Amazon Apple deal spells doom for some independent resellers

HEADLINE: Amazon Apple deal spells doom for some independent resellers, but amid misfortune could be opportunity

Goodbye, refurbishers and resellers of cheaper Apple products on Amazon.

Tech giants Amazon and Apple entered into an agreement this month that will significantly affect the products shoppers see listed on Amazon.com. Amazon announced it would be expanding its listings of Apple’s iPads, iPhones and smartwatches available through certain resellers. For most people, this means another way to buy Apple products and, possibly, shorter shipping times.

But the Amazon-Apple partnership isn’t good news for everyone. For the hundreds, possibly thousands, of independent resellers on Amazon, it could mean the loss of their livelihoods.

This month, Amazon sent a notice of the deal with Apple to resellers, including Filmar.

“You are receiving this message because you are currently selling, or have previously sold, Apple or Beats product,” it reads. “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.”

As part of the deal, Amazon isn’t allowing unauthorized resellers to list Apple products, including second-hand and refurbished products. As the largest e-commerce platform by far, Amazon’s decision spells doom for unauthorized refurbishers that relied on the expansive online Amazon Marketplace.

To understand why the deal matters, let’s look at how it affects Filmar Technologies. We’re an independent reseller that buys thousands of iPads, MacBooks, MacBook Pro and iPads every year, refurbishes them and sells them on Ebay, Amazon, and other independent resellers who do the same. We buy primarily from large universities, governments and corporations that replace their computers every three to five years.

We’ve already seen the resale value for used Apple products and our own refurbished products drop by about 25 percent, though demand is still high. And in the past few weeks our regular buyers of Apple products who sell on Amazon have been hesitant to purchase anything unless it’s discounted.

So to cope, we’ve started to focus more on selling to retailers downstream. I expect many second-tier retail shops like Newegg.com to see growth as a result of this deal.

Because Apple supports its old devices with software, often for years, they usually run fine for light workloads and are pretty easy to refurbish. Not only is this good for the environment, it’s good for recyclers and independent resellers like Filmar. It’s also great for the many consumers who can’t afford Apple’s high-end offerings.

For many people, older MacBooks that sell for $100 to $300 are more than adequate to meet their needs. Plus, they feature a smooth software experience compared to budget Windows devices.

In a sense, I understand why Amazon and Apple did this. I’ve heard the horror stories about unscrupulous third-party resellers. Apple is probably looking to lock down the repair revenue streams because these companies are affecting its margin and the sales of new products. Apple also wants to protect the brand from unauthorized resellers who may be pumping out low quality refurbished IT equipment they’ve just cleaned up and stuck in a box. That’s because when a buyer receives an Apple product that’s been poorly refurbished, Apple tends to get some of the blame, even if they didn’t have anything to do with the issue. I suspect Apple wants only new product sold on Amazon, and that’s what this deal is about. It earns Apple more money, obviously, but it could also protect its image.

Amazon, on the other hand, made shopping convenient for buyers, but now a few bad sellers have muddied the waters with counterfeit Apple accessories and poorly refurbished Apple products passing as Apple-refurbished. Personally, I think refurbished Apple products should be allowed on Amazon; let the customers use the site’s influential rating system to weed out the bad sellers.

Refurbished products don’t have a great reputation to begin with, so potential customers are less likely to visit their sites. When they do, it’s often because they’ve considered the potential cost savings. That’s why a marketplace like Amazon is so helpful. (Keep in mind Amazon doesn’t verify if a product is used, refurbished, or even a returned product being sold as new.)

At least with eBay, a shopper can choose which seller to buy from. And if they have a bad experience because they decided to buy from a shady guy with an 80 percent feedback rating, it’s their fault. Top Rated sellers are a pretty safe bet in my book.

Ultimately, I have faith in the market. If there’s enough interest, other methods for selling refurbished Apple products will emerge.