iPhone 4 Delays: Will Retail Stores and Trade-In Partners Take Customer Heat?

by Reads (24,065)

Beyond creating more consternation among iPhone users, a future continuation of the iPhone 4 product shortages and pre-ordering glitches that happened this week could cause more problems for retailers such as Best Buy and Radio Shack, as well as for companies specializing in trade-ins of earlier iPhones and other consumer electronics (CE) products.

On Tuesday afternoon, Apple announced a total sellout of the iPhone 4, less than 24 hours after the phone became available for pre-order from Apple and original launch partners AT&T, Best Buy, and WalMart.

Along the way, Radio Shack, a major retailer that joined the iPhone 4 party after Apple’s June 7 rollout event, hasn’t even been taking pre-orders for the new phone — not officially, anyway.

“We’ve been taking customer requests in our stores instead. We will match these requests with the phones when the [iPhone 4] comes in,” said Hannah Higerd, a spokesperson for the nationwide consumer electronics (CE) chain. According to some sources, Radio Shack has been specifically asked not to refer to these customer requests as “pre-orders.”

Other Apple partners — and customers — have already undergone hassles, too. As of 4 pm on Tuesday, AT&T reportedly asked Best Buy to stop taking pre-orders for the white model of the iPhone 4.

Apple and AT&T then set a series of delayed iPhone 4 delivery dates for customers who weren’t among the first group to pre-order. “As of Tuesday afternoon, customers who pre-order iPhone 4 moving forward will receive their device on June 25 or later, depending on when the order is placed,” AT&T said in a statement on Tuesday.

On its website later that night, Apple gave July 2 as the delivery date at Apple stores for those who hadn’t managed to pre-order by 4:30 that day. Soon afterward, Apple changed the date to July 14.

Trade In to Trade Up
In conjunction with its plans to sell the iPhone, Radio Shack also rolled out a product trade-in program for the iPhone 4 — similar to plans already in place at Best Buy and Wal-Mart, and also the same general lines as programs under way by online trade-in specialists like Gazelle.

Gazelle also provides the technology underpinnings for the CE trade-in programs at Best Buy, Wal-Mart, and several other big retailers, while also offering a direct trade-in program to consumers and businesses on its own website, said Kristina Kennedy, marketing manager, in an interview.

The average price offer on for an iPhone 3GS on Gazelle’s iPhone sub-site is just over $200, enabling many users who trade in their 3GS models to effectively upgrade for free.

Visitors to Gazelle’s website can trade in iPhones of any generation, in addition to many other categories of products, including desktop and notebooks PCs, digital cameras, and LCD monitors, Kennedy said. The website calculates an initial trade-in offer based on the user’s answers to questions about the condition of the device and which product accessories the user can provide, for instance.

About a week after mailed-in products are received by Gazelle, users are sent payment in their choice of a check or a Best Buy or Amazon gift card. Gazelle first removes all personal data from a gadget. High-end CE goods are then resold through websites such as eBay and Overstock, while somewhat older products are sold to refurbishers and repair shops. About 10 percent of the items received go to recyclers. “But we make no money on the recycling,” she said.

For its part, Radio Shack’s trade-in program uses CE Exchange, a competitor to Gazelle, as its trade-in engine.

Demand Is Very High
Yet while Apple’s retail and trade-in partners clearly stand to rake in business from the iPhone 4’s very strong sales, will they also take on a lot of customer backlash if the product delays continue?

Problems have kept increasing this week. In a statement on Wednesday, AT&T announced that it was temporarily suspending pre-ordering so as to fulfill orders already received. With the AT&T ordering system no longer available at all, Best Buy and WalMart stores were reportedly forced to resort to pen-and-pencil pre-orders.

Also that day, Apple apologized for website glitches in AT&T’s pre-ordering system that caused repeated crashes, and that even served up users’ account information to the wrong customers in some cases.

Yet companies are voicing considerable optimism, anyway. “iPhone pre-order sales [on Tuesday] were ten times higher than the first day or pre-ordering for the iPhone 3GS last year,” AT&T noted in its statement Wednesday.

Likewise, since June 7 of this year, Gazelle has seen more than 10,000 iPhone trades, representing more than a ten-fold increase in the number received in the first ten days after Apple’s 3GS launch last year.

Gazelle’s Kennedy acknowledged that, if the product postponements go on, some users might decide to wait until they actually get their hands on an iPhone 4 before deciding to relinquish an older model of Apple’s phone.

“But that hasn’t been happening yet,” she added. Gazelle also gives users a 30-day window for “locking in” an offer price, meaning that a user can wait up to 30 days to send old gear and still get the same offer first accepted.

“So as long as the iPhone 4s are delivered within our window, that should work out fine,” Kennedy noted.

For its part, Radio Shack still expects to receive its own allotment of iPhone 4 phones on June 24 to sell to customers who have turned in requests, according to Higered “That’s our hope, anyway. That’s the plan,” the Radio Shack spokesperson said.

Stores in the Best Buy, WalMart and Apple chains are reportedly slated to get limited numbers of iPhone 4 smartphones on June 24 beyond the phones already pre-ordered, for distribution to customers on a first-come, first-served basis.

 

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