Comment: Apple deal clings to core base

The cost of the Apple iPhone could be lowered in the UK. Picture: Lisa Ferguson

Why is this critical for Amazon and Apple? After seven years of stratospheric figures, iPhone sales are getting squeezed by budget competition. Apple decided to stop reporting iPhone sales in November.

Refurbished Apple devices are a form of recycling, and also provide consumers with a cost-effective way to get their hands on a highly desirable brand. However, buying refurbished phones from a third-party doesn’t put money in Apple’s pocket. By partnering with the world’s biggest e-commerce platform, Apple hopes to get more revenue swinging back its way.

From the consumer’s perspective, there are now fewer choices for cheap Apple devices. It also means Apple will have virtually no competition on Amazon. Arguably, this is an example of big business winning, with little regard to the average consumer.

Like hundreds of UK businesses, Glasgow-based Phonesmart has been hit by the agreement. The firm owns Plunc and Freestyll, which both sell refurbished Apple devices; Amazon was a significant part of these sales.

As MD, I can say that we are willing to absorb the blow. For us, business carries on as usual. We will continue striving to offer great deals through our websites.

Unfortunately, many competitors have had to close despite investment in equipment and staff training. They don’t have the financial cushion to pivot.

The Amazon deal is one of the many tactics Apple is using to put a plaster on less than stellar iPhone sales. In 2017 it introduced an iPhone X base model at an eye-watering £999. Presumably an attempt to bridge the revenue gap caused by declining sales through increasing the price.

Over the past year, smartphone shipments have been sliding globally. This can be attributed to a lack of innovation and a robust second hand market.

Notably, sellers can still apply to sell Apple products on Amazon through the e-commerce platform’s Renewed programme. However, firms will need to already be selling millions of pounds worth of Apple products and maintain other stringent requirements which can change at any time. There aren’t many businesses that can meet these criteria. As a result, Apple will continue to dominate on the Amazon platform.

What happens if other tech brands decide to use a similar strategic partnership? Arguably, this deal between Amazon and Apple is designed to push out smaller firms. However, it could bite Apple in the foot. When consumers feel squeezed, they tend to shop around for other brands.

- Stewart McGrenary, MD of Phonesmart