If you’re reading this article, you already know Apple’s pre-order drill for major new releases: Apple announces a new product, says advance online orders will start at 12:01am on a specific day, and then — when most of its customers are either exhausted or groggy — re-opens its online store to a pent-up frenzy of reservations. Virtually every time, Apple’s most dedicated customers deal with delays and web site loading problems. Sometimes, even if their orders were placed in the first hour or two of sales, they may also face uncertainty over adequate supplies for launch day deliveries.
Despite Apple CEO Tim Cook’s suggestion that the Apple Watch rollout could not be going better, his customers have widely deemed it a disaster: some unlucky people who pre-ordered Apple Watches in the first 10 minutes still haven’t received anything a full month later. Meanwhile, a group of “luckier” people — notably including scalpers — have found ways to skip Apple’s pre-order lines, walking into boutiques such as Maxfield in Los Angeles, and buying bunches of the same Watches pre-orderers are still waiting for.
Sure, overwhelming demand for new products can be hard to manage, and business gurus tend to write this off as a “good problem” for any company to have. But at some point, that good problem becomes chronic, frequently dissatisfying customers, which is when it has officially become a “bad problem.” Whether he admits it or not, that’s the situation Tim Cook faces today. The good news is that he’s well-known as a supply chain genius, so if anyone’s capable of fixing the three key problems within Apple’s screwy pre-order system, it’s him. My hope is that discussing these issues — as well as solutions — will inspire the improvements Apple’s customers have been wanting for a long time…
1: Rethinking the 12:01AM online pre-ordering experience. It’s been around five years since Apple started taking middle-of-the-night orders for iPhones — a process that has been unpleasant for customers since the beginning. Apple and its cellular partners have blamed one another over the years for various ordering errors and complete web site crashes, but at this point, Apple’s had more than enough time to make its own web site reliable for launches. Now that it’s transitioning into a luxury/lifestyle brand, it needs a no-nonsense online ordering experience — one that works whenever its customers are awake and ready to shop.
The biggest problem here is timing. Apple may have picked 12:01AM Pacific Time because it was a quiet time for web traffic, catering only to passionate customers, and a point at which Apple’s online sales team could focus on managing just one type of demand. But whatever the old justifications were, there’s no good reason to continue inconveniencing customers like this: Apple has millions of customers and billions of dollars in the bank; it should have the necessary staff and infrastructure to take its next million orders and make its next billion dollars any time of day. Midnight pre-order launches aren’t helping special customers at this point. Because of limited availability, eBay scalpers are actively gaming the system, and tons of valuable customers are getting pushed behind them in line.
Solution: It’s time to rethink both the timing of the pre-ordering process, and the process itself. If an arbitrary time is needed, why not noon — lunch time for at least some people? A better solution would eliminate artificial timing altogether. Apple has hundreds of millions of customer credit cards already on file, and the Apple Store goes down during every major new product announcement, anyway. So why not just start taking orders as soon as the event ends? To reward dedicated fans who watch the event, fulfill the first hour of preorders in first-come, first-served sequence after the event is over. After that first hour, let the next wave of delivery-date-sensitive customers optionally add a 2%-5% premium to their orders, donated straight to a charity such as PRODUCT (RED), to get earlier shipping priority. Any cancelled order moves the remaining orders up in line.
2: Streamlining SKUs to reduce consumer confusion and fulfillment issues. One of Steve Jobs’ smartest moves when returning to Apple was a radical streamlining of its product lines: fewer products meant less confusion for customers, fewer parts for manufacturing partners, and simpler stocking for retailers. But Apple’s SKUs (stock keeping units, or individual product variations) are out of control again. Competing cellular standards forced Apple to sell separate iPhones and iPads for various carriers, so it got used to making every color and every capacity in multiple versions, as well as bundling carrier-specific SIMs with some iPhones. Today, Apple sells over 50 different iPad models, which is probably why it was willing to roll out the Apple Watch in 38 different variations. Unfortunately, Apple didn’t warn customers in advance that it wasn’t actually ready to ship them all on day one, and some of those models missed the initial launch date by nearly a full month.
Solution: It’s time for Apple to go back to basics again and radically simplify its product lines. Now that the technologies have matured, iPhones should ship with universal network support, and with Apple SIMs pre-installed. Any carrier that doesn’t sign up for Apple SIM support in time for the next iPhone launch can skip the launch. Similarly, there should be one iPad — the cellular + Wi-Fi model — at the current price point of the Wi-Fi models, again with Apple SIMs pre-installed. And every aluminum or steel Apple Watch should ship with a Sport Band. These three changes would make Apple’s products a lot easier to choose from and ship.
3: Guaranteeing shipment of units in the order placed, putting online preorders ahead of retail sales. Although it doesn’t happen with every launch, some users have recently been disheartened by Apple’s willingness to fulfill some orders non-sequentially — a problem that may sound somewhat tricky to fix. It was least offensive when Apple offered same-day shipments of 38mm Apple Watches when some “day one, first hour” customers were still waiting for their 42mm Apple Watches. There’s no avoiding this: Apple has every reason to offer the quickest possible delivery of its 38mm inventory regardless of whether it’s backlogged on 42mm models.
The real problem was that many first-hour, first-day, and first-week pre-orders remained unfulfilled while Apple’s boutique retail partners were selling products to people who randomly walked in off the street. Los Angeles’s Maxfield sold many Apple Watch Sport and Apple Watch units this way, but Apple’s own retail stores routinely do this with Apple accessories, too. Last week, hard-to-find Apple Watch bands went on sale to walk-in customers at a handful of Apple Stores in cities such as Miami, Los Angeles, and Stanford, even though Apple hadn’t shipped month-old pre-orders and wasn’t promising to do so for another month. It’s just bad business to take and hold pre-orders when random retail customers will be able to walk in and buy the same products weeks or months earlier — it makes people feel as if they’re being treated unfairly.
Solution: Angela Ahrendts is supposedly working to blur the line between the Apple Retail and Online experiences. In fairness to customers of both shops, if “first come, first served” is going to be a policy, online pre-orders should always receive priority, rather than off-the-street retail customers. No one should be able to skip the line.
One More Thing: Redefining the retail “lineup” experience for a luxury brand. The single best comment I’ve seen from a reader this year was a commentary on Apple’s transformation into a fashion-lifestyle company; paraphrased, he said that the sight of people camping outdoors for Apple products in trash bag-like sleeping bags was clashing with Apple’s luxury retail ambitions. In other words, it’s time for Apple to bid good riddance to launch day lines. I think he’s right: waiting overnight for a new iPhone on the sidewalks of a shopping mall is no better than pitching a tent outside Walmart to save $50 on Black Friday. Between Apple’s widely-acknowledged success and the availability of options to avoid lines, there’s no good reason for these lineups, apart from the annual spectacle of seeing tired, disheveled adults and a growing number of professional line-waiters wait around for hours to pick up devices.
Solution: Apple’s online reservation system is capable of queuing customers for Genius Bar visits and try-on appointments. The company is also able to take advance and same-day orders for in-store product pickups. Apple Retail should expand upon these systems to form virtual launch-day lines, offering appointments to pick up new products on launch days. It should guarantee availability of the ordered product in up to two given capacities, colors, or sizes per customer; the launch day’s leftover inventory could thereafter become available to late-to-reserve customers, and then walk-in customers.
What do you think, readers? Share your thoughts in the comments section below!