Why it matters: Earlier this week Amazon announced that they would be listing Apple’s iPads, iPhones and smartwatches through various authorized resellers. For most people, that just means another way to buy Apple products and possibly shorter shipping times. But for the hundreds, if not thousands of independent resellers on Amazon, that means a loss of business.
As part of the deal, Amazon isn’t letting unauthorized resellers list Apple products, including second-hand and refurbished products. As the largest e-commerce platform by far, this decision spells doom for unauthorized Apple refurbishers that relied on Amazon's Marketplace.
To understand why that matters, let’s take a look at John Bumstead. John’s an independent reseller who buys thousands of MacBooks and MacBook Pros every year, refurbishes them, and then sells them on Amazon and to other independent resellers who do the same. He primarily buys from small recyclers (large ones are required to shred Apple devices if they have a contract with Apple) who get their devices from large companies, government facilities and universities who replace their computers every 3-5 years.
Because Apple supports their old devices with software for so long, these devices usually run fine for light workloads and are pretty easy to refurbish. Not only is this good for the environment, the recyclers and independent resellers like John, but it’s also good for the many consumers who can’t afford Apple’s high-end offerings.
For a lot of people, $100-$300 older MacBooks are more than adequate and have a smooth software experience compared to budget Windows devices. On Friday morning, John received an email from Amazon explaining why he wouldn’t be able to operate his business anymore.
"As part of a new agreement with Apple, we are working with a select group of authorized resellers to offer an expanded selection of Apple and Beats products, including new releases, in Amazon’s stores. You are receiving this message because you are currently selling, or have previously sold, Apple or Beats products. Your existing offers for those products will soon be removed from Amazon’s online store in the United States. Please contact Apple if you would like to apply to become an authorized reseller on Amazon."
Despite a request for comment, Apple has declined to specify exactly what requirements there are to become an authorized reseller, but you can be sure it’s going to be pretty hard given the number of physical stores that are excluded.
John will be able to continue selling his products until January 4, at which point his listings will be taken down. Amazon will reimburse his “return or disposal fees” up until February 4. At that point, he’s given three options.
The first is to attempt to join to join the “Amazon Renewal” program for refurbished products, which would be fine if he was selling non-Apple products. But to join the program and sell Apple products, your business must be purchasing over $2.5 million in Apple products every 90 days from national wireless carriers or retailers; such as Verizon or Target; or Apple themselves. These companies may not even have $2.5 million worth of second-hand products that need refurbishing if John’s business could afford that anyway.
The second option is for John to try and sell his products on a different platform, such as eBay or Craigslist. Unfortunately, refurbished products don’t have such a good reputation on those websites, so potential customers are less likely to go looking on those sites. Compounding the issue is the fact that only Amazon offers centralized shipping services, meaning that he can send a hundred refurbished products to an Amazon warehouse and then let Amazon ship them individually, saving a lot of money. Lastly, his existing customer base is on Amazon, and even if migration to another platform was possible then it would take a long time to build his reputation back up.
John’s third option is to give up trying to sell refurbished MacBooks. Instead, he could try to sell refurbished Windows devices – though that probably won’t work very well as Windows laptops tend to age a lot worse. Perhaps his best option is to apply for a job working for a large authorized reseller or Apple themselves as a repairperson.
The thing is, nearly all the devices John sells would have been destroyed or recycled anyway.
In Apple's world of controlled ecosystems, this is just another such strike, this time against the refurbished, second-hand and repair markets for Apple products. But is it right for them to be able to do this? The United States Supreme Court has ruled that if you legally own a product, then you can resell it “notwithstanding the interest” of the original seller. However this ruling only extends to being able to list the product at all, and it doesn’t force a platform to list it for you. That’s got its advantages, but as Aaron Perzanowski, a law professor from Case Western Reserve University explains, it’s just big companies bullying small businesses.
“This is a very troubling development,” he said to Motherboard. “Given Amazon’s dominance as an online retail marketplace, its decision to disregard the first sale rights of resellers will significantly limit consumer choice. The fact that this move was demanded by Apple makes it even more problematic. What we see here are the world’s two most valuable companies engaging in a coordinated assault on the lawful resale of consumer devices.”
“Amazon is leveraging its power over its marketplace to give Apple power that the courts and Congress never have and never would.”
Kyle Weins, the CEO of iFixit, agrees. He says that iFixit has been engaged in a lengthy battle to keep their iPhone replacement parts on sale – parts that Apple won’t even sell you.
“The idea you have a retailer that if they can strike a deal with the most profitable company in the world and lockout independent resellers is concerning for the future of commerce,” Wiens said. “It’s kind of mind-boggling to think that a brand would be able to restrict the sale of used products. This is exactly the kind of control Apple wants to exert over the marketplace.”
The fact that Apple can end John’s business on a whim is disturbing to me. Yes, there are lots of dodgy resellers on Amazon who do take advantage of customers, particularly iPhone resellers, and this is perhaps the biggest justification for Apple's decision, but there are also a lot of good honest people out there, so perhaps this should have been handled differently.