Best Buy Blacklisted From Selling iPad 2s After Holding Back Units?

Best Buy Blacklisted From Selling iPad 2s After Holding Back Units?

Apple has a vested interested in getting as many iPad 2s into customer hands as possible, as quickly as possible. It’s not only about mere volume of unit sales. It’s also about trying to slacken the crazy demand that the iPad 2 has generated before customers actively start resenting Apple for it and, in their impatience, are literally driven out of their minds (a state diagnosable by purchasing a Xoom).

So imagine how absolutely ticked off Apple must have been when they heard that Best Buy has been refusing to sell all of its stock of iPad 2s to customers, because they’ve already reached their sales quotas for that day. Actually, no need to imagine, because according to a Best Buy employee speaking to Crunchgear, the answer is “very.”

The situation is that Best Buy has internal quotas set upon iPad 2 sales, but those quotas don’t take into account the actual number of iPad 2 sales in the stores. What it seems like Best Buy has been doing is this: if they get more units in a new iPad 2 shipment than they need to sell for their quota, they hold those extra units back to help make the next day’s quota, and so on.

This is just the sort of stupid “appease management over customers” math that makes Best Buy everyone’s favorite big box. Apple’s storming mad, and has apparently blacklisted Best Buy for the moment, refusing to ship them any more iPad 2s until they get their house in order. That may not be true — although Tim Cook himself is reportedly banging a table about the situation — but even if it is, expect the situation to resolve itself soon. Apple’s not going to feud too long with one of their biggest third-party sales partners.

  • Buddyro7

    Just another reason that best buy is absolute garbage.

  • Un_FollowMe

    Best Buy does that so they can have more customers come in each day, to “boost” their sales. Because, chances are, you’d be distracted and buy something in the store if you come at least twice to buy an ipad and get it on your 3rd attempt. Stupid technique if you ask.

  • FultonKBD

    I question if the rumor that “Apple is ticked off” has any merit. Mostly because Apple seems to be doing the same thing at their own stores.

    I went in the local Apple store late Saturday evening a couple of weekends ago and they said they were “sold out” of the iPads. But the clerk said that if I come back Sunday early morning, I probably could purchase one. Now I highly doubt that they got a shipment in between late Saturday and early Sunday morning.

  • stevenN

    Apple Retail stores sale the previous days shipments starting in the morning. So while Apple has received the shipment, they have not entered those units in for sale yet. These units are then entered into the system for sale the next day.

    BB is said to have received the units and entered them into the computer for sale and then refuse to sell them. So you check inventory of a store. It says 20 in stock on the web. You go to the store and they are “out”.

  • GHo5t

    IMHO, BB needs Apple > Apple needs BB.

    Customers want their product(s) as soon as they have placed their cash on the counter.

    BB might attempt to drive secondary sales with this practice but Apple and BB suffers because the customer’s experience with the new product is reduced when they have to come back at a later date (2nd visit to the store) to pick up the product.

    Remember, there are numerous other retail outlets that sale Apple products. (Walmart, Target, Apple online, Apple retail, etc)

  • Barbara

    I hate the way management tracks sales in stores. I work at a store on a college campus. I don’t get commission, but my reviews are partly based on my sales. I lost 11k worth of business in 2 days because we were out of 13″ MacBook Pros. That doesn’t show up in the sales reports. Extremely frustrating.

  • Tom McGrath

    Glad we don’t have this Best Buy place here in the UK.

  • Steve

    The one unknown is whether Apple has some input into the BB quotas. For instance a store’s quota could be 5 units per day or 35 per week. If you sell all 35 units on Mon and Tues you’re now not meeting quota on 5 week days or 71% of the time. All depends on who’s setting the quota system and the parameters driving it.

  • CharliK

    Apple isn’t going to give a shite about how many units BB or anyone else sells. So long as they are following their contract rules.

