Carphone Warehouse is a UK mobile phone retailer. They won exclusive rights to sell the Nokia 5530 in the UK for 6 weeks starting on August 11, 2009. When they realized that the device didn’t sell as well as they had hoped, they started shifting units to outside markets. Carphone Warehouse purchased 130,000 units, and have exported over half of them. You may think that sounds all well and dandy, after all if a company purchases goods with the intent to resell them then they what they did, under the strictest tenants of capitalism, is considered doing their job, right? Sadly it isn’t. It violates the rules Nokia enforces upon all of their distributors and resellers. We’ve seen such commotion arise before, in China, when several shops received fines for selling devices to provinces that were not agreed upon.
Nokia is rightfully pissed because Carphone Warehouse sold the 5530 to distributors in other countries who are now dealing with excess inventory within their borders. Economics 101 kicks into play and with large supplies, and little demand, prices drop. They’ve dropped as much as $16 per device in some cases. If distributors make little profit on Nokia hardware then next time they may order fewer units, or worse yet go out of business.
A Carphone spokesperson told Mobile News: “There are a combination of reasons why we would look to sell product outside of our standard channels. These include returns and repairs, end-of-life stock, and over-stocked products. In this respect, we are no different from any other retailer in the industry. Equally, if we do have to sell stock in this way then we want to ensure there is the least disruption possible in the markets that we trade in.”
To which a Nokia spokesman replied: “We take the matter very seriously and are looking into the alleged activity.”
Buying goods on the grey market is nothing new. American Nokia fans were once used to this, often buying unlocked devices that were undeniably from the UK due to that hideously large power plug. Times are better today and Nokia sells a lot of unlocked units to American resellers. Here in Finland, any time someone goes on a trip to America they’ll usually ask their friends if they “need anything”. No, I’m not talking about illegal drugs, and besides everyone knows the UK has the cheapest drugs in all of the EU, I’m talking about the really weak dollar, combined with low taxes, making devices super cheap. Take the new $999 Apple MacBook for instance. In Finland it is 999 EUR, which is $1500. Why wouldn’t you pick up an American MacBook for only $1000, which is 665 EUR, and spend that extra 335 EUR on a small weekend retreat to Estonia or something?