To boost Mac market-share Apple Europe is from today altering the way it does business with Euro resellers – not all of whom are happy with the move.
The change involves the margins that Apple is offering dealers. For example, unauthorised independent dealers can now expect a basic margin of one or two per cent against Apple's high-street price across the board – the equivalent of about £13 on an entry-level Power Mac. This compares to an average of around seven per cent basic before the change.
However, basic margins will be increased on a sliding scale on a per-dealer basis, depending on the facilities and services a given dealer offers. A high-street dealer offering custom-built solutions with strong sales and after-sales support will enjoy “significantly higher margins” Apple UK managing director Mark Rogers told Macworld. He revealed that other factors include location, staff-training levels, demo facilities and third-party product stocks.
“Apple has designed this sliding-margin structure to support the development of the best possible quality buying experience for our customers," Rogers said. “It's designed to stimulate growth," Rogers explained.
He added: "It's easy for us to convince Windows users to switch to the Mac once we present our products in the right environment. What we've done is move to a margin structure that compensates direct and indirect sales, which we did not have in the past. We’re trying to compensate the channel for the services they offer their customers," he said.
Mike Jennings, managing director of Scarborough-based authorized reseller Jennings Computer Services said dealerships such as his “will enjoy comparatively better margins”, but he added that "prices have increased to channel”.
He continued: "The new deal favours dealers with dedicated Mac staff, strong after-sales support and dedicated high-street presences. We already make more on support and service provision than we do on selling boxes."
Jennings has seen other changes in the way Apple conducts its business with his company: "Our account manager at Apple is much more active than before, which is much better."
Independent non-authorized resellers are hardest hit by the change, with some dealers feeling that their margins are being squeezed.
Will Woodhouse of MacAssist complained: "My margin when selling a Power Mac to a customer is now £13 through distribution, which is about 1 per cent. I can get a better deal from Cancom or Jigsaw than I can through Apple's own distribution channel. It's crazy."
Woodhouse, who used to enjoy a seven per cent discount, added: "Apple is trying to force people to become Authorised Apple Resellers. As an independent, I’ve had no advance warning of this change.”
Another UK dealer complained: "For us, it means we may not be able to offer the same kind of deals we have been able to."
Acquiring Authorised Reseller status means dealers have to sign agreements on service and sales levels with Apple, which is not always practical for smaller operators.
Rogers agreed that as a result of the changes: "Some dealers will benefit, and some will be “slightly worse off”.
He said: "The smaller operators who sell one or two Macs – they don't run their business on those margins, but from associated services. What's important is that they can become authorised resellers."
Max Wright, managing director of Cancom observed: "The smaller operators are going to be quite a bit worse off buying direct from distribution."
Wright continued: "However, on the whole I'm looking at the new structure with a great deal of optimism. I do think the theory of what Apple's trying to do is good."
Woodhouse confirms that much of his business comes from service and support provision, but explained: "For me, customer relationships are very important. If I can't supply the kit they need at a competitive price, and they go somewhere else, then that weakens my business. It could destroy my business.
Rogers said: "Additional programmes will be introduced to channel during the rest of the year offering additional margin breaks."
Its understood that these will reflect the continuing development of Apple's Solutions Experts programme, primarily aimed at dealers willing and able to meet the needs of particular market sectors, such as video, architecture or medicine.
Rogers added: "The good guys will benefit from the programme; but those who don't provide the quality buying experience we require in order furnish growth may not.
"The opportunity is there for dealers to make more margin than before – but we can give this only if we generate growth. The new structure has been designed to stimulate that growth.”