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Distribution System of Apple

Distribution System of Apple

Farjad Khan
Sadia Shahid Naqvi

Mohammad Ali Jinnah University

Sir Humair Ali


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Distribution System of Apple

Acknowledgment:

In the present world of competition there is a race in which everyone wants to come first. With

the will to be on first we made this report. First of all we would like to thank the supreme power

of Almighty Allah who is the one who has always guided us to work on the right path of life.

Next we would like to thank our parents to whom we are greatly indebted to for bringing us up

with love, care & encouragement to this stage.

We feel obliged in taking the opportunity to sincerely thank our teacher Sir Humair Ali who has

helped us throughout the semester and never let us down. Last but not the least we would like to

thank all our friends who have always stuck with us through thick and thin, who have always

encouraged us whenever we felt down.

We have no valuable words to express our thanks, but our hearts are full of favors received from

every individual.
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Distribution System of Apple

Table of Contents

Acknowledgment: ........................................................................................................................... 2
Introduction: .................................................................................................................................... 4
Product Line of Apple:................................................................................................................ 5
Competitors of Apple:................................................................................................................. 5
Distribution System: ....................................................................................................................... 6
Distribution System of Apple: ........................................................................................................ 7
Conclusion & Recommendations: ................................................................................................ 10
References ..................................................................................................................................... 11
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Distribution System of Apple

Introduction:

Apple is an American multinational corporation, one of the greatest in the world that designs and

manufactures consumer electronics and computer software products. It’s Best known products are

its Mac Computers & Laptops, iPhone & iPad. Apple has expanded the number of retail locations

and its geographical coverage, with 506 stores across 25 countries worldwide as of 2018.

Established in Cupertino, California on April 1, 1976 and incorporated January 3, 1977, the

company was called Apple Computer, Inc. for its 30 years, but dropped the word “Computer” on

January 9, 2007 to reject the company's ongoing expansion into the consumer electronics market

in addition to its traditional focus on personal computers. Apple has about 132,000 employees

worldwide and had worldwide Revenue of 265.6 Billion Dollars in 2018. For reasons as various

as its philosophy of comprehensive appealing design to its unique advertising campaigns, Apple

has established a unique reputation in the consumer electronics industry. This includes a customer

base that is devoted & Loyal to the company and its brand, mainly in the United States. Fortune

magazine named Apple the most admired company in the United States in 2008 and in the world

in 2009.

Initially it was established to sell Apple 1 personnel computer kit. A computer single-handedly

designed by Wozniak. during the first five years’ revenues doubled every four months with an

average growth rate of 700%. The Apple II also invented by Wozniak was introduced on April

1977. By the end of 1970's Apple had a staff of computer designers and a production line. The

company introduced Apple III in May 1980 in attempt to compete with IBM and Microsoft. On
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Distribution System of Apple
December 1980, Apple went public at 22% per share generating more capital than any IPO and

instantly creating about three hundred millionaires than any company in history. In 1982, Jobs

took Jef Ruskin’s low cost computer project which was launched in 1984. It was a first personnel

computer to be launched without any programming language at all.

Product Line of Apple:

Apple has a variety of different products. Some of its products are:

1. Iphone

2. iPad

3. iPod

4. iOS

5. macOS

6. Apple Watch

7. Apple Tv

Competitors of Apple:

1. Dell

2. Hp

3. Lenovo

4. Samsung

5. Sony

6. Xiaomi

7. Huawei
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Distribution System of Apple
Distribution System:

A Distribution system is a chain of Intermediaries by which a product or service passes before

reaching the final consumer. It includes Distributors, whole sellers, Retailers, intermediaries. Now

a day as technology is evolving, internet is the distribution channel. Manufacturers are opening

their own online websites or stores to sell their products or services. This is also known as e-

commerce or online shopping. It is now a trend in the market to buy products online.

There are 2 main types of Distribution Channels; Direct & Indirect. In Direct Distribution, the

manufacturer sells products directly to the customers either through having own retail stores or e-

commerce. In Indirect Distribution, the Manufacturer sells the products to the customers indirectly

using intermediaries. There can be multiple intermediaries in the Indirect Distribution System.

To make sure that your distribution system is efficient and effective, there needs to be a distribution

strategy. Distribution Strategy is a strategy or a plan to make a product or a service available to

the target customers through its supply chain. Distribution strategy designs the entire approach for

availability of the offering starting taking inputs from what the company communicated in

marketing campaigns to what target audience is to be served. A company can decide whether it

wants to serve the product and service through their own channels or partner with other companies

to use their distribution channels to do the same. Distribution Strategy is precisely the strategy

deployed by a company to make sure the product/service can reach the maximum potential

customers at minimal or optimal distribution costs. A good distribution strategy can maximize

your revenue and profits but a bad and unplanned distribution strategy can lead not only to losses

but also helping the competitors get the advantage through the opportunity in the market which

you created.
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Distribution System of Apple
There are 3 main types of Distribution strategies:

 Exclusive Distribution : Exclusive stories to sell products leads to more control.

