Apple Resellers and Service Providers Speak Out Following Simply Mac Closures

GameStop last week announced it is closing a number of non-productive Simply Mac locations throughout the United States, less than four years after acquiring and expanding the Apple Authorized Reseller and Service Provider, which effectively serves as a third-party Apple Store in smaller markets.

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Following the reports, we received a tip from a disgruntled Apple Authorized Service Provider owner who said the underlying issues prompting Simply Mac's downsizing are "far deeper" than it would seem. He noted his own AASP is closing because Apple has "slowly strangled" him on margins and with "free labor" demands.

Another longtime Apple Authorized Dealer and Service Provider told us that AASPs have been "under siege" for years. The person, who wishes to remain anonymous, said profit margins are "appallingly low" and that Apple views its authorized service partners as "nothing more than glorified TV repairmen."

"I am sad to say that I do not see this changing," the person said. "Apple is highly aware of our concerns and do not seem to care. As an Apple reseller for over 20 years, I thought that when Apple became successful we would participate in that success, but we did not," the person added.

Given the polarizing comments from a few, we decided to reach out to a number of Apple's authorized sales and service partners in the United States and Canada to see if there is any validity to the claims.

A number of the Apple Authorized Resellers and Service Providers we spoke to refuted the allegations, noting they are stable if not growing, but we did learn that Apple has made one adjustment in particular that might explain the pressure felt by some sales and service partners—especially smaller ones with fewer sales.

Since August 2015, Apple has lowered its profit margins for resellers, requiring them to pay more upfront for products. Apple then rebates the difference as part of the monthly Business Development Funds checks it sends to resellers, but this method requires resellers to wait longer to be fully paid.

In other words, while the margins did not change overall, resellers are now forced to pay more upfront for Apple products to sell, which restricts cash flow that could otherwise be used for day-to-day operations, employee wages, and other expenses. For smaller resellers, the change can be particularly burdensome.

Meanwhile, one reseller believes Apple's arguably lackluster 2016 was a contributing factor to its own year-over-year sales decline.

On the service side, one person told us they "don't know that there is any truth" to the statement about Apple demanding "free labor," which a separate source said is likely an exaggeration for certain items that Apple used to compensate resellers for but now considers "non-revenue repair."

"I would not say that Apple has been demanding any kind of free labor," a service manager told MacRumors. "However, they are increasingly sending customers to us for iPhone repairs, which do not pay very well. We get paid more for a ten minute Mac repair than we do for an hour-long iPhone one."

"I am pleased to say that Apple really values their service partners and has increased our compensation for warranty work," another reseller said. "If you can achieve Premium Service Provider status, you get some nice perks along with higher compensation. While not perfect, Apple service really seems to care about us and is constantly trying to make things better for us."

MacMedics, an Apple Authorized Premium Service Provider with two locations in Maryland in Severna Park and Lanham, and another in Philadelphia, agreed to comment on the record to shine positive light on Apple.

"We're doing very well, we've expanded, and we opened a new pure retail location in 2015. Apple give us great support and guidance," said Dana Stibolt, President of MacMedics. "We're very encouraged by the upward trends over the last year, and in fact we're hiring more staff for all locations for both in-lab and on-site."

The other sources asked not to be identified. Apple and GameStop did not respond to requests for comment.


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Multiple Simply Mac Stores Shutting Down Across the U.S.

Simply Mac, a well-known Apple Authorized Reseller and Service Provider owned by GameStop, is shutting down a number of its brick and mortar stores across the United States.

Locations in North Carolina, North Dakota, Montana, Texas, Illinois, and more, are closing this week.

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Image via the Billings Gazette

Notices at some of the locations have suggested Simply Mac is being shut down because Apple is ending its agreement with the retail chain, and several local newspapers are reporting the same news, but on Twitter, Simply Mac says that is not true.

A notice sent out by the West Acres Mall in Fargo, North Dakota:
We wanted to reach out to you with news of another change at West Acres. As of today, Simply Mac has closed. Simply Mac opened at West Acres in August 2014 and we've enjoyed having them as part of the West Acres family.

The closure is due to the Apple Corporation ending its national agreement with Simply Mac to sell them Apple product, making it impossible for them to continue. They will be onsite for a few days to help with customers who have repaired items to pick up.
A GameStop spokesperson who spoke to the Midland-Reporter Telegram in Texas and the Billings Gazette in Montana said the closure of the Simply Mac store in that location was done as part of a business transformation plan that involves closing non-productive store locations.
"As GameStop announced in its holiday sales release, the company continues to focus on the execution of our business transformation plan, which includes growing our non-gaming businesses and right-sizing our global store portfolio across all our retail brands. This involves evaluating and closing non-productive locations. The closure of this Simply Mac store is part of that strategy."
It is not clear why there is mixed information being shared about the store closures, but it appears that only a select number of stores are being shuttered at this time. We've reached out to GameStop for a full list of the locations that are disappearing.

The closure of several Simply Mac stores comes as GameStop faces flagging sales. Earlier this month, GameStop announced that its holiday sales fell 16.4 percent compared to 2015.


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