Apple Store suppliers describe being ‘squeezed’ by more stringent payment terms, consignment model

Apple Store suppliers describe being ‘squeezed’ by more stringent payment terms, consignment model

A new report from The Telegraph this weekend claims that Apple Store suppliers have been “forced” by the company to accept more stringent terms to sell the products in Apple Stores and on the Apple Online Store. Suppliers cited in the report describe being “squeezed” by Apple through these new terms.

Through its retail and online stores, Apple sells accessories and products made by third-party companies. This includes things like iPhone cases, smart home accessories, Mac peripherals, and more. It’s these companies affected by the new Apple Store terms.

The report explains that the suppliers are now required to wait 60 days after an order is completed before they are paid, up from 45 days currently. The companies are also now required to accept a “consignment model,” meaning they are “paid only after an item is sold, rather than after it is received by Apple, shifting inventory costs to them.”

Interestingly, the suppliers say that in the past they have been able to negotiate these terms with Apple. This time around, however, the terms are said to have been “set by Apple and not open to negotiation.” This ensures that all suppliers now follow the same terms, as opposed to different terms for different suppliers, but it puts more pressure on each of them.

One company that sells goods in the Apple store said: “They are not doing their vendors any favours; their vendors face cash challenges that they don’t. I don’t think anyone’s going to turn them down; there’s very little competition for the brand exposure that you get with Apple. It’s certainly a squeeze.”

In response to the story from The Telegraph, an Apple spokesperson said:

“We deeply value the close relationship we have with the world-class companies who sell their products via and in our stores. Apple regularly assesses the assortment of the third-party products we sell and the structure of our models to provide vendors the ability to reliably and confidently grow their businesses.”

In the end, suppliers are unlikely to end their contracts with Apple in light of these new terms, the report explains. Apple Stores provide more visibility and brand exposure than other retail and online channels, the suppliers say.