iPhone 5 Resale Experience: Exploiting Shortages

Within 4 hours, I queued, received, sold and banked $1,240 from the sale of Apple’s new flagship – its iPhone 5. The following account is an experience that I hope people in the market hoping to make a quick turnaround will find useful.

 

I turned my new iPhone 5 into something more practical

I turned my new iPhone 5 into something more practical

 

The Queue – Balancing Time & Productivity

I woke up early and took a 3.5km walk to Jurong Point. The idea was the beat those who would arrive on the first bus / train. I didn’t want to wait long. The returns to queuing early were high. Yes, I had to endure looking like an idiotic fanboy turning up at the M1 store at 5:30am but coming in at 6 would mean I could wait 1-2 hours more.

A background in economics makes you value time consistently. I wanted this to be over by 9am so that I could get to my lecture. The M1 store opened at 8am. I came prepared. My laptop was tethered to my One X and I got the revision I wanted to do the night before cleared in the 2.5 hour waiting gap. Everything was down to maximizing time spent and ensuring good returns.

The people queuing with me were around my age. I’m guessing most of them were students. I was 10th in the queue. The guy before me was friendly and cooperative. We watched each other’s spots for toilet calls and buying breakfast. Also, he was one of the very few Singaporeans in the queue. I was quite surprised that many there were basically foreign students. In that location, it was not surprising to later find out many were from NTU.

The Queue @ 7:30am. 30+ people.

The Queue @ 7:30am. 30+ people.

The queue grew slowly, but as expected it rapidly rose to 30 after the first buses and MRTs came in. At around 7:30am, the queue hit 40 and slowly climbed to 50. At that point, I could not understand why would anyone join the queue. Stocks would probably be gone by then considering that each person was not limited to a single set. Also, waiting times would take you past lunch.

 

The Store – Friendly but Inefficient

The store opened at 8am sharp. They started out with 2-3 counters opened and really sleepy staff. Can’t blame them. These people were used to starting out only at 11am. The biggest problem were the customers. The first few in the queue were very problematic cases. There was the foreigner issue and then their specific request that they were not sure of. What we observed was the first 4-5 people making phone calls and attempting to get the paper work done with plenty of obstructions.

M1 HP Shop - Staff were hindered by slow systems and problematic customers

M1 HP Shop – Staff were hindered by slow systems and problematic customers

The staff were mostly friendly and some understandably quiet and sleepy looking. They handed out water to those in the queue. It is a tiny shop but they did their best to accommodate demand. They had a table to sell iPhone 5 accessories because that’s what every iPhone buyer does – wrap the new phone in protection seconds after they are bought. I can understand that, I did the exact same thing with the 4. The 5 is sturdier but somehow still looks fragile. It’s probably an Apple thing.

After 45mins of waiting for the few problematic folks to clear, I got my phone within 15 minutes and contacted the highest offer.

 

Handling Offers with a Time Constraint

I wanted to finish everything by 9am so I wouldn’t miss my lecture. The day before, I contacted 8-10 re-sellers on forums and known shops to get their prices and be on their notification lists. I didn’t have time to bargain or haggle. If one has the time to do that, you could push for prices above $1,300 and more depending on supply. I didn’t want to waste that time.

 

If one has the time to do that, you could push for prices above $1,300 and more depending on supply. I didn’t want to waste that time.

 

All through queuing, I was getting multiple offers and then revised offers. Using these offers I simply used SMS to notify buyers who were offering too low and some of them revised their offers upwards. Some of them automatically updated their offers over SMSes as well. In the end, I picked one that was the highest and willing to deal at my location.

Within 15 minutes of receiving the phone, I sold it off.

 

Factors

Many factors come into play when dealing in this market. It was a pure market operation and it was fascinating to watch prices rise and fall so rapidly. I spoke to 2 of the dealers who made such moves and here are the things that affect the price.

