3.15.2011

How The iPad 2's Gray Market Works

You may have noticed, as you were queuing for your shiny new iPad 2 over the weekend, that you were surrounded by rather a lot of people of a foreign persuasion. There is, it turns out, a reason for this -- the gray market in selling iPad 2s abroad.

Because the latest magical product from Apple came out in the US first, a couple of weeks ahead of the rest of the world, foreign dealers were keen to scoop up as many as they could and quickly ship them overseas to make a killing. M.I.C. Gadget has done an interesting analysis of how the process works.

Hong Kong vendors are making a killing -- bottom-of-the-line 16 GB Wi-Fi models sell for over US$1,000, which is more than twice the original price. "Mr. Lo, the 'master' of the gray market in Hong Kong, who distributed hundreds to thousands of iPhone 4s and iPads to China's gray market last year, has already received 200 orders before the launch," they say. He paid eight couriers in New York, Chicago, San Francisco and Los Angeles to hop on planes to Hong Kong after securing about 200 iPads, which he planned to have on sale by March 13.

When asked why he can charge more than double for most models, Mr Lo replied, "Apple fanboys are willing to pay our prices to have the iPad 2 earlier. That's how we earn money."

[Via CNN]

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