Costco Drops Apple
By Tom Ryan
Apparently ruffled over pricing policies and limited access to
product, Costco confirmed last week that the wholesale club is phasing out
all Apple products from its doors, per a mutual agreement between the companies.
Financial Officer Richard Galanti told The Seattle Times, “In
the past couple months, we agreed to wind down.”
Mr. Galanti complained
to the Times that Costco had sold iPods and
pre-loaded iTunes cards for years, but was limited on how much it could discount.
Over a similar issue, Costco shocked many in November 2009 by pulling Coca-Cola
products from its doors because it wasn’t able to price the product competitively
enough. In explaining the missing Coke product, Costco posted signs in stores
and messages online that it wanted to “pass along the value our members
deserve.” The issue was resolved within three weeks.
Mr. Galanti also told
the Times that Apple never allowed Costco to sell
its products online like other retailers.
the news confirmed a rumor in mid-October from the technology website, iLounge,
that the warehouse club was already clearing its Apple merchandise because
it wasn’t gaining favorable enough access to the iPad. The item was launched
at Apple’s stores and Best Buy in April, began selling at Wal-Mart and Target
in October, and at Sam’s Club in November. Mr. Galanti did not discuss the
iPad availability issue to the Times.
Costco “is a huge advocate for its members, and is not afraid of making
big statements to big vendors that don’t provide them with the right motivation
to sell their product,” said Daniel Binder, a retail analyst at Jefferies,
in a report attained by the New York Post. The analyst also said Costco
is not as dependent on Apple as a traffic driver as its discount competitors.
known for its highly-restrictive distribution and pricing policies, has not
commented on the report.
Discussion Questions: What do think of Costco’s move to phase out all Apple
products from its stores? Is product access or pricing restrictions a bigger
issue for a discounter such as Costco?
- Costco reports strong quarter; will phase out selling Apple products – The
- Costco dropping iPod over iPad snub? – iLounge
- Costco confirms it will stop selling Apple products – CNET
- Apple gets booted – The New York Post