The great iPhone crunch: Stock shortage or nexus between sellers, distributors?

Don’t be too disappointed if you couldn’t get your hands on the latest iPhone 7 after standing hours in queue outside a local Apple outlet on Friday evening. For one, thousands of fellow-Indians are in the same boat.

People wait outside an Apple store during the launch of iPhone 7 at Ambience Mall, in Gurgaon. (Parveen Kumar/HT Photo)

Don't be too disappointed if you couldn't get your hands on the latest iPhone 7 after standing hours in queue outside a local Apple outlet on Friday evening. For one, thousands of fellow-Indians are in the same boat.

The smartphone's long-awaited countrywide launch was marred by complaints that Apple failed to provide enough units to Indian consumers, resulting in its black-coloured variants being sold for a premium of up to ₹40,000 in the grey market.

"There was a dire shortage of the product this time, and I had to cancel several pre-orders for customers who only wanted its black variants," a retailer told HT on the condition of anonymity. "The demand for jet black editions of the iPhone 7 and 7 Plus is really high. However, Apple has been able to provide very few units of that kind - the ratio of orders and units received in that regard is 100:1."

Grey market operators had been holding on to their stock in anticipation of Saturday's sale, he said. "From early that morning, they began selling the products at a premium of anywhere between ₹10,000 and ₹40,000."

This is not the first instance of Apple failing to meet the customers' demand for its hottest product. Initial stocks of the iPhone 7 Plus were sold out globally just days after its launch. While every colour variant of the iPhone 7 Plus disappeared in a blink, it was the jet black version of its smaller cousin that was the first to be swiped off the shelves.

Though all Apple stores have run out of stock, customers continue to place online orders for the models they desire. "We sincerely appreciate our customers' patience as we work hard to get the new iPhone into the hands of everyone who wants one as quickly as possible," Apple spokeswoman Trudy Muller said in a statement.

But India seems to be a different ball game, with retailers alleging corruption in the allocation process. "Many units were deliberately moved to the grey market, so more profits could be reaped through the creation of a false demand. Meanwhile, customers had to return home empty-handed," another retailer told HT.

While police were reportedly summoned to a GK-1 store to control the mob of customers, large crowds were also witnessed at Apple outlets in Cyber Hub, DLF Promenade and Connaught Place.

Another retailer said an Apple outlet was supposed to open at Nehru Place in tandem with the launch, but was forced to keep its shutters down owing to unavailability of units. "A second shop was forced open by the company, but it sold just a couple of handsets as a formality," he added.

Experts, however, discounted the conspiracy theory. "It may be part of a strategy shift. Apple is probably trying to sell more of its products in tier-2 and tier-3 cities through online partner Flipkart," an analyst said.

Retailers did not agree. "As far as we know, Apple had allocated 1.25 lakh units for India - out of which 70,000 made it here. However, only 10,000 units were shared with big Apple partners. So what happened to the rest of the stock? Did all of these go to the online partner?" one of the retailers asked. The Cupertino-headquartered giant plans to sell five lakh units in the first 15 days after the launch, he added.

While Redington, Ingram and Beetel are the key iPhone distributors in India, Futureworld and iZenica are its top resellers.

Apple refused to comment on the matter.

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