When it comes to ordering tech products from a website, there’s really no better place
to do it than the online Apple Store.
Not only does it look and work better than competing sites from Dell and Microsoft, but
it also has helpful capabilities like live chatting with an associate, reserving products
for in-store pickup, or getting value estimates on your trade-ins.
But the online Apple Store hasn’t always been so cutting edge.
In fact, Apple wasn’t even the first computer company to create an online store.
So in this video, we’re going to explore the history of the online Apple Store and
find out how it became the e-commerce powerhouse it is today.
This is Greg with Apple Explained, and I want to thank Squarespace for sponsoring this video.
If you want to help decide which topics I cover, make sure you’re subscribed, and
