BGR Investigates: Artificial shortage sends iPhone 5 prices up in India

If you are out shopping for an iPhone 5 in India, you are most likely to be asked to wait or pre-book one as it is sold out. Most cellphone retailers will tell you that they are expecting Apple's dist

If you are out shopping for an iPhone 5 in India, you are most likely to be asked to wait or pre-book one as it is sold out. Most cellphone retailers will tell you that they are expecting Apple’s distributors to get the next shipment soon. Many will even crib about the limited stock they received, which is not even enough to satiate the pre-bookings they already have from their customers. ET’s Hitesh Raj Bhagat (disclosure: he happens to be a friend of mine) reported about it a couple of days ago and briefly hinted whether retailers are hoarding the iPhone 5 and selling it at a premium. The stark reality is that they indeed are doing that. Read on for our investigation.

At the outset, let me make it clear that not all retailers are hoarders. In fact, most indeed received very limited stock and there is a serious supply-demand mismatch. But that’s the case globally and not specific to India. However, what’s interesting is how the iPhone 5 billed in India is available readily, provided one is willing to pay a premium that ranges from Rs 3,000-Rs 5,000 depending where one goes to buy it.

We checked a few retailers in Delhi and Mumbai, who first claimed that the iPhone 5 was out of stock but they could “arrange for one” with a bill if we were willing to pay a premium. Of course, the bill would mention only the MRP and the premium would be for making an “out-of-stock” product available. Some retailers were quite open in accepting that they had the iPhone 5 in stock but will only sell it at a premium.

“I’m aware that the iPhone 5 is hard to get and since I have a few units I will only sell it at a premium. Anyway, even when the next lot of phones come, I can still sell it at MRP so I won’t lose any money. How is it wrong if I can make some extra money if people are willing to pay a premium for it?” a retailer in Mumbai told us when we went undercover while investigating the matter.

Some other tech savvy retailers have also opened eBay accounts under aliases where they are selling the iPhone 5 with a genuine bill and warranty in India at a premium.

That’s not to say that every retailer is hoarding units of the iPhone 5 and selling them at a premium. “For me my store’s reputation is more important that earning a few extra thousand bucks like this. My customers come to me because they trust me and many of them have paid me in advance for their iPhone 5. Unfortunately, I don’t have any stocks and Apple’s distributors say there are no stocks. They send us no more than 20 units whenever they get any stock. However, some retailers seem to have a constant supply of the iPhone 5 that they are selling at a premium,” complained a prominent retailer.

While Apple has strict policies regarding pricing of its products, it also helps hoarders as they know the phones will still sell at MRP even when the stock is readily available. Unlike other products where companies drop prices regularly over the life of the product that deters them from hoarding, they are assured that they won’t lose any money on the iPhone 5 till Apple announces the next version of the iPhone. And that is not happening anytime soon.

We reached out to Apple’s PR in India but the company did not provide any comment at the time of filing this story. We would suggest our readers not to pay any premium for the iPhone 5. In case a retailer asks for a premium, do let us know in comments below. We will update this post as and when we receive any official comment from Apple.

Photo Credit: Eshan Shetty

  • Published Date: December 6, 2012 7:32 PM IST
  • Updated Date: December 6, 2012 8:42 PM IST