Price war predicted as Apple opens online store

Apple has launched its online retail store in the UAE, undercutting local retailers by up to Dh500 on a Mac laptop.

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Apple launched its online retail store in the UAE yesterday, undercutting local retailers by up to Dh500 on a high-end Mac laptop.

Residents can now purchase an Apple iPad, iPhone or computer with a credit card online and have them delivered in three days.

Experts said the move would shake the electronics industry in the UAE. "Despite the fact that e-commerce has not taken off in the UAE, it's quite a price-sensitive market and people want a bargain," said Matthew Reed, a senior analyst for the Middle East and Africa at Informa Telecoms & Media.

"The lower prices will have quite an effect. Store-based retailers will probably respond by cutting their prices."

The Apple online store sells versions of the iPad 2, iPhone 4 and Macbook Pro at Dh2,099, Dh2,299 and Dh6,499 respectively.

This is hundreds of dirhams below the prices currently being offered in store and online by Plug-Ins Electronix, Sharaf DG and Carrefour UAE.

Sharaf DG sells each of these products at Dh2,149, Dh2,699 and Dh6,999, Plug-Ins sells the iPad and iPhone 4 in store at Dh2,149 and Dh2,449. Carrefour also sells the iPad 2 at Dh2,149.

“It becomes another competitor for us, it gives the consumer one more place to buy that has a competitive advantage because it does not have any overheads,” said Omar Abushaban, general manager at Plug-Ins Electronix. “Apple is looking to cash in and be more profitable in this market.”

Apple will deliver its products from a variety of warehouses around the world and has made its call centre in Ireland available to UAE customers.

The online store will also allow for the customisation of Macs before buying and for free engraving of iPads, iPhones and iPods.

Customisation of Macs has often been an issue for consumers in the UAE. Delays of up to two months with local retailers are common for computers ordered with, for example, extra memory or bigger hard drives.

Before the launch of the online store, Apple products were available only through official resellers such as Plug-Ins, supplied by Apple’s authorised distributor, Arabian Business Machine.

It is unclear whether they will still be the official distributor of Apple products to retailers. ABM and Apple declined to comment.
Online retail executives said Apple's move to sidestep its distributor was significant.

“I find it really interesting that they’ve cut out their local and regional distributor,” said Omar Kassim, founder of the retail portal JadoPado in Dubai.

Mr Kassim, whose site sells products such as the iPhone and iPad for delivery in Dubai, said Apple was likely to be seeking greater profits on sales of its products locally.

“It’s Apple basically keeping more margin for themselves,” he said. “I think they’ve seen the grey market being a pretty large factor, both locally and regionally.”

An iPad on the Apple website is Dh100 more expensive than on JadoPado, but Apple is selling the iPhone 4 from Dh2,299 – significantly lower than the Dh2,600 at JadoPado.