Thinking different could help Apple rule the retail world

David Braue
25 May, 2009
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Another weekend, another Apple Store. After an eight-month interval, Apple is investing heavily in Australian Apple Stores, with May seeing the opening of outlets in Robina, Queensland and, this past Saturday, Doncaster, Victoria.

That a second Brisbane-area store, at Chermside, is apparently now in the works reinforces Apple’s sudden love of Australia’s retail market – yet as I left the Doncaster opening, I was thinking more about the thing Apple has yet to do when it comes to retail – and that is to fully capitalise upon one of its strongest assets.

That asset is iTunes.

Over the past few years, Apple has been in the enviable position of successfully building up an extensive and effective chain of distributors that sell its prepaid iTunes cards in several denominations. Everybody from your local newsagent to your local grocer and hi-fi shop pushes the cards in their catalogues, putatively to facilitate purchases of music to fill the iPods they sell. Plonk down your cash and you get a number to type into iTunes for credit.

But what if you could maintain one prepaid account in iTunes, then walk into an Apple Store and buy your products using that credit?

What if Apple extended its online store to accept iTunes credit, so you could purchase products from the site without requiring credit cards?

What if you could register that shareware app you bought using iTunes credits rather than having to go to an online form and enter all your details yet again?

What if your Apple TV could be used to buy products you see on TV with the click of a button, using your iTunes account?

What if you could buy an iTunes card as a gift for your nephew and he could use it to buy software, hardware or even non-IT products?

What if Apple was able to parlay its robust and effective prepaid system into a de facto micropayment system that worked across other sites and became a universal payment system for Internet transactions?

I know not everybody is scared of throwing their credit card details all over the place anymore, but it seems to me that it would be incredibly easy for people to pay for memberships at ancillary Web sites using iTunes points rather than having to go through the rigamarole of credit card authentication and separate charges at each site.

This is particularly the case for $5 purchases that might be made without a second thought in the real world but become major exercises online. Think about it: when was the last time you bought a cappuccino with your Amex?

Microsoft’s own version of the App Store is going to struggle simply because of the approach it’s taking – which is to require credit card details for every single purchase you make. This is highly annoying and interruptive, and is hardly conducive to encouraging people to spend heavily.

Purchasing software and hardware shouldn’t be an interruption to the computing experience, but the way things are done now, it most definitely is.

Of course, there are other issues – fraud, for example, and consumer care issues such as warranties and transfer of ownership of goods. So far, eBay-affiliated PayPal has been the most successful in this arena – but where there’s a will there’s a way. The reach of Apple’s recharging network gives it a significant leg up, and there’s no reason it couldn’t become the first viable alternative to PayPal – especially since the system could be executed without consumer fear of credit card fraud.

Dot-com entrepreneurs have been trying to build this sort of micropayments system for years, without success; they simply lack the critical mass to make their alternative currencies relevant. But Apple has already built up a viable micropayments system that can be used for tiny amounts as well as large purchases. If it could partner with online and offline retailers to set up a micropayments system based on iTunes money, I reckon it could make everybody’s lives a lot easier – and build itself another source of ongoing revenue in the long term.

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