Apple and Amazon cut a deal that upended the Mac resale market

When John Bumstead looked at listings for his products on Amazon.com in early January, he was waiting for the guillotine to fall.

A small online business owner from Minneapolis, Minnesota, Bumstead specializes in refurbishing and selling old MacBooks, models he typically buys from recyclers and fixes up himself. But on January 4th, Bumstead’s entire business dwindled into nonexistence as his listings were removed from the platform due to a new policy limiting all but the largest companies and specially authorized providers from selling Apple products.

“You’d go to your current items, your inventory items, and just watch them disappear that morning,” Bumstead says of the fateful day the policy went into effect, confirming fears he first expressed in an interview with Motherboard last November. “I pretty much had all my inventory, but as the day went on, you could see them dwindle down to two or three [listings] as they took them away.”

For small sellers like Bumstead, who’s run his refurbishing business for years under the name RDKL, Inc., the deal means you can no longer sell new or refurbished Apple products on Amazon Marketplace, the fast-growing third-party seller network that now takes in more revenue than Amazon’s entire online retail operation. Some financial analysts estimate that Amazon Marketplace is worth more than double the company’s internal e-commerce business, or about $250 billion.

For US retailers big and small, Amazon has become the preeminent place to sell products, rivaled only by eBay and Walmart’s competing marketplaces and smaller, more product-specific platforms like Etsy and Overstock.com. Yet none of Amazon’s competitors offer the same robust logistics and shipping benefits the company offers its sellers, making it a top destination for online businesses.

Companies that want to sell Apple products through Amazon now have to meet one of two requirements. The first is to purchase at least $2.5 million worth of refurbished inventory every 90 days from Apple itself or through a retailer with more than $5 billion in annual sales, like a wireless carrier or big-box retailers like Target or Walmart. The second is to reach out directly to Apple to become an authorized reseller. Apple has yet to make its reseller requirements known to the public, but to become an Apple-authorized provider of repairs requires a physical retail space for customers to enter.

By cutting this deal, Apple and Amazon benefit while knocking out millions of dollars worth of business for small sellers. For Apple, the move to sell on Amazon and its aftermath highlight the company’s long-standing adversarial relationship with repair providers and resellers. Even those within the confines of Apple’s strictly controlled network have faced byzantine restrictions to acquiring proper equipment.

Sellers both in-network and out operate entirely at the whims of a company that has fought right-to-repair legislation and builds devices that are notoriously difficult to rebuild. Now, small sellers have been forced off their biggest platform so Apple could move in.

For someone like Bumstead who performs repair work from home, it’s not practical to open a brick-and-mortar repair shop to become an authorized provider. He also says it’s not feasible for him to start spending millions more dollars per quarter to acquire inventory he’s not sure he’ll ever be able to sell. Bumstead says he’s tried to get Amazon to tell him more about Apple’s supposed authorized reseller program, but he hasn’t heard back.

“People going onto Amazon now are getting the impression that a low-end used MacBook costs $700 instead of $200,” he says. “Amazon is literally half of the online marketplace for all products. So if you take low-end, perfectly good laptops that are available in the millions off [the platform], you’re really doing damage to those products in terms of visibility to the world. People won’t know about them and buy them, and that just leads to machines like those being scrapped rather than sold.”

For Amazon, the motive was clear. Apple was not selling on its platform before, choosing instead to sell its products through retailers like Best Buy, and handling a bulk of online sales of new and refurbished products through its own retail website. But, like Nike and other big brands in the past, Apple cut a deal with Amazon on its own terms to get a splashy landing page full of listings with its own name under them that the company controls. That benefits Apple because it can tightly control the products and the pricing.

“Amazon needs brands. We know that consumers search on brands, and so Amazon will go to pretty drastic lengths to get access to those [products],” says Sucharita Kodali, a Forrester analyst specializing in e-commerce and consumer trends. Since the early 2000s, Amazon’s primary way to acquire well-known brands was to let third-party merchants resell them, Kodali notes. “The brands have noticed, and the brands want to control more of their presence online. And because Amazon is such a big presence in e-commerce, if you want to control your brand presence online, you have to control what it looks like on Amazon.” That inevitably means cutting deals and shutting out what, in Apple’s eyes, are rogue merchants.

