill all conceivable demand instantly because of the danger of overstocks. Stores other than Apple stores will get their iPhone 5’s and everyone will be happy…but it might take another week.

Matthew Keylock
Guest
Matthew Keylock
4 years 10 months ago

I am not surprised. I think most consumers are now trained to know that the place to buy Apple is Apple. This doesn’t stop other retailers trying to get a piece of the action too. In many locations they are still well placed to do this as the only convenient physical location. Clearly there is tension in the system and a fine balance being managed.

With Apple launching products like Passbook and the growing threat of mobile-led disintermediation of some forms of retail, I wonder how long it will be before retailers begin to consider Apple as a competitor too.

Craig Sundstrom
Guest

It’s all *****’s fault. Well maybe not. I’m not sure why this is even seen as a story — I mean the sun came up today, too. The only question being whether these are “true” shortages or simply publicity engineering by Apple. As for stores discontinuing the items: (1) why on earth would they want to do that? (2) but even if they do, if they’re (apparently) receiving so little stock, what difference would it really make?

Bill Hanifin
BrainTrust

I’ve got to largely side with the comments of Doc Banks below. My gut tells me to resist falling prey to any “must have” trends for consumer products. The faux shortages are an obvious ploy to accentuate demand for a product already in demand.

I stop short of agreeing with Banks on the relative advantages/disadvantages of the iPhone and Android. Both have their “ups” with my key curiosity being the Passbook app included in iOS6.

Fortunately, that app is available to me on my iPad, so I don’t have to turn on my Android to explore the possibilities with Passbook.

Answering the retail question, Apple likely engineered shortages at their retail partner stores and, despite my comments, it is an effective selling strategy for the mass market.

Brian Numainville
BrainTrust

Not a surprise. Apple has tried to train shoppers repeatedly to purchase their products via Apple. While having broader exposure across multiple retail outlets is good, it is not critical to their success.

Mark Burr
Guest
4 years 10 months ago
I’m not so sure that the conversation should be about any level of shortage at all. You have to just be totally amazed that that any retailer of any kind can sell five million of anything in a weekend! Just imagine if GM, Ford, or Chrysler could do that! Yet even more amazing is that they did it at all. It is really amazing — totally amazing! People lined up all over to buy an inferior phone just because of its name! Imagine that! Imagine if Ford had five million lined up to buy the latest Mustang the day it was released simply because it was a Mustang. As it has been already pointed out by Doc and others that there are equal or superior phones available for less at all types of outlets, Apple was able to convince five million and more that they needed to buy the latest product from them! Will it hurt their relations? Not in the least. Those that “need” to have one will wait. They will be disappointed in themselves, not with Apple. They will be self-conscious about what they have in their pocket being judged by their peers until their “5” arrives. They’ll… Read more »
Kai Clarke
BrainTrust

Bad planning, bad PR, bad customer service. These new phone (and product) updates reflect a company that is not in control of the basics of customer service instead of one which is. As a shareholder and a customer, this is inexcusable after 5 generations of iPhone. Apple loses customers, gets frustrated customers, and continues to hurt itself and its perceived customer service. Why do this every generation when a little better planning and logistical implementation can all but avoid this?

Lee Peterson
BrainTrust

All manufacturers hit their own stores first with hot product releases unless they’re doing “exclusives” — which Apple doesn’t do: Nike, Reebok, Samsung, Ralph Lauren, etc. I would hope it’d be a given for other retailers (and customers) to ‘get’ that. One of the many reasons Apple’s plugging $5000 per square foot at retail!

wpDiscuz

Take Our Instant Poll

Do you think Apple intentionally shorted iPhone 5 supplies to resellers such as Best Buy, Sprint, Target, etc.?

View Results

Loading ... Loading ...