 Intensive Distribution : Maximizing outlets to maximize sales.

 Selective Distribution : Carefully choosing multiple channels and partners.

Distribution Strategy depends upon following parameters too:

 Location of business

 Location of target market

 Reaching the target market

 Warehousing

 Transportation and logistics

Distribution System of Apple:

Apple is a multinational corporation having presence all over the world. It has its own retail stores

across 25 countries. With having spread across 25 countries, Apple needs to have a unique

Distribution system to increase its sales and to efficiently have its products available everywhere

in the world whenever needed.

For this purpose, Apples follows a mix of Direct and Indirect Distribution System. Apple has over

506 retail stores of its own across 25 countries with 217 stores in the United States. Rest of the

stores are in the other countries. With having brick stores, Apple also has its own online store

which it created back in 1997. Apple uses these stores for direct distribution of its products to its

customers. Apple also controls the perception of its brand by opening its stores in exclusive

locations only with an iconic architectural style. This way, Apple create a positive cognitive gap

in the mind of its consumers where they perceive the brand much higher or better.
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Distribution System of Apple

For Indirect Distribution, Apple also distributes its products to other stores as well. This includes;

a) 3rd party telecom operators

b) Wholesaler

c) Retailers

d) Resellers

Using this strategy, Apple increases its reach. People might think that this strategy isn’t that much

important but in reality, most of Apple’s sales are by using this strategy. Apple does 71% of its

sales through Indirect Distribution while the rest 29% through Direct Distribution.

The Apple business model leverages both on direct and indirect channels. Apple sells its products

directly via its Apple Stores. This is critical to Apple success as it enables it to deliver a high-

quality buying experience for its products in which service and education are emphasized. That is

also why Apple keeps expanding its stores worldwide. It is also quite expensive. Yet Apple has

full control over the customer experience and control over a distribution strategy requires massive

resources. Apple stores doesn’t only sell its products; it also sells services. 13% of the revenues

from stores are from the services its sell.

If Apple were relying solely on its retail operations, this would be too risky. Indeed, those retail

stores are subject to financial risks and if sales were to rely exclusively on them would, when

slowing down, it would easily create trouble for Apple long-term business success. At the same

time, Apple Stores have a high impact on the company’s brand. Indeed, they create visibility for

the brand and the company’s products.


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Distribution System of Apple
Some of Apple’s distributors are:

a) Best Buy

b) Walmart

c) Target

d) Radio Shack

What makes Apple’s sales and channel strategy unique is that Apple never discounts through its

direct channel. It does discount refurbished products and there are price changes, but there’s no

“sale” pricing, say on a holiday, for example. Apple keeps reseller pricing stable. While it’s illegal

to set dealer pricing (to its customers), Apple still manages to keep retail pricing remarkably stable.

It does that by keeping dealer margins slim, offering no volume discounts, and keeping terms

consistent between resellers of the same product.


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Distribution System of Apple

Conclusion & Recommendations:

Apple is one of the leading companies worldwide with a revenue of 265.6 Billion Dollars in

2018. It gives employment to around 132,000 employees. Having presence across 25 countries

and selling products worldwide, it needs to have a unique distribution strategy. Apple uses a

mixture of Direct & Indirect Distribution strategy to sell to its customers. Apples has its own

retail store and Online store. Apple also uses 3rd party telecom operators, Wholesaler, Retailers

& Resellers as indirect means of Distribution. Apples sells 71% of its products through Indirect

means while 29% through direct means

The recommendations for Apple are:

a) Apple needs to focus more on their Direct Distribution as the gap between Direct

Distribution and Indirect Distribution sales is too much. It needs to minimize this gap

and increase its Direct Distribution Selling

b) Apple needs to provide discounts to bulk buying distributors so that their sales can

increase. They also need to have festival/holiday sales/discounts to attract more

customers
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Distribution System of Apple
References
Cuofano, G. (n.d.). Apple Distribution: The Apple Store Is Not About Selling iPhones. Retrieved
from four week mba: https://fourweekmba.com/apple-distribution-strategy/
Distribution Channel. (n.d.). Retrieved from Shopify:
https://www.shopify.com/encyclopedia/distribution-channel
Introduction of Apple Inc. (n.d.). Retrieved from Scribd:
https://www.scribd.com/document/348580088/Introduction-of-Apple-Inc
Tjosep. (2015, May 16). Apple’s Sales and channel strategy – key to it’s success. Retrieved from
mpk732.wordpress: https://mpk732.wordpress.com/2015/05/16/apples-sales-and-
channel-strategy-key-to-its-success/
Total Net Sale of Apple. (2018). Retrieved from Statista:
https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004/