Travels in time: The Apple Watch and its implications for the future of online and offline commerce

(c)iStock.com/Mutlu Kurtbas

Before the launch of the Apple Watch, every Apple product launch followed a similar pattern: a product announcement on stage in March, June or September; a shipping date announced some days to a couple of months later; and usually about a week before the launch, lines of people starting to form in front of all of Apple’s stores.

There is always a CNN report interviewing the first person waiting in line, the very keen ones with the tents to give their first-hand experience of sleeping on Fifth Avenue in order to be the first get the latest Apple product. Things started to get ugly at the launch of the iPhone 6, which was initially in such high demand that there were people standing in the queue who had been paid to be there by others so that they could buy more than the allocated limit of two iPhone 6s per person, smuggle them to Asia (where it wasn’t available) and sell them for as much as $6,000 per unit.

How Angela changed the game

Yet things changed after Angela Ahrendts stepped in as Apple’s SVP, Retail and Online Stores. Going from CEO of fashion house Burberry to chief of a retail division would be a downgrade had it been to any other company. But Ahrendts became the retail director of the world’s most profitable company ever: for Q1 2015, Apple reported record earnings of $57.6 billion in revenue and $13.1 billion in profit, beating any company to date.

It didn’t take long for Ahrendts' experience in retail to be applied to the Apple project cycle. The launch of the Apple Watch – the first new product launch for Apple since the iPad was introduced in 2010 – was in stark contrast to the existing product launches. Product was announced in September 2014, leaving a PR wave that rolled on until April 24, 2015, when it was in stores yet still not shipping. Publicity was exclusively carried out by celebrities: Beyoncé wearing a never-before-seen solid gold link bracelet; Pharrell had the watch before launch; it made the cover of Vogue China in October; and Christy Turlington ran a marathon in Kenya, using an early prototype as a platform to raise awareness for her charity organisation.

That exclusivity continued in stores for “normal” people too. The change in retail strategy meant that you could only see the product in store and try the different wrist straps, but then you had to order it online: now buying in-store and taking it home with you that day was no longer possible. In select stores, even a viewing of the watch required a special appointment made on an (iPhone) app.

Shopping for the Apple Watch

The Apple Watch isn’t sold in stores; it’s just on display. There is a lot to show and try, as there are tens of options available: two sizes (38 and 42 mm) and three models with two options for each – black/white anodised aluminium, black/“steely” steel, and rose and normal gold – along with dozens of straps – from polyurethane to leather or steel – to match any model. This is a stock of sizes and colours that even big clothes retailers can’t quite match.

After the “selling” date came and online orders were possible, the expected delivery dates moved every minute. At 00:03 PST, Apple’s online store said the watch’s shipping date would be May and by 12:20 PST it had shifted to June and July, with the black steel model particularly hard to find and currently available for delivery in August.

To boost the ecosystem of apps, Apple offered a program for registered developers to order the watch and skip the queues, as having good apps for the watch is key to mass sales.

The strategy

The reasons behind this shift in strategy are easy to read now it is in place:

  • It offers a better retail experience. Since Apple’s products are considered premium, no one wants to queue for hours in order to spend up to $17,000 for a gold watch. People want to have the required amount of attention from the brand in order to receive the product.
  • There are no queues or smuggling. The Apple fanboy lines disappeared with the launch of the watch, which improved the company’s image. No CNN reports of the launch, but maybe that’s for the better.
  • It provides a huge cost saving to Apple. You can imagine what a strain on the production and delivery chain it would be if every Apple Store was required to stock all 24 models and the plethora of bands that go with it. It’s either impossible or it would leave you visiting a store, liking a particular blue leather band with 38mm black steel watch and it not being available (again, more customer frustration). Having all of the stock online is saves costs as Apple can easily ship from one fulfilment centre to the entire US or Europe.
  • It enables data collection and order management. Having the data of every single customer is key to establishing a long-term relationship with them. In addition, being able to monitor every order online makes it easier for the production chain to adjust quickly and, for example, produce more black steel watches because they can see they are in higher demand.

The future of e-commerce

So what are the implications of the Apple Watch’s launch for the rest of the retail world? Will we soon be able to buy refrigerators in the way we buy Apple Watches? Preview in store, press a button on an app and have the fridge shipped to your home? Quite possibly.

Every company can benefit if they structure their retail cycle around an obvious physical showroom and an invisible (online) delivery centre and combine it with online shipping. Not every company can make a product as popular as the Apple Watch prior to the launch, but every company can take cues from Apple’s development of their retail strategy.

Related Stories

Leave a comment

Alternatively

This will only be used to quickly provide signup information and will not allow us to post to your account or appear on your timeline.