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Apple plugs iPod loophole discovered by clever resellers

post #1 of 19
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As it struggles to maintain pristine control over its iPod inventory and manufacturing cycles, Apple Computer has decided to indefinitely bar the majority of its authorized resellers from placing direct orders for engraved iPods, AppleInsider has learned.

Apple offered no explanation in removing the option from its reseller online store, but sources with ties to the company say the word on the street is the option was discontinued due to "abuse" by its resellers channel.

The Cupertino, Calif.-based company's independent dealers have largely accused Apple of using its own chain of retail stores and a series of dirty tactics in an attempt to muscle them out of business.

Last year, a group of those resellers in conjunction with consumers filed a 26-page class action lawsuit against the iPod maker, accusing it of unlawful business practices, breach of contract, misappropriation of trade secrets and other practices deemed illegal under consumer law.

One of the accusations made against the company is that it unfairly withheld stock of popular iPods and Macs from its authorized resellers in order to supply its own brick-and-motar retail stores.

Often the last in the supply chain to receive stock of constrained Apple products such as the latest iPods, some resellers reportedly formed creative solutions to the problem in order maintain their flow of business and meet the needs of their customers.

According to one source, some resellers found that placing orders for engraved iPods allowed them to circumvent Apple's supply chain restrictions, effectively bypassing the long queue designated for orders from the reseller channel.

Crafty resellers were able to use the technique to quickly fill large orders for iPods by requesting each player with a simple engraving, such as a period ("."), sources have said.

Apple is reportedly considering an alternative method for allowing independent resellers to place orders for engraved iPods, but in the meantime has told the dealers to find their own means of engraving the players post delivery.

For the most part, Apple resellers are not sore over Apple's decision to plug the loophole, as they may now order non-engraved iPods directly from the company as a result of the change instead of relying on its two US distributors. Still, one reportedly quipped that only the Apple of today would consider "ordering too many iPods" a means of abuse.
post #2 of 19
If resellers were seriously abusing the engraving by ordering iPods with a period... the option should have been shut down. If I was a customer and received an iPod with a period on the back of my iPod from say... Macmall... I'd be pretty pissed. If they were VALID engraved options, then I see it as apple being rough with the resellers.

 

 

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post #3 of 19
Come on. Get off your high horse. Why do you think people order from resellers? It's because they can usually save a few bucks compared with ordering from Apple, which will almost always charge you sales tax on top of full retail price. And Apple wasn't exactly playing above the board if their accusations of Apple serving its own stores first are true. Two wrongs don't make a right, but I don't see you getting all outraged about consumers who placed their orders through resellers being forced to wait even though they may have placed the earliest orders.

You'd be "pretty pissed?" Yeah, right. I seriously doubt you'd even notice a small dot in the middle of the iPod's back unless it was pointed out to you. And I seriously doubt anybody else would care as long as they got their iPod. Maybe you should first get "pretty pissed" about all those engraved serial and model numbers and other information already on the backs of iPods.

I don't think you even understand the point of the article. "Seriously abusing the engraving?" That wasn't the point. Just how much work do you think laser engraving takes? It's almost certainly fully automated and takes about ten seconds per iPod, costing several cents at most. Here's the Cliff Notes version of what the actual story was: Apple sent iPods to their own stores first. Resellers were forced to wait. They discovered if they ordered engraved iPods, they'd get them faster. So they had them engraved inconspicuously so their customers wouldn't have to wait. Apple will no longer allow engraving. Capisce?
post #4 of 19
You can roll it around however you like; it's still resellers tricking their customers. If you order an engraving-less iPod and get one with an engraving, that's fraud, nothing else.
post #5 of 19
Quote:
Originally posted by Kolchak
Come on. Get off your high horse. Why do you think people order from resellers? It's because they can usually save a few bucks compared with ordering from Apple, which will almost always charge you sales tax on top of full retail price. And Apple wasn't exactly playing above the board if their accusations of Apple serving its own stores first are true. Two wrongs don't make a right, but I don't see you getting all outraged about consumers who placed their orders through resellers being forced to wait even though they may have placed the earliest orders.

You'd be "pretty pissed?" Yeah, right. I seriously doubt you'd even notice a small dot in the middle of the iPod's back unless it was pointed out to you. And I seriously doubt anybody else would care as long as they got their iPod. Maybe you should first get "pretty pissed" about all those engraved serial and model numbers and other information already on the backs of iPods.

I don't think you even understand the point of the article. "Seriously abusing the engraving?" That wasn't the point. Just how much work do you think laser engraving takes? It's almost certainly fully automated and takes about ten seconds per iPod, costing several cents at most. Here's the Cliff Notes version of what the actual story was: Apple sent iPods to their own stores first. Resellers were forced to wait. They discovered if they ordered engraved iPods, they'd get them faster. So they had them engraved inconspicuously so their customers wouldn't have to wait. Apple will no longer allow engraving. Capisce?

I understood the article just fine...

I sense a little hostility about this subject.... you must be part of a reseller...

Point is... if I was a customer... and I got an engraved iPod i didn't ask for... that is bs... wether it does save me a few bucks or not.

 

 

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post #6 of 19
Hmmm let me see.. I'm imagining I'm 18...

1)I want an iPod now, but I can't get one because they're in short supply and sold out. I'm pissed off.

or

2) I want an iPod now. I can get one from a reseller and it has an almost-invisible '.' on the back.

Imagine you're 18. Which would you choose?

post #7 of 19
I am 30 and a "." would mean nothing to me. Two weeks of use and you would be unable to distinguish it from the rest of the scratches.

