Apple to restructure its distribution

NEW DELHI: The India office of Apple Computers International is restructuring its distribution channel. Since Naren S Aiyyar took over as Managing Director for the India and SAARC region last year, he has discontinued the three-tier model and restricted to two-tier. Now, he plans to add more distributors at the first tier and likewise add a few resellers at the second tier. The idea is to increase its geographic reach as well as decrease the product specialty gap. Said Aiyyar, "The restructuring is being done to bring about cost benefits to the end-user."

In the last one year, Apple has not only streamlined distributor margins to the lowest levels, it has also worked hard on improving its logistics. In fact, by improving its logistics, Apple has successfully brought down the cost of its computers from Rs 79,900 to Rs 69,900. This was achieved in less than a year by accurately predicting the demand requirements, thus using sea instead of air to bring in the shipments. In addition to this, Apple also negotiated hard with its freight forwarder to keep prices low.

Currently there are two Apple distributors in India: one each in Delhi and Mumbai. In addition to this are 33 resellers, of which three get their inventory directly from Apple. Apple will now upgrade 12 of these resellers during this year to the level of master resellers who will deal with the company directly. They will be selected on the basis of performance and financial capacity. Fresh resellers will replace each reseller, currently under the distributor, who will migrate to the single tier model.

Apple plans to add 20 more resellers by this year. The total number of resellers by the end of this year is expected to be around 66 to 70 and by next year-end, around 100. While the preference is for a single tier model, at least in metros and bigger cities, the two-tier model will be followed to facilitate the process of distribution in smaller cities and remote areas.