As far as brand awareness goes, few companies even begin to compare to Apple. I’m sure you’ve noticed the strange popularity of the Apple Stores in your city, and the enormous crowds that they gather when a new product is being launched. This reinforces the claim that the Apple logo is one of the most recognizable symbols in the world. So it seems perfectly logical that, if you are an e-retailer, you should sell Apple merchandise.
Right?
Wrong.
The fact is, selling Apple products is one of the most painstaking, difficult endeavors that your business is likely to face. I know this seems counterintuitive, but in this lesson I’ll go over the horrible truth about selling Apple products.
1. Your profit margins will be razor-thin
Let’s use a simple example to illustrate my point: Customer A walks into an Apple Store and buys an iPhone 5s for $845. How much does it actually cost Apple to build this iPhone 5s?
According to ZDNet, just $218 (and this includes manufacturing costs). At first glance, this looks like a great opportunity for retailers. You simply buy the Apple merchandise wholesale and resell for a thinner profit margin. But there is a kicker — the discount Apple offers to retailers is razor thin.
Another article on ZDNet describes the situation in greater detail. Apple sold the first iPad to retailers at a 3 percent discount! Apple is able to do this, and the big retailers accept it, because of the strength of the Apple brand.
What does this mean for the average e-retailer? Basically, if your business is to compete with these big retailers you will have to reduce that tiny profit margin even further. At the end of the day, your potential profitability does not justify the investment.
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Furthermore, it is important to note that the big retailers that accept the 3 percent discount only do so because they know that they will make most of their profits from peripheral products that are associated with iOS devices: earphones, warranties, iTunes gift vouchers, cases, specialized accessories and so on. It's much more difficult to upsell multiple products online than it is in a physical store.
2. The application process to become an Apple distributor is very difficult
Before you can even begin to think about selling Apple products, you’ll need to be accepted as an Authorized Apple Reseller. As you may have guessed by the tone of this article, the process is far from easy.
According to the Authorized Apple Reseller Application website, you will need to take the following steps for the pre-application process alone:
- References - You will be asked to provide up to three (3) client, industry, or vendor references.
- Documents - You will be required to provide the following documentation in electronic form (PDF, JPEG, TIF, PNG, or GIF):
- Business License
- General Liability Insurance Certificate
- Photos of each sales location (interior and exterior)
- Environmental Remitter number(s)
- Resale Tax Certificates
Accounts claiming exemption for Provincial sales taxes must submit a resale tax certificate for each province that you ship to. You can submit your resale tax certificates to Apple by completing the online Exemption Certificate Manager. Upon completion you will receive a Tax Certificate ID Confirmation Code, to be entered into this form.
What’s even more frustrating is that Apple is currently not accepting reseller applications.
3. Apple products are imitated by scammers
If you decide to work around Apple and purchase your iOS Devices wholesale from another retailer, you are opening yourself up, and your customers, to scammers. These scammers know that Apple products are extremely popular, and they play on the scarcity created by Apple. If you see a deal that is too good to be true, then 99 out of 100 times, it is.
The last thing you want to do to your customers is to sell them second-rate products. It will destroy your reputation. If you are intent on following this route, there is one option open to you: buying refurbished Apple products from liquidators.
Case Study: The demise of the independent Apple reseller
Yet another excellent article from ZDNet, "The Demise of the Independent Apple Reseller," describes the impossible situation facing independent Apple resellers. If you are intent on becoming an Apple reseller, you should read this article very carefully.
The article can be summarized in one telling passage:
The barrier to entry for an average (or even a well-funded) entrepreneur are impossibly high. How could an independent Apple reseller compete with Cupertino's retail juggernaut that gets inventory first, in greater quantity and at cost?
The harsh reality of e-retail is that you will not be successful if you focus on selling the wrong product. Why spend thousands of dollars trying to compete with the biggest companies in the world when there are literally hundreds of thousands of other products available online — products that can be resold for a healthy profit.
If you have your heart set on selling Apple products, check out our list of trusted suppliers who stock iPhone and iPad accessories that you can resell for a profit.
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