iPad Gray Market Inflates Overseas Cost

The iPad will not be sold overseas until late May, so early adopters in Asia and Europe have no choice but to pay inflated costs over the Internet.
Posted April 15, 2010

- Reuters

BOSTON (Reuters) - Apple Inc's decision to delay the sale of its iPad overseas may frustrate customers in Germany, France or Japan -- but it brightened the day of at least a few crafty fans closer to home.

So-called resellers, opportunists who scoop up hot products and sell them over the Web at inflated prices, have recently been charging premiums of more than $500 on sites like Craigslist or eBay for the iPad.

They could soon jack up prices even more, thanks to Apple's announcement on Wednesday that iPads will not go on sale outside the United States before late May. Until then, shoppers in Europe, Asia and the Middle East who can't wait for the touchscreen device to arrive in local stores will have little choice but to pay up over the Web.

"There is huge demand. I'm buying as many as I can," said Todd Davis, proprietor of ToddsToyz.com, a Boston-based Web retailer that ships consumer electronics around the globe.

The firm charges $100 to $150 over list price for the devices, though some retailers on eBay were asking for $1,200 or more for a high-end model that Apple sells for $699.

Davis said he had only been able to get his hands on five units before they sold out, but planned to spend Wednesday afternoon scouring Boston area Apple stores and Best Buy Co Inc outlets for more.

British online retailer PurelyGadgets.co.uk was selling tablets for 590 pounds ($914) to 790 pounds ($1,223), a hefty premium over their original price of $499 to $699. A salesman said they were almost sold out.

Apple has yet to announce overseas pricing. In the meantime, market forces will determine how much consumers pay, said Steve Baker, an analyst with market research firm NPD.

"Gray markets are the purest form of supply and demand. If you crimp the supply and demand doesn't go down, then prices will go up," he said.

In the United States, the device has proven more popular than some analysts had expected, selling 500,000 units in the week after its April 3 launch.

That caused sellouts at Best Buy and some Apple stores -- the only direct sellers of the iPad -- though the manufacturer has replenished supplies at some locations.

The company said it expected sales would likely continue to exceed supply over the next several weeks. For its overseas customers, it plans to announce international pricing and begin taking online orders on May 10.

Copyright 2010 Reuters. Click for restrictions.

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