Scalpers Hog Lines for iPhone 5 at Some Apple Stores

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Scalpers have been hogging some iPhone 5 lines at Apple Stores in the U.S. A reader report from the Rockingham Park Apple Store in New Hampshire said resellers were buying iPhones two at a time with stacks of Apple gift cards, while on the other side of the country, Forbes reported that line sitters were selling their spots to real customers in Apple's back yard for up to $150 a pop.

Rockingham Park Apple Store

Rockingham Park Apple Store, courtesy of Alexander
(Click the image for a larger version)

A reader named Alexander sent a report from the Rockingham Park Apple Store in Salem, New Hampshire, where the lines were some of the longest we've seen for the iPhone 5 launch. According to Alexander, however, many of those in line were mules buying two new iPhones at the full retail price for resellers, and then getting back in line to do it again.

Rockingham Park Apple Store

Rockingham Park Apple Store, courtesy of Alexander
(Click the image for a larger version)

"They're paying with gift cards," he told The Mac Observer after witnessing the transactions. "They have stacks upon stacks of them. If they aren't burning a subsidy and buy at the full carrier (not unlocked) price they don't need to activate them in-store."

He added, "I really wish Apple would require the phones to be activated in-store like they used to. The line experience where fellow fans gather and celebrate together has been lost. It's a real shame."

Rockingham Park Apple Store

The Night Before at Rockingham Park, courtesy of Alexander
(Click the image for a larger version)

Rockingham Park Apple Store

Getting Near the Front in Rockingham Park, courtesy of Alexander

Forbes reported that line sitters were scalping their spots for as much as US$150 a pop to latecomers willing to pay to not wait. This was in Apple's downtown Palo Alto Apple Store, in the company's back yard.

“I was asked for $150,” one customer told the magazine. “I offered her $100, which she debated for a while. When I showed her the $100 in cash, she accepted.”

The customer added that others were doing the same thing, and an Apple employee said that this happened every year at the store.

Dadeland Apple Store

The Dadeland Apple Store in Miami, FL put its line in the garage
Photo by TMO reader David

It's not the case at every store, however. Customers in line in Glasgow, Scotland appeared to be dominated by customers looking to buy iPhones for themselves. Additional reports from TMO readers in Florida (above) and Las Vegas (below) didn't include any anecdotes of scalpers or mules shopping for resellers.

Fashion Show Mall Apple Store

Outside the Fashion Show Mall Apple Store in Las Vegas
Photo by TMO reader Brian

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8 Comments Leave Your Own

Alexander

It’s not that clear in the photos, but the line outside was 3-4 people wide and went all the way to the back of the parking garage.  The organization of the people scalping the phones was impressive, with a clear hierarchy and direction all the way down the chain.  It was definitely not the normal excited perspective buyers, these people wanted their money, and didn’t care about anything else.  My guess is they came to this store (and likely the Phesant Lane store as well in Nashaua, NH) due to the lack of sales tax in NH.

James Leo Ryan

It boggles me to think that there are those that will pay something like an extra $150 just so they can have an iPhone 5 a few weeks early. Oh well!

andystac

I got lucky, happened to be walking by the apple store here in Berkeley around 2 not intending to buy a phone and there were only 3 people left in line.  I asked the store rep out front if they had any phones left and he said they did.  so, 10 minutes later I hd a new phone for my wife.

cb50dc

One person worse than a scalper:
the person who pays the scalper’s price.

One person worse than a line-sitter (on spec, not by previous hire):
the person who pays the line-sitter.

One person worse than a mule:
the person who hires the mule.

As long as people keep SUPPORTING scalpers, sitters, and mules, this crass subculture of laziness, greed, and empty opportunism will continue, and will grow worse.

I’m as happy as anyone to see the genuine enthusiasm of real fans.

AND at some point, some of us might do well to learn a little ability to postpone gratification.

Bosco (Brad Hutchings)

Double ick toward any moralizing against this. It is actually a beautiful spontaneous response to a pricing error. I am here to celebrate it! I am here to celebrate that property rights emerge without some authority organizing and enforcing them. People are generally well behaved and respect the value of things like place in line.

The reason there are scalpers and line sitters is that Apple is leaving money on the table. You want an iPhone 5. There is a price people are willing to pay. Apple’s price (complicated by carrier subsidies) is below that. Supplies are perceived to be low enough, that the price people are willing to pay is propped up. They may pay a third party opportunist reluctantly. It may leave a horrible taste in their mouths. But they do it. And if they don’t, someone else would. And if nobody did, or Apple priced the phone correctly in the first place, the opportunists wouldn’t be out there.

And guess what happens when you drive scalpers underground with laws. Just as with drug prohibition, you introduce violence into the mix, either among participants or those charged with enforcing the prohibitions. So learn to embrace and celebrate this phenomenon!

webjprgm

I would not embrace or celebrate something I don’t like, but I can live with it.  I do think it’s much more fun to stand in line with people who are as excited about a new iPhone as you are.  Or just generally nice people.  I had a good experience 2 years ago getting an iPhone 4.  But this year I decided to order online instead.

About leaving money on the table: what would the right price be? There are people who are willing to pay full subsidized price or more, but then a lot of people just wouldn’t buy iPhones at all.  So to get the same profit the right price is somewhere between the marked up $600-1000 price and the current subsidized $200 price.  If the right price for Apple was $400 there would still be a small market for scalpers to sell to the few people willing to pay $1000.  Maybe it would just be a small enough market that we’d stop hearing about it in the news.

I’m still very glad the subsidized price is low, because I would not justify buying a phone that cost as much as a laptop computer.  Not unless it replaced my laptop, which it does not.

Bosco (Brad Hutchings)

There are lots of pricing strategies that discourage scalpers or at least try to discover what their market clearing value is. One is to have “priority ordering”. For a $100 fee, for example, let a purchaser schedule a pick-up time. No waiting in line, no worry about not getting a phone. If you can keep that option always stocked with product, you effectively put a ceiling on what the flippers can make per phone. Bonus points for letting the local store manager adjust the fee on an hourly basis and posting it on both the front window and store web page. Communicate that it’s an effective pricing mechanism for discouraging flipping and making sure everyone who wants an iPhone gets a good one.

justaman

everyone complains about mules. but yet still got their iphone 5, did they not? and ontop of that why is there a problem with mules if they are actually there at the mall lined up at 3 in the morning…not their fault that so called “fanatics” arent lining up that early and or earlier…

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