Profiting from iHype?
July 6th, 2007 | by mbhunter |The build-up of new products like Apple’s iPhone, the Sony Playstation 3, the Microsoft XBox 360, or even the new Presidential $1 coins have created a temporary secondary market based on the perceived scarcity of the new items. Sometimes there are enough to go around for everyone who wants one (more or less); other times the stores have very limited quantites which mainly serves to create additional buzz before the flood gates open up the product to the masses.
Diehard fans anticipate the release of new products by standing in line hours, days, weeks, or even months before the items are offered for sale. (Students at RPI have been known to start standing in line for season hockey tickets nearly a year before they go on sale!) So, it’s likely that the folks that are standing in line for these products
- really, really want it
- are being paid to stand in line for someone who really, really wants it
- are hoping to sell it to someone else who really, really wants it but can’t get it the first day of release.
Retailers know that the secondary market exists, and categorically bristle at the idea that someone else could possibly profit directly from sales made from their stores. So the policies for first-day releases is usually one per customer, first come, first served. The customer must wait in line, and the customer can only purchase one iPhone (not all of them, ma’am!), so it’s really not a great business model to try to capitalize on the first-day release. It takes too much time to get one of the first ones, and your volume is lousy.
It seems like a better business model would be to hire folks for maybe $8/hour, have them stand in line for five hours, get the phones for customers who had better things to do than stand in line, tack on a service fee of $100, deliver it to the customer that day, and pocket the difference.
In any case, before doing this, it might pay to think about how much time would be spent standing in line, and how much money that time is worth. Also, there will almost always eventually be enough to go around for everyone who wants one, so the hype is just that, and the scarcity at the time of release is just a marketing tool.
And after the hype dies off, it will probably be cheaper, too!
3 Responses to “Profiting from iHype?”
By darius on Jul 6, 2007 | Reply
eBay is the perfect place to monetize on such things. For example people were bidding over $4,500 for an iPhones on the release day. In this case even if you can buy only one product per customer you can make a pretty nice income.
By Chris on Jul 6, 2007 | Reply
They were bidding, but did they pay? There’s a good chance those $5,000 iPhones never saw any real money trade hands.
By zen on Jul 6, 2007 | Reply
Ebay is flooded with the iPhone – I’d almost say to the person with a watchful eye you could get a deal (or a steal) spending less money than those that waited in line to be “the first of thousands” to own another apple gizmo.