Apple Store suppliers suffering through longer payment terms, consignment model
Accessory producers and other suppliers who provide products for Apple's retail outlets have to wait longer before being paid by the company, a store claims, with changes in terms also making them responsible for unsold products.
Apple has reportedly made changes to the way it handles products it receives from suppliers for sale in the online and physical Apple Store. Suppliers who do not agree with the new terms reportedly risk their placement on Apple's shelves, with the changes considerably benefiting Apple.
After providing distribution for its retail stores to a new provider, The Telegraph reports Apple has made demands to suppliers directly, and in an inflexible way. Suppliers told the report that terms were previously negotiated with distribution companies, but the new ones were set by Apple and are not negotiable.
The changes include a change in how long a supplier waits for payment, increasing the time from 45 days to 60. Suppliers also have to accept a "consignment model," in that they are paid only once an item is sold.
The non-negotiable nature of the changes does at least mean all suppliers have the same deal with Apple, but the dependence on sales via Apple also means most are likely to accept them. Vendors are also reportedly anticipating a squeeze on cash flow from the changes.
"They are not doing their vendors any favors," said one unnamed supplier. "Their vendors face cash challenges that they don't. I don't think anyone's going to turn them down. There's very little competition for the brand exposure that you get with Apple. It's certainly a squeeze."
An Apple spokesperson said "We deeply value the close relationship we have with the world-class companies who sell their products via Apple.com and in our stores. Apple regularly assesses the assortment of the third-party products we sell and the structure of our models to provide vendors the ability to reliably and confidently grow their business."
The change to suppliers isn't the only way Apple is trying to improve its retail position. In August 2020, it made a request to landlords in the U.K. to cut the amount of rent it pays by half or to secure free rental periods, in exchange for lease extensions.
Apple has reportedly made changes to the way it handles products it receives from suppliers for sale in the online and physical Apple Store. Suppliers who do not agree with the new terms reportedly risk their placement on Apple's shelves, with the changes considerably benefiting Apple.
After providing distribution for its retail stores to a new provider, The Telegraph reports Apple has made demands to suppliers directly, and in an inflexible way. Suppliers told the report that terms were previously negotiated with distribution companies, but the new ones were set by Apple and are not negotiable.
The changes include a change in how long a supplier waits for payment, increasing the time from 45 days to 60. Suppliers also have to accept a "consignment model," in that they are paid only once an item is sold.
The non-negotiable nature of the changes does at least mean all suppliers have the same deal with Apple, but the dependence on sales via Apple also means most are likely to accept them. Vendors are also reportedly anticipating a squeeze on cash flow from the changes.
"They are not doing their vendors any favors," said one unnamed supplier. "Their vendors face cash challenges that they don't. I don't think anyone's going to turn them down. There's very little competition for the brand exposure that you get with Apple. It's certainly a squeeze."
An Apple spokesperson said "We deeply value the close relationship we have with the world-class companies who sell their products via Apple.com and in our stores. Apple regularly assesses the assortment of the third-party products we sell and the structure of our models to provide vendors the ability to reliably and confidently grow their business."
The change to suppliers isn't the only way Apple is trying to improve its retail position. In August 2020, it made a request to landlords in the U.K. to cut the amount of rent it pays by half or to secure free rental periods, in exchange for lease extensions.
Comments
Changing the payment terms to 60 is pretty lame. Going to a consignment model is not. It's been in use by many industries for decades and still is. Unsold inventory goes back to the manufacturer and they get paid for what they sell. It's part of the price they pay for having the sales outlet. The seller does not accept inventory risk.It's called smart business and cash management. Ever buy goods through Amazon and return something that came from a third party supplier? Every buy clothing in a retail store? I don't think you understand how common this is in retail sales of non-perishable goods? You think Walmart and Target pay suppliers for unsold inventory of non-perishable goods? You think any big retailer pays up front when they don't have to? It's the price you pay to do business with them. Worth the risk for most of them.
It's also true that Apple has no obligation to sell any third party apps in Apple's App Store.
Nobody can force Walmart, or Apple, to sell products made from other companies in their stores.
This doesn't mean I always support whatever Apple does, but I always point out that any company is free to sell whatever they want, however they want, whenever they want. If Epic or anyone else wants to change the rules of Apple's stores, all they have to do is buy 51% of Apple's total stock. And I also support Epic's decision not to allow other parties, like Apple, from changing the rules to Epic's app store.
And by the way, Apple doesn't own Apple. The shareholders own Apple. And most of Apple's shares are owned by small investors, even though some of that doesn't seem apparent because brokerage houses act on smaller individuals' behalves. Tim Cook tries to make Apple profitable in order to benefit all those small little investors. Apple is owned by little people like you and me. (I don't own Apple stock, but I have some bank investments that probably include Apple stock, however banks normally don't tell you what stocks they are investing in.)
The crap is the subject of the article. Arbitrarily changing the terms with their retail suppliers putting them in a cash crunch. Doing something to pad their own bottom line at the expense of their partners.
Trouble? that could come in many forms. This could add to the narrative about Apple being an abusive monopoly leading to more investigations and possibly even sanctions. Much worse it adds to the growing narrative that Apple is just another abusive money grubbing company and not "the computer for the rest of us". If Apple loses that then it risks much of what makes it an aspirational product. Apple has cultivated over decades the image as a company that cares about the environment, social justice, people. It is one of the pillars of the companies image. But acts like this put that image at risk. That will come back to Apple in the ***, and will hurt the bottom line. It's a self inflicted wound. It doesn't have to happen.
No it is't. This is universal method of retail sales employed by every large retailer and applied to non-perishable goods.
This is not something that is a regulatory matter nor something the EU or Dept. of Commerce or even the courts have the authority to regulate. This is not anti trust, anti-competitive or any of the categories regulators are charged with oversight of. There is nothing illegal, immoral or anything along those lines that is applicable here.