  • Sellers: It is almost impossible to judge how many sellers would be in the market. By sellers, I mean people like me. Most in the queue were fans. I was probably the only one that was selling the phone. In fact, I made it clear to the counter girl that I didn’t need a nano SIM as the phone will be resold. Many Apple fans glared at me. As time went on, more and more sellers entered the market lured by prices. This drove the price down at an early stage.
  • Dealers: Dealers are the people I sold the phone to. There were some that came into the market late, driving the price up. Some exited as well causing price changes to fluctuate widely.
  • Stocks: Besides telco operators, you could buy the iPhone 5 without contract from shops such as Nubox and EpiCentre. This are the best places to get it because you don’t have to sign a contract. Based on intuition, I knew it was impossible to get any there. What happened was that some dealers paid people to go down and buy in bulk on their behalf. There were groups of 18-20 people that camped overnight and wiped out the stocks in half an hour. The dealers were prepared. It was no surprised that these stores ran out of stock really quickly. Prices rose from then on.
  • Export Timings: Some dealers export the sets to countries that either are not receiving the iPhone 5 or will be receiving it late. Such exports are highly lucrative. A 16GB phone can fetch a whooping S$2,000 in those markets. Export timings thus come into play. There were a few dealers working with an export in the afternoon today. They paid really high if they could not match their export targets. After matching those targets, the same dealers quoted lower prices.

 

It is a very volatile market. You can fetch prices much higher than mine if you time it right and talk to the right people. This is why I put a time constraint in.

 

It is a very volatile market. You can fetch prices much higher than mine if you time it right and talk to the right people. This is why I put a time constraint in because it was too difficult to predict the market. It is hard to anticipate how things will turn out in the following days. Consumer demand will fall. The most eager to buy (and most willing to pay) would have already have the phones. Export markets would be filled in some capacity in the next 24 hours. In general, prices should fall day by day until it evens out at around $950 which is the selling price of the phone without a contract.

Till then, you will observe some spikes over time along a general downtrend.

This news correlated with a price spike in offers.

This news correlated with a price spike in offers.

 

Comparisons: Was It Worth It?

The only situation when this is fully worth it is if you buy the phone off contract and just sell it. Unfortunately, with dealer tactics and really early campers, that is not an option (if you value time). Everyone has different tastes and preferences, so it’s hard to compare with another person. As such, I’ll compare only my options.

I knew that my iPhone 4 would have its 2nd hand resale price massively reduced when the 5 was out. On top of that I wanted to move to Android because the 4S (and later the 5) didn’t excite me. So, it made perfect sense for me to sell my iPhone 4 five months ago. I sold the iPhone 4 for $430. Today, it is worth $300 or less depending on who you go to. In its place, I bought the best in class Android phone at that point – HTC’s One X. It continues to be a co flag bearer even after Samsung’s Galaxy S3 was launched. I bought the One X for S$768. Thus, my net profits are:

($430+$1240) – ($768+$430) = +$472

What if I kept my iPhone 4 all the way and bought a iPhone 5 now? The highest value of a iPhone 4 is at $300

($300) – ($430) = -$130

What if I kept my iPhone 4 and bought a One X now? Note that the S3 and One X are more expensive than the iPhone 5.

($300) – ($450) = -$150

Of course, I did not calculate the cost of 24 months of a $39 monthly plan (It’s $30 for me due to friends and family). But that is a non issue because this sum appears across all options. You don’t carry a smartphone without a plan. It’s a fixed, sunk cost that is beyond one’s control

The option I took did turn out to be the best one for me. I had originally expected only to earn about $200 but wild price fluctuations made that a lot higher.

 

Conclusion

Most people enter a new phone contract with a new phone by spending some money. In this case, I got a new phone, entered a new contract and made some money instead. I think it was a good option to let my iPhone 4 go quickly and swap to a new handset. Apple’s popularity certainly played a huge role in my profits.

It was also an absolute spectacle to watch pure market forces at work. Prices moved in either directions quickly reacting the market conditions.

As a friend put it, Adam Smith would be proud.



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