Back in October, a mysterious new shop got set up on eBay's namesake auction site, simply under the username "refurbished_outlet." The digital storefront began selling Apple Certified refurbished products en masse, and quickly attracted the attention of consumers since the products were offered at reasonable prices. Discounts are available on a wide range of various popular Apple products, and all items are sold at "Buy It Now" pricing.
There's a very high likelihood that Apple directly operates this refurbished outlet. The seller has conducted nearly 11,000 transactions in less than six months, and all items carry the exact same terms as refurbished products sold directly by Apple, such as a one-year warranty and physical reconditioning. It's highly dubious that anyone other than Apple could get their hands on this sheer quantity of gear.
Setting up shop on eBay provides Apple a backend route to clear out its refurbished inventory. At the same time, since it's not publicly associated with refurbished_outlet, the lower pricing doesn't tarnish Apple's premium brand image that it likes to maintain. We already know that Mac sales aren't doing so hot, down 22% last quarter, so the store is a way for the company to quietly flush out older models.
Apple is using a subtle strategy of price discrimination where it tries to maximize what consumers will pay. It doesn't want to risk diluting its brand, but it still wants to capture sales from consumers only willing to pay lower price points. With its new products, it uses price maintenance to again maintain its premium brand. Apple exerts tremendous control over its resellers, with relatively small wholesale discounts compared to other electronics products. These are just two different aspects of Apple's pricing strategy.
As far as eBay is concerned, it may or may not know the true identity of refurbished_outlet, but it frankly couldn't care less. More volume is more selling fees that it collects, and that's almost 11,000 deals that it's had a piece of since October. This affair may never be confirmed for sure.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple and eBay. The Motley Fool owns shares of Apple and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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