    The rumor is that Apple is holding units themselves. My sources (which are very reliable) say that this is partially true. The way the ipads are shipped and the amount of prep that they are required to do is too much to get a shipment ready to sell in any kind of quick fashion. So the policy by Apple is to not even try to get them ready right away but simply have it done by the end of the day to sell the next morning.

    So in one sense, just saying that no one else can hold back units would be hypocritical.

    But if the contract with Apple doesn’t allow for holding back units for this particular reason (or even at all) then Best Buy would be violating contract and perhaps has had their shipments frozen while Apple looks into it

    OR (and more likely), all this talk about Apple punishing BB is bull and this is just fall out from the way the channel system works. BB etc have to make a bulk buy of units which they sell, then order more, get them, sell them, wash, rinse repeat. It is possible that they tried to place another order and Apple informed them that do to high demand via apple.com etc they wouldn’t be able to fulfill that new order right away. Now Best Buy has a sitch to deal with. Because they have all these pre-orders. So they send out word to their stores that they must stop taking pre orders and stop selling to anyone that doesn’t have a pre order and pull all stock from the floor (to avoid customers tossing a hissy fit cause it is ‘right there’). That way they can find out who has what orders to fill at each store, ship the remaining stock back to their central warehouses and have it sent out to those that need it for orders and avoid a PR nightmare from that policy (which might be why Apple cut their reservations this year)

  • CharliK

    Every retail is like that. Some stricter than others. At college I was at Godiva and if I didn’t mean my sales goal I was written up. 3 write ups and I could be fired for poor job performance (at the least my hours would be cut). I complained to HR because my boss had me receiving every shipment which put me off the floor but she still called it ‘sales hours’ and yet she didn’t do that to herself. They did nothing, so I got another job that pull that crap.
    As a parting gift I set up and filled a 25k order that she was going to have to match next year (holiday corporate thing). I wasn’t upset when I heard the company decided to just do a huge donation to the Red Cross or some such.

  • CharliK

    Yes and no. The clerks don’t know what is in shipments or even if a shipment has arrived because generally speaking it goes in a street door that is straight to the receiving room (and the clerks have no reason to be wandering around back there). So until the managers tell them that something is in stock, they have no clue.

    And given the amount of processing I am told these things have to go through with 3 levels of boxes to unpack, counts and recounts, inputting into their inventory system to show up and have the sales software allow the sales, the managers won’t be telling them that until the next morning. So as far as they know, yes a shipment came in late Saturday night

  • FultonKBD

    Yeah… there is a chance that the Apple Store had units that were sitting on the dock while waiting to be processed for sale. I was there not long before the store was closing for the night. It just seems odd that the clerk would suggest that I come back tomorrow morning… and gave me the time to come. It seemed a bit too rehearsed to me.

    But if BB is holding back and only selling a few each day (but selling out each day), how mad can Apple be? With the supply constraints Apple is having, I doubt that they are overly “ticked off”. I doubt BB will be “punished”.

    Anyway, if I was Apple or BB and I knew my supply was limited, I would do the same to keep foot traffic coming everyday. Instead of all at once for one day.

  • AlterThending

    I think it is funny best buy can be a bunch of bastards! I pre-ordered my iPad 2 there and got it 3 weeks ago they called me 2 days ago telling me my pre-order was in… I was like I picked that up 3 weeks ago she said maybe you pre-ordered but picked up a different one instead and I said No, I went to customer service and my pre-order was with everyone elses someone must have just put picked up ipad pre-order papers back in the stack of non picked up ipads. Idiots.

  • Guest

    It would be nice to have iPad 2’s to hold back. Considering that the BB I work at receives about 3 of them every other week, it’s hard to believe that Apple is more interested in getting their products into the hands of customers than in keeping demand extraordinarily high.

  • Mcb66

    Tom – they opened one this month in West Thurrock Retail Park, Essex a year ago.

  • bestbuyboy

    This is funny considering none of its true..haha

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John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his wife and two parakeets. You can follow him here on Twitter.

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