Amazon not only gets to claim it has certified Apple sellers on its platform selling genuine products, but it also gains a rare insight into how Apple’s business works online, Kodali points out. “Amazon has always said it’s agnostic between first- and third-party sellers, but it probably prefers first-party more because it can control the relationship and because they own margin information,” she says. By selling directly on Amazon, Apple is illuminating parts of its business to one of its competitors.

“You’re exposing sales data, margin data, units sold, reasons for returns… you’re exposing a lot of your trade secrets when you sell as a first-party on Amazon,” Kodali says. “Those are risks for any brand that chooses to sell [on another platform].” For instance, that is likely why Apple chooses not to sell its Echo competitor, the HomePod, on Amazon.com.

“As part of a new agreement with Apple, we are working with a select group of authorized resellers to offer an expanded selection of Apple and Beats products, including new releases, in Amazon’s stores,” an Amazon spokesperson tells The Verge. The company would not comment on third-party sellers leaving the platform, but it did recommend that any individual or business looking to sell refurbished products try and qualify for Amazon Renewed. But as made clear when the deal with Apple was announced, there are special requirements to become an Apple reseller that make it restrictive for all but large operations.

Apple did not respond to a request for comment for this story.

“Brands and marketplaces are on a collision course, and they need to figure out how to work together. And if not, you need to make sure your brand is represented on the internet,” Kodali says. “More brands are going to be really strict about their supply chains, and third-party sellers are going to be fewer and fewer.” In this case, the sellers no longer have “this Amazon gravy train,” Kodali adds. “You’re selling somebody else’s product, so you’re always at risk of being disintermediated.”

Bumstead isn’t alone in getting kicked off of Amazon. A number of sellers, both individuals and multiperson e-commerce operations, have found themselves forced to sell elsewhere since the Amazon-Apple deal took effect.

As noted by CNN last fall, companies that specialize in outdated electronics, like AceBeach, have been pushed away from reselling Apple products entirely because doing so on platforms other than Amazon is prohibitively difficult. (eBay and Walmart don’t impose restrictions on Apple sales, but Bumstead says discoverability is an issue on those platforms, and neither offers the same logistics support Amazon does.) Similarly, CNET spoke with an engineer from Colorado who said he sells hundreds of thousands of dollars in Apple products per year. Last November, he predicted he’d have to switch to selling other electronics because he didn’t want to switch to another platform.

In a Facebook group Bumstead participates in, dozens of other individual sellers have gathered in the past six months to discuss alternative marketplaces, potential legal remedies, and other strategies to maintain their businesses and continue working with used Apple products. One fellow seller Bumstead met through his network of Amazon resellers is Jim Ilardi, the founder of a private device repair and refurbisher he calls PiratePT Electronics. Unlike Bumstead, who specialized in mainly MacBook products, Ilardi was unique in that he refurbished old iPod Classics, a product category Apple no longer supports or sells.

Ilardi would give old iPods new shells and batteries, and he eventually started replacing their hard drives with faster SSD drives, making the products better than they’d ever been. For those perusing Amazon for an iPod Classic, especially one with a flash drive so it was much speedier than when it first came out, PiratePT Electronics was one of the very few sellers available. Ilardi still maintains a positive rating of 98 percent on the platform, despite Amazon no longer allowing him to list his products.

“It was extremely successful,” Ilardi says of his business. Over the last decade or so, Ilardi estimates he’s sold roughly $1.2 million in refurbished iPods, with “95 percent” of his business on Amazon, he estimates. Ilardi now splits his business between an Etsy storefront, an eBay account, and his personal website where he also offers screen repairs and other service work.

But Ilardi says eBay is difficult because it doesn’t group together sellers under a single product, but instead, it makes users scroll through individual listings, some of which are just run-of-the-mill used versions from everyday eBay users. On Esty, Ilardi said he was, at one point last year, doing only one-fourth the sales he was doing on Amazon. But Ilardi’s Etsy store has since gained steam now that he is offering different paint job options and more flash storage.

