Apple Not Delivering Enough iPhone 5s To Retail Partners: Report

Apple Inc. (NASDAQ:AAPL) has sold 5 million iPhone 5s since Friday, but few have been obtained from the three big retail chains that have partnered with the tech giant to sell them: RadioShack Corporation (NYSE:RSH), Best Buy Co., Inc. (NYSE:BBY) and Target Corporation (NYSE:TGT).

Some outlets received far below pre-orders they have to fulfill, according to a report in Monday’s Wall Street Journal. Meanwhile, Apple’s own retail stores received far more phones to unleash upon the eager masses.

The difference is stark. According to the Journal story that cited a person familiar with the issue, one Apple store “known for heavy traffic” delivered 3,000 phones. Another anonymous source at a Target outlet in Chicago said it received one phone on Saturday to begin fulfilling back orders.

Apple’s relationship with its retail partners is important because it operates only 378 stores worldwide. But that relationship is strained if customers end up waiting longer for their pre-orders to be filled at third-party merchants, especially if customers end up blaming the merchants rather than Apple.

However, this doesn’t necessarily mean Apple is giving short shrift to its partners. Radio Shack, Target and Best Buy have thousands of outlets combined while Apple has only 249 stores in the U.S. Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T) and Sprint Nextel Corporation (NYSE:S) are also distributing the phones through their many outlets.

Apple, of Cupertino, Calif., isn’t commenting on its distribution policy or how many of its phones it has in stock.

Further complicating the supply chain is that the phone is being released worldwide at roughly the same time. The phone is already on sale in the U.S., Canada, Germany, Australia, Japan, Hong Kong, Singapore, Germany, France and Britain. The phone will go on sale in 22 more countries on Friday the company said.

"It could take as long as 28 days to find the iPhone you want," Shawn Score, senior vp at Best Buy, is attributed as saying in an email to the Journal.

Radio Shack shares rose 13 cents to $3.07 on Monday, while those of Target fell 24 cents to $64.20 and Best Buy shares fell 4 cents to $17.77.

Best Buy in particular – which is trying to reinvent itself in part as a more user friendly retailer – could end up with more to lose with its deal with Apple if customers end up blaming it, rather than Apple’s own supply chain, for the wait.

This “underlines why analysts and others have been reporting for weeks that Best Buy isn't poised to profit from the iPhone launch the way it would have if Apple didn't have its own retail chain,” wrote managing editor for The Minneapolis / St. Paul Business Journal. “And consider it some wisdom-of-crowds validation for those willing to wait in line for an iPhone.”

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