Low markups in Beijing's gray market suggest lower Chinese demand for Apple's iPhone X

AppleInsider

Gray market iPhone X dealers in Beijing are reportedly charging much smaller premiums for the iPhone X than they did for last year's iPhone 7 Plus, allegedly reflecting lower Chinese demand in general.

Resellers were charging up to 29 percent for the 256-gigabyte iPhone X at last week's launch, versus 163 percent for the jet black version of the iPhone 7 Plus in 2016, according to JL Warren Capital research cited by Bloomberg. At a city electronics market, the X markup was just 15 percent.

The main issue is believed to be price. Before any markup, a 64-gigabyte iPhone X is 8,388 yuan in China, or about $1,264. Choosing 256 gigabytes ramps the cost up to 9,688 yuan, or $1,459. The phone can easily cost as much or more than someone's monthly salary.

Premiums are liable to shrink even further in coming months as Apple's supply begins to catch up to demand, eventually making it pointless for a shopper to turn to the gray market to beat shipping delays. In the U.S., online orders are currently shipping in three to four weeks.

Another compounding factor is the availability of comparable but cheaper Android phones from domestic firms like Huawei and Oppo. Apple remains in fifth in the Chinese smartphone market, despite a boost from September's launch of the iPhone 8 and 8 Plus.

wizard69

I still don't get the people that line up to pay a surcharge just to get a cell phone a few days or weeks early.     Makes no sense at all to me.    It makes about a s much sense as people crowding a chain restaurant the first few weeks after it opens, even though it serves the same food as the rest of the restaurants in the chain.   What is the point?

jfc_pa

OR how easy it is now to get an iPhone via official channels. 

foljs

Yeah, check back in 2-3 months for the true story.

This is like the several stories about how the iPhone 6 or so was unpopular in Japan (it hit record sales there), then in China (again), more recently about how the iPhone 8 wasn't selling well (Apple's quarterly results show it broke last years 7 sales and exceeded guidance) and so on.

There's no way the X is going to sell bad in China. It has something Chinese buyers of premium phones look for specifically: it's distinct enough to signal you got the new model.

lukecage

Wouldn’t this support Apple’s claim that they have enough supply?

esquirecats

It could be softer demand, but it could also be a reflection of better supply - which seems to be the case in parts of the USA where many stores still accepted walk-ins many days after launch (some still do today), despite 'off the charts' sales.

A higher price and better supply makes grey market phones a risky business. A single unsold phone could easily wipe out profits from the sale of 4+ other grey market iPhone X's, which means grey market margins need to be optimised to take advantage of a short-lived scarcity. (And as mentioned by the author, the higher grey market price may persuade many buyers to wait for an iPhone from an official channel, decreasing grey market demand -and prices- as a whole.)

edited November 2017

soli

Low demand for grey markets or low demand for iPhone X considering the number of stores Apple has?

k2kw

Maybe the iPhone X doesn't have a big enough screen.

wood1208

wizard69 said:

I still don't get the people that line up to pay a surcharge just to get a cell phone a few days or weeks early.     Makes no sense at all to me.    It makes about a s much sense as people crowding a chain restaurant the first few weeks after it opens, even though it serves the same food as the rest of the restaurants in the chain.   What is the point?

You,me and many billions on earth are either money average or frugal with money. some want to be part of thrill of buying on first day or other things you mentioned. No one is right or wrong and don't try to understand.

wood1208

Apple may want to create iPhone X buzz but certainly not gray market demand. Apple rather give it's customers non-gray market retail priced iPhone X. One reason not so much Chinese gray market demand because Apple's ability to keep building iPhone X fast and distributing fast so people are getting them sooner than anticipated.

edited November 2017

robjn

So they are comparing it to jet black iPhone 7 specifically?

I seem to recall that the jet black was highly constrained.

Apple have assembled far more iPhone X units than anyone anticipated. The expectations of long wait times and extortionate resale prices around the world have simply not materialized.

robjn

I don’t know about China but here in the US Apple are not selling  the popular “no-sim” version.

This was the preferred version for grey market re-sellers.

This may have to some small degree helped mitigate the grey market.

edited November 2017

suddenly newton

Good. More supply for us.

evilution

Small hands don’t suit a big phone.

yojimbo007

Stock has gone up a lot .... so some scum bags are trying hard to create fud.

foggyhill

robjn said:

So they are comparing it to jet black iPhone 7 specifically?

I seem to recall that the jet black was highly constrained.

Apple have assembled far more iPhone X units than anyone anticipated. The expectations of long wait times and extortionate resale prices around the world have simply not materialized.

Kuo was 1000% wrong (or even more...), as usual for him.

viclauyyc

wizard69 said:

I still don't get the people that line up to pay a surcharge just to get a cell phone a few days or weeks early.     Makes no sense at all to me.    It makes about a s much sense as people crowding a chain restaurant the first few weeks after it opens, even though it serves the same food as the rest of the restaurants in the chain.   What is the point?

Not everyone has credit card in China. No permanent address, work, credit history, etc.

China is not as advanced as some people think.

on side note, there is actually a guy who sell his kidney for an iPhone few years back. I wonder how he do upgrade. 

viclauyyc

foljs said:

Yeah, check back in 2-3 months for the true story.

This is like the several stories about how the iPhone 6 or so was unpopular in Japan (it hit record sales there), then in China (again), more recently about how the iPhone 8 wasn't selling well (Apple's quarterly results show it broke last years 7 sales and exceeded guidance) and so on.

There's no way the X is going to sell bad in China. It has something Chinese buyers of premium phones look for specifically: it's distinct enough to signal you got the new model.

No. In fact, Hong Kong’s grey market cool down a lot for the X. Some people actually selling below the retail price, like -1-20USD. 
It used to be when you step out HK’s Apple stores, 10-20 people will holding cash approach you and ask for the new iPhone. And some grey market seller will stock up couple millions worth of iPhone and ship to China. Not anymore.
Romour said Apple reserved shit load of X for the Chinese market alone. 

jbdragon

wizard69 said:

I still don't get the people that line up to pay a surcharge just to get a cell phone a few days or weeks early.     Makes no sense at all to me.    It makes about a s much sense as people crowding a chain restaurant the first few weeks after it opens, even though it serves the same food as the rest of the restaurants in the chain.   What is the point?

People do this for Game Consoles and Tickets, etc, paying a big markup from ebay. I remember seeing pictures of like 100 Game consoles on ebay for sale with a big markup as they were sold out everywhere. I won't pay it. I'd rather wait myself.

metrix

wizard69 said:

I still don't get the people that line up to pay a surcharge just to get a cell phone a few days or weeks early.     Makes no sense at all to me.    It makes about a s much sense as people crowding a chain restaurant the first few weeks after it opens, even though it serves the same food as the rest of the restaurants in the chain.   What is the point?

For most of the people is like going to Disneyland, they associate their first iPhone experience, their first iPod experience, and their first Mac experience all rolled up into one. These were all unique and more about fun and less about how many more things the competition did. 

kkqd1337

I think all these stories about very limited supply and off the charts demand was all coming from the Apple hype department. It just isn't true. I easily got my X on day too and the Apple Store in London wasn't even busy. But I love the X and it deserves to do well.