UAE online retailer defends Apple Watch grey market pricing
JadoPado’s CEO says 200% mark-ups ‘way higher than expected’
UAE-based online retailer JadoPado yesterday defended pricing of the Apple Watch, even as national Apple resellers said they would not resort to grey-market imports for the Cupertino company's first wearable device.
JadoPado's stock of Watches, most sold by third parties, carried premiums of as much as 250% above US Apple Store listings on Tuesday, but in mid-March, when asked how much consumers could expect to pay on the grey market for the wearable, Omar Kassim, chief executive officer, JadoPado said: "My gut feeling is between $349 and $500 [AED 1,280 and AED 1,830], so about a $150 [AED 550] premium."
"It's been way higher than I expected," Kassim said yesterday, in an emailed statement sent to ITP.net. "When I made that prediction, I was expecting Apple to have stock available in stores on launch day, resulting in a decent amount of stock being available to be moved out across the world. Unfortunately, for the first time ever, they decided to leave it online only, [presumably] due to a lack of supply, and that has resulted in very small amounts of pre-order stock making their way to Dubai and [hence] extremely high prices."
The Wall Street Journal today shed some light on Apple's taut supply lines for the Watch, reporting that delays were caused by a faulty component from a Chinese manufacturing partner. Apple has reportedly since switched to an alternative supplier that was already making the component, but that company is having difficulty in ramping up production rates.
JadoPado's Kassim said most of the movement of Apple Watch stock has come from third parties.
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"We evolved into a marketplace back in February, allowing both buyers and sellers on our platform," he said. "While JadoPado Direct has a few offers for the Apple Watch, the majority of the movement and offers has come from other sellers on our platform.
"The cheapest offer available today is the Apple Watch Sport at AED 3,500. While it does represent a 170% mark-up to Apple's retail prices, as always, it's boiling down to more demand than supply and in this case an additional squeeze on supply versus prior product launches."
The US Apple Store shows 38 different models for the Watch, in three different categories: the low-end Sport costs from $349 to $399; the mid-range Watch sells for between $549 and $1,099; and the luxury Edition variant costs between $10,000 and $17,000.
On Tuesday, when ITP first reported that the Apple Watch was available in the UAE, JadoPado had only two models available: an Apple Watch 38mm Stainless Steel Case with Black Classic Buckle model for AED7,499.00 ($2,040), which was a 214% mark-up on the $649 charged by the US Apple Store; and a AED4,599.00 ($1,250) Apple Watch Sport 38mm Silver Aluminium Case with Blue Sport Band, which costs $349 to buy from the US store, representing a 258% premium.
JadoPado's marketplace sellers have since grown this range to 11 different products (no Edition models are available yet). These include, at the time of writing, an Apple Watch 38mm Stainless Steel Case with Milanese Loop at AED8,199 ($2,230), which sells for $649 in the US - a mark-up of 243%. The cheapest variant is an Apple Watch Sport 38mm Silver Aluminum Case with Blue Sport Band at AED3,299 ($898), selling at $349 in the US - a premium of 157%.
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As the stock of Watch variants among JadoPado's third-party resellers, authorised Apple resellers in the UAE have insisted they will not resort to grey imports for the Apple Watch, despite appeals from consumers across the region.
Retailers including Jumbo and Emax, told ITP.net's sister magazine, Channel Middle East, that importing the Watch via parallel channels before the official launch would be endorsing the grey market.
Nadeem Khanzadah, head, OmniChannel Retail, Jumbo Group, said: "We have a direct relationship with Apple and we don't want to jeopardise that by bringing in the new watch through parallel imports. We don't have any information either on which stores in the UAE will be allowed to stock the wearable range once these products are officially introduced."
Neelesh Bhatnagar CEO, Emax agreed. "Grey market thrives because of delays in launching a product in one region or market," he said. "The pressure from e-tailers and other online stores means that outlets such as ourselves are left pondering as to whether it's prudent to give in to the consumer demands. The mark-up on grey imported Apple Watch range currently being sold by online retailers in the UAE is ridiculously mindboggling."
Retailers added that they were under particular pressure as Apple has not indicated when the Watch might be available for official sale.