Apple (NASDAQ: AAPL) retail chief Angela Ahrendts recently said in a leaked video that the Apple Watch will not be available for customers to purchase in Apple retail stores on April 24. Instead, the company is only allowing customers to order the devices from Apple's online store.
In an internal memo that Business Insider managed to get ahold of, Ahrendts indicates that the online-order only business is due to "high global interest" coupled with "[Apple's] initial supply." She also expects that this will "continue through the month of May."
Apple may have needed some more insightWhy doesn't Apple have high enough initial supply to support this launch? Why won't these devices be available to buy in stores on April 24?
I believe that, a priori Apple had very little idea of what kinds of sales numbers it could see for Apple Watch. Of course, there are plenty of estimates out there for global smartwatch shipment volumes over time, but I'd say that it's all more or less guesswork based on metrics of questionable value.
At any rate, I believe the reason Apple opened up pre-orders for the device on April 10 and seems to have trouble meeting demand is that the company wanted to gauge demand. The pre-order demand would allow Apple to get a sense of what kind of demand it should expect from the Apple Watch which will in turn, inform its manufacturing plans.
Determining total demand and product mixIn addition to getting a sense of what the total level of demand for Apple Watch products is, the online pre-order scheme should allow Apple to figure out what the rough mix of Apple Watch and related bands will be.
Remember, there are three different actual Apple Watch models (Sport, Apple Watch, Edition), and each of those models comes in two different sizes (38mm, 42mm). Following the online pre-orders, Apple likely has a good sense of the relative amounts of each type/size it will sell.
The Apple Watch Edition. Source: Apple.
Additionally, the different bands come in many different colors and styles. I suspect that the majority of Apple Watches sold will be the Apple Watch Sport, so Apple really just needs to figure out the relative popularities of the various Sport band colors. This isn't a big deal since those bands are all made of the same material, so it's just a matter of figuring out what colors to make them.
For the more expensive Apple Watch and Apple Watch Edition models, the different bands are generally fundamentally different. The non-Sport bands all feature unique designs and materials, so it stands to reason that Apple would really like to have some hard data on what the relative demand profiles are for the different Apple Watch and Apple Watch Edition models ahead of time.
This is supply chain mastery at workI see a lot of folks claiming that Apple "dropped the ball" with the low initial supplies of the Apple Watch. However, from what I can tell, this exactly how I'd expect a company that runs a tight ship would go about launching a new product category that allows customers to choose from a seemingly endless set of combinations.
This, my fellow Fools, is supply chain mastery at its finest.
The article Why You Can't Buy Apple Watch This Friday originally appeared on Fool.com.
Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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