Apple Is Trying to Undermine Retailers by Offering Discounted Gift Cards?

Hi All,

I've been noticing 15%( Flybuys/ Everyday reward points) Apple discounted cards for sale recently in Woolworths, Coles and Bigw… etc.

Similarly Sony sells brand new TV's as Box damaged at a lower cost to undermine their retailers.

Does anyone agree that Apple is working towards selling goods/services to end users directly in the long run and leveraging their $2.46 trillion market capitalization.

Please feel free to share your thoughts.

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  • +3

    Where do you see this? I haven't seen Apple Gift Cards discounted 15% of late otherwise it would have been on OzB on 1st page immediately!

    • +1

      Both Woolworths and Coles have offered a 15% rebate as flybuys and everyday rewards points in the last few months.

    • Even if this were the case, there is nothing to show which business (i.e. Apple or Woolworths, etc) that is taking the 15% hit.

  • +7

    Does anyone agree that Apple is working towards selling goods/services to end users directly in the long run

    They already do. Quite significantly. The whole Apple Store thing…

  • +5

    Pretty sure if Apple/Samsung wanted to cut-out the retailers, they could just stop selling their products to them

  • +2

    Apple seems to have been merrily undermining retailers for decades.

    • -2

      Hence why I avoid them where possible, having sold their products since the late 80s.

      There margins make cigarettes look good at times, especially on phones. This makes other brands look like a better choice to purchase and use especially when a lot of their specs are better.

      However, if you are an employee and work for Apple, they give you the choice of purchasing a product once a year from a particular category eg Phone/Tablet/iMac or Macbook, at a substantially reduced price at 25% off.

      Admittedly I did buy a Macbook Pro this year, however, as a semi-professional musician (where we play gigs for next to nothing)I can claim this on tax, whereas I can't with a Musical instrument.

      • +1

        I purchased my first mac from MyMac a long time ago, and there they are, still operating, that's pretty cool…

        I also remember signing up for Apples developer program where discounts were huge, too… That's long-gone.

        I guess we can only vote with our wallets.

  • +2

    I fail to understand how a retailer giving some points to you for buying an Apple card from their store is evidence of Apple's malfeasance.

    I'm sure Apple would prefer you spent 100% of your money directly with them, but until they can engineer that, I'm sure they'll continue to accept the huge margins they receive on products sold elsewhere.

  • +2

    Cutting out Apple Authorised Resellers would be one motivation, because they would not have to wait around for a retailer to send payments to Apple after selling Apple products (and they wouldn’t have to worry about resellers taking a cut).

    However, I think there are other motivations to consider:

    • When people purchase Apple gift cards, Apple receives those funds and can throw it onto their large pile of money, so they can invest it, etc. Apple would hold onto both the funds and the goods/services people want until people requests a redemption of those funds to pay for goods/services. You cannot transfer those funds out of Apple (unless you successfully instigate a chargeback or something like that), so that’s also another benefit for Apple.

    • Some gift cards will never have their full balance redeemed, whether it is because someone forgets to redeem the full balance, or loses the gift card, or has their gift card stolen, or they added the gift card funds to their Apple Account and then the funds were forfeited after they died and Apple closed the Apple Account, or some other reason.

    • Apple probably wants people to use gift cards as a payment method, as it probably costs less to run a gift card system than to accept PayPal or credit cards or debit cards and pay for both payment processing fees, particularly if someone does a change of mind return or requests a chargeback. Of course, you will always have people raise chargeback requests for purchases of gift cards, but at least you cannot do a change of mind return for purchases of gift cards.

    • Apple would cover the cost of any bonus points during a bonus points promotion, and I suspect the amount Apple has to pay a retailer for the bonus points is not the same as an upfront percentage discount. For example, if I bought a $200 Apple gift card at Coles in the recent Flybuys deal, I would have got 6,000 Flybuys points, which can be converted into $30 in Flybuys Dollars (i.e. a $30 discount at participating retailers). However, I think Apple would pay less than $30 to cover the cost of me receiving the 6,000 Flybuys points.

  • Coles or woolies, don’t give these cards away for free. They make margins on them. Apple pays them to distribute the cards in some form or another.

    If Apple wants to cut out retailers it would sell the cards direct given most are electronically enabled.

  • Well it's a win/win for both Apple and Coles/Woolies. I don't think Apple is absorbing the entire discount, but likely splitting it with the supermarket. Just my speculation of course.

    Let's assume the 15% points value is split equally, so Apple offers the retailer 7.5% off the gift card (on top of whatever commission the retailer makes), the real cost to Coles/Woolies is then just an additional 7.5%. But they don't have to realise that cost until the customer redeems the points, driving future shopping visits, and since you can only redeem them in $10 blocks, the customer is likely to spend money on those future visits too.

    Now on the Apple side, I believe the margin on Apple hardware at retail is not much higher than 10-15%. If Apple is offering 7.5% off to Coles/Woolies for the promotion, adding the regular commission for the gift card sale, the amount they make on hardware they sell directly to someone using these gift cards is possibly the same or more than when that hardware is sold through another retailer. Then you add in the fact that some people will likely hang on to a lot of it as credit on their Apple ID to pay subscriptions or wait for future hardware, and that amount becomes free interest-bearing cash to them.

    I do hope these will be ongoing promotions rather than just introductory deals while Apple gift cards are still new, I've saved almost $700 on Apple devices with them already.

  • i think its more a case of apple competing against zippay afterpay etc which grab 5% etc
    slso they are promoting the new apple gift cards
    also ww coles pay for some of thr discount
    also bigger profit margin for goods bought on apple store
    slso apple gets 30% comission on apple store apps so 25% off still gives them profit

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