Were they smart they would order engravings like "iPod Video" or "Designed by Apple" next line "in California"
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post #8 of 19
I dont get it, you can get it FASTER if you order it engraved with a "."? whats the logic here? If Macmall orders 100,000 ipods, they get them in less time if they are engraved? they get unusualy high priority? WTF?

So NOWHERE at apple does it raise a red flag when there is an order for 10,000 units with the same engravment on the same ticket going to a resellers warehouse?

And why WOULD apple want to help the resellers? they buy a $100 item for lets say $85 and sell it for $94...they undercut Apple...if you buy a $99 ipod shuffle from Macmall, Apple, hypotheticly, sees say, $85, the reseller keeps $9 andthe consumer keeps $6, so by selling direct, they make like $15/unit more...
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post #9 of 19
Yes strange indeed. It probably have absolutely nothing to do with the rumours that Apple is prioritising its own sales channels.
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post #10 of 19
Part of what Apple may have been concerned about is that an ingraved iPod in a non-returnable item. If you bought an iPod from McMall (or whomever), and it developed a problem that led you to take it back to the nearest Apple retail store, and you were told it couldn't be returned because it had been engraved, wouldn't you be pissed, too?
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post #11 of 19
Quote:
Originally posted by rwahrens
Part of what Apple may have been concerned about is that an ingraved iPod in a non-returnable item. If you bought an iPod from McMall (or whomever), and it developed a problem that led you to take it back to the nearest Apple retail store, and you were told it couldn't be returned because it had been engraved, wouldn't you be pissed, too?

First of all its not Apples problem. Its the problem of the reseller.

And if it developed a problem ingraving means nothing, Apple would still (have to) honour the guarantee.
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post #12 of 19
my take on this.

shame on apple, they treat resellers like dirt. regardless if they found a loophole, they've been mutilating them for a while now.

shame on the resellers. selling ipods with engraved periods on the back of the device is just wrong IF they aren't telling the customer about it.
post #13 of 19
Quote:
Originally posted by emig647
I understood the article just fine...

I sense a little hostility about this subject.... you must be part of a reseller...

You sensed wrong. It's not hostility. It's intolerance for stupidity.

Quote:
Originally posted by a_greer
I dont get it, you can get it FASTER if you order it engraved with a "."? whats the logic here? If Macmall orders 100,000 ipods, they get them in less time if they are engraved? they get unusualy high priority? WTF?
...
And why WOULD apple want to help the resellers? they buy a $100 item for lets say $85 and sell it for $94...they undercut Apple...if you buy a $99 ipod shuffle from Macmall, Apple, hypotheticly, sees say, $85, the reseller keeps $9 andthe consumer keeps $6, so by selling direct, they make like $15/unit more...

Yes, I guess you really don't get it. Apple apparently prioritized its own stores first and personalized iPods second, both over its retail partners.

As for why they should not want to get all the resellers frustrated, see this article. It's an old article, but the points are still valid. Note especially the paragraphs near the end that says:

"Putting priority on its own stores over dealers could come at a high price for Apple, considering how many more dealers there are, analysts said. CompUSA alone has more than 220 locations, compared with 28 Apple stores. Independent dealers add almost another 200 stores carrying Macs.

"The relationship with dealers is an important one," said ARS analyst Toni Duboise. "It's not something any company wants to do--degrade the relationship with these important partners. I know Apple wants their own stores, which offer a consistent experience, but they have to court these dealers if they want any hope of increasing their market share beyond 5 percent."

If you think being able to buy Apple products only in Apple Stores and their online store would be a good thing, you really don't understand business and economics.
post #14 of 19
I think that the biggest problem is that Apple has marketing people that should be fired because they can't anticipate the market demand accurately and thus create supply problems. Seems like a very common problem in many companies these days!
post #15 of 19
I think if they could produce more without high risk or high cost then they would... supply and demand is not a simple thing at all.

As for the logic about retailers: Obviously if apple is feeding its supply to its retail stores and not getting much to CompUSA, then obviously the Apple Store is pushing the supply to its limits.

Apple wants you to buy the product at CompUSA too, but obviously if supply is short they would prefer their stores too have them in stock. CompUSA would obviously prefer their stores to have it in stock...but tough for them. What else is there to do? Apple should put CompUSA on its list first? CompUSA also sells products from 1,000 other vendors so who cares?
post #16 of 19
Quote:
Originally posted by Kolchak


If you think being able to buy Apple products only in Apple Stores and their online store would be a good thing, you really don't understand business and economics.

No, All I am saying is that since Apple makes the product, they can sell it however they want...wether it is good for business or not...
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post #17 of 19
Quote:
...
And why WOULD apple want to help the resellers? they buy a $100 item for lets say $85 and sell it for $94...they undercut Apple...if you buy a $99 ipod shuffle from Macmall, Apple, hypotheticly, sees say, $85, the reseller keeps $9 andthe consumer keeps $6, so by selling direct, they make like $15/unit more... [/B]

u forget about all the overhead and cost associated when selling through their own channels... especially if it's b&m. so your logick above is flawed to some degree.
post #18 of 19
If those resellers were really smart they would order them the word "iPod" or "iPod (insert model here)" no one would complain about that, most consumers probably wouldn't think that's irregular.

But how engraving makes shipping faster is beyond me.
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post #19 of 19
Quote:
Originally posted by a_greer
No, All I am saying is that since Apple makes the product, they can sell it however they want...wether it is good for business or not...

I think it is incredibly bad faith for Apple to treat its independent resellers like this, especially the ones that held on and kept Apple alive when Apple was in trouble.

I don't think Apple is interested in opening up new markets but rather killing the independent resellers. The local apple store opened up in an area already pretty well served by the local reseller. A bigger, better mall 20 mi away with no local reseller, didn't get the Apple store.

There may be legal entaglements as well with this preferential treatment.
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