Why is an iPad cheaper in the UAE than the US?

Why is an iPad cheaper in the UAE than the US?
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Published November 26th, 2013 - 04:55 GMT via SyndiGate.info

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Now Apple is really trying to bring “prices down to make it non-attractive” to buy from the grey market.
Now Apple is really trying to bring “prices down to make it non-attractive” to buy from the grey market.

 Buying an iPad Mini or iPad Air is cheaper in the UAE than in the US as Apple has become very aggressive in pricing in bid to counterattack the mushrooming grey market.

Apple is selling the iPad Mini (WiFi) 32GB for Dh1,899 while the same spec is sold in the US for $499 (Dh1,835) plus sales tax of around nine per cent depending on each state, which translates to $548.9 (Dh2,018).

“We have been having regular meetings with Apple and have been bringing to their notice about the official product availability gap and pricing gap in the UAE. One of Apple’s main strategies is to eradicate the grey market,” Neelesh Bhatnagar, CEO of Emax, told Gulf News.

He said Apple products used to be available in the UAE after six months of official launch some years back, but now it has come down to less than two months.

Now Apple is really trying to bring “prices down to make it non-attractive” to buy from the grey market.

“This is the assurance Apple has given us and it looks like Apple is very much in the right direction,” Bhatnagar said.

Customers ready to wait

The grey market was booming before as the customer was not sure when the Apple products will be available in the UAE. Now customers are ready to wait for the official launch.

Bhatnagar said the official launch of iPhone 5 is an example as many of the authorised distributors are recording brisk sales. It shows that customers have been waiting for the official launch.

Hani Nehmi, general manager of iStyle, Apple premium reseller, said that it is very good to buy locally than in the US. It is a good price and declined to comment more on the pricing gap.

The online retailers are selling the same device for a minimum premium of Dh300 and said that they are witnessing decent sales every day as of now.

“We have been registering decent sales daily. The key difference is all the official stocks in the UAE do not have FaceTime on it and Apple shipment time is between 5 to 10 business days. Over the next few weeks our prices also will come down than the official selling price,” said Omar Kassim, founder and CEO of JadoPado.

He said Apple has been pretty aggressive on pricing and it is to counterattack the grey market. So far things have been okay for us.

According to Sheriff Rizwan, CEO and Founder at ALSHOP.com, the only difference between us and the official UAE launch is that our products have all the applications.

“We are definitely selling many iPads every day and many customers prefer to pay a premium and buy from online stores because they want all the applications. We will be reducing the prices after a few days,” he said.

When asked how do you make money after bringing the prices lesser than the official price, Rizwan said that ALSHOP makes money out of volume. It is a demand and supply game.

He said the worst category to do business is electronics and it is a known fact. The cost and margin is very thin in electronics. The gross profit margin will never cross 15 per cent. If you are lucky you will get more than two per cent for Apple products.

“It is a wafer thin margin we work on but we work on huge volumes,” he said.

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