JCL Blog

Apple Crushes It With Help from the Channel

Apple has widely been perceived as a company that operates outside of the reseller channel.  Its stores and web site sell directly to their customers and they have achieved meteoric growth without the help of the third parties that make the rest of the technology industry function.  The prevailing belief in the industry is that there is no way to get to such a large market without the aid of channel partners -- that number in the hundreds of thousands. 

The launch of the iPad gives us a good backdrop to examine if this is really true.  Does Apple sell directly to customers or through the channel?  Is there anything to learn from the recent success of Apple?  I propose that Apple sells through the channel and there are some specific things that can be learned.

First, Apple has an awesome web site and some 300 or so stores that generate an average of $50 million in revenue per store.  Apple generates more revenue per square foot than any other retailer – actually twice that of Tiffanies - the next most productive retailer.  Despite this incredible performance, in 2011 Apple generated 15% of its revenue through its stores, it pales in comparison to revenue generated by iPhone sales of 45% -- three times that of its stores.

iPhones are sold by Apples new channel partners – the wireless carriers.  If you add this to the sales by Apple’s other partners:  BestBuy (1,000 stores) and Walmart (2,500 stores) and it is starting to look like a significant portion of Apple’s incredible growth is fueled by its channel partners.

Apple 2011 Annual Report