BusinessWeek Offers Look At Apple Resellers, Recommends Apple Ditch Resellers Near Apple Stores

February 11th, 2003 at 2:00 PM - News by Alex Allee

Have you ever seen a small, independent bookstore within a short distance of the local branch of the nationwide Sav-U-Mor Books chain, and wondered what the point of the smaller store is? According to an article on BusinessWeek, Apple should be wondering the same thing in regards to independent Mac dealers near its new chain of Apple Stores. The author recommends that Apple draw a circle around each of their stores, and cut off all resellers that fall within a certain distance. Exempted from the blast radius would be retailers that sell Macs as part of their consulting business.

In addition to trimming out excess Mac retailers, the article suggests sending additional Apple representatives to CompUSA stores during peak selling periods such as the back-to-school season and the winter holiday season. During off-peak times, the excess Apple reps could be used to help train employees of independent Mac retailers in areas where Apple doesnit plan to build stores. From BusinessWeek:

I think Apple should take a compass, draw a circle around each of its stores, and cut off all resellers that fall within a certain distance. I would leave in place the consultants who sell Apple wares as part of their gigs advising companies and organizations (Mac Tech in Bend will continue to consult on companiesi Apple projects, for example). But the rest of the crowd -- meaning those who canit survive as consultants -- probably isnit worth the hassle anymore if they live too close to Appleis own retail turf.

The numbers back me up. One-tenth of Appleis worldwide sales now come from its own stores, according to Charles Wolf, a veteran Apple watcher at investment bank Needham & Co. (he owns Apple stock and has a hold on it.) That figure should climb smartly this year, as Apple continues to open more stores. Whatis more, Wolf calculates that Apple is getting an exceedingly high internal rate of return on its store investments -- on the order of 52%.

So it seems Apple is doing a better and better job selling through its own stores. And unlike the resellers, Appleis snazzy outlets attract not just Macheads but Windows users who might make the switch. The stores even get sweet rental rates at malls because theyire foot-traffic magnets.

You can read the whole article at BusinessWeekis Web site.