Dealers baulk at iPhone terms

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Apple has issued strict terms to Orange dealers hoping to sell its iPhone handsets, which will not be made available to third parties at all until 2010.

Orange Federated Dealers were contacted by Orange account managers last week about Apple’s iPhone terms. Each dealer outlet, not just chain, must be pre-approved by Apple to sell the product, and each member of a dealers’ sales staff must be trained by Apple’s authorised trainers.

Outlets must also pass rigorous mystery shops by the Californian company.

Inside, all stores must be kitted out with around £1,000 of advertising materials – £600 for a display stand and £400-£500 for a working demo unit.

Discounting any potential cost for extra staff training, the marketing terms alone will cost dealers £1,000 per store.

Leading independent retailers and federated Orange partners JAG, Get Connected, Go Mobile and Intek will be set back in the region of £75,000, £63,000, £52,000 and £24,000 respectively to stock the device across all their estates on that estimation.

Dealer sources calculated that, based on £100 gross profit on each iPhone sale, it would require the sale of 400 devices for a 40-shop chain to recoup the outlay.

Based upon quoted typical net profit of £5 per box, after all shop overheads are considered, dealers claimed it could require the sale of as many as 8,000 units to recover additional costs for such a chain.

One dealer remarked: “It seems an incredibly laborious and expensive process for us to consider right now. We will review it again after Christmas if the situation is right. We would probably only consider it for our busiest stores in major towns and not our shops in smaller community towns.”

Another said: “If this goes ahead, I can’t see us spending £1,000s just to stock the device in our stores. We’ve managed without the iPhone for this long and, if we really have to, I’m sure we could continue that stance.”

One B2B dealer said: “Apple is being over-zealous. Dealers have dealt with BlackBerry for a long time and never brought that brand into disrepute. Less paranoia is needed.”

Approved third-party retailers have been informed they will not receive stock of the iPhone before Christmas.

Orange refused to comment upon its iPhone distribution strategy.

 

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