This is the main gripe of Apple resellers: why, for a company that handily makes more than $50 billion in revenue per quarter, are online resellers such a threat? “I’m selling something they’ve completely stopped manufacturing and don’t support anymore,” Ilardi says. Apple does still sell MacBooks, making Bumstead’s business, in a way, competitive with Apple’s, but Bumstead deals in years-old products designed for people who never spend $800 to $1,200 on a new computer.

iPods, on the other hand, no longer exist except in the form of the iPod Touch and refurbished or used models. “My product was sunsetted,” Ilardis says. “They actually got rid of it. Why would that matter to Apple and Amazon? They’ve gone out of that business.”

That’s where the Amazon-Apple deal bumps uncomfortably up against the right-to-repair movement. Apple has reportedly spent years fighting right-to-repair bills moving through nearly two dozen state legislatures. Just last month, an Apple lobbyist pressured California lawmakers to pull a right-to-repair bill by claiming consumers could hurt themselves trying to repair iPhones.

Ostensibly, Apple is fighting rules that would require the company to spend and lose out on money because making its smartphones, tablets, and computers easier for owners to repair would mean more consumers may buy used instead of new, while letting individuals and businesses not part of its authorized network provide repair services would cut out the Apple Store and its network of providers. Apple, a company notorious for its high level of quality control and its obsessive approach to marketing, also likely prefers no other company resell its products, and it of course despises counterfeiters. Yet grouped in with repair services is the right to buy and sell refurbished products, making this just as much an environmental issue as it is an economic one.

The US Supreme Court ruled in 2013 that consumers have the right to sell copyrighted products so long as they legally own the product. But that hasn’t stopped companies like Apple, and now Amazon, from making the act of reselling prohibitively difficult. Apple is making a big shift toward software services to lessen its dependence on the iPhone, but it still became the most valuable company on the planet, largely thanks to selling massive volumes of new products each and every year.

We’ve seen this play in a variety of fashions with Apple over the past few years, in addition to its efforts to fight right-to-repair laws. There was the notorious battery throttling controversy in late 2017 that forced the company to offer lithium-ion battery replacement for iPhones at a reduced cost, a concession CEO Tim Cook has openly attributed to negatively affected sales of new devices last year. Prior to that, industry trade group the Repair Association released a report saying Apple, alongside other big consumer electronics companies, had systematically undermined environmental standards that would cut down on e-waste.

Last October, Apple confirmed that its T2 chip found in the newest line of MacBook Pros and other computers would lock down the device if certain parts, like the logic board, were repaired without running a special diagnostic tool distributed only by Apple to its own network of stores and authorized repair providers. For refurbishers like Bumstead, that could put an end to his ability to repair newer MacBook Pros in the future, if the machines won’t run when he reassembles them without proprietary Apple software not made available to the public.

Ultimately, Bumstead says the situation has been a wake-up call. “I’ve had a number of friends go out of business. It’s hard to say that it was Amazon as the cause, but it’s sort of a ‘death by a thousand cuts’ situation,” he says. Bumstead has returned mostly to the wholesale selling of old MacBooks, which is what he says he dealt in prior to Amazon Marketplace. Typically, he gets his hands on dozens of MacBooks from recyclers, fixes them up, and sells 10 or 20 of them to a single seller.

“They tend to be people who sell, too. They might have retail stores and laptops are one of the things they sell. They could be exporters. They might be selling locally or they might even be putting them eBay,” he says. “I do make it worth their while to buy them 10 or 20 at a time.”

As a result, Bumstead has started moving a large portion of his business to his personal website, using eBay and other platforms as a supplement. “Someone can buy a laptop on my website, and I think to myself, ‘Wow, I don’t have a deadline as far as this goes. No negative reviews to work out. No threatening infrastructure of the platform,’” he says. “If I’ve learned anything from this experience, it’s that you really want to own your own platform. Nobody can take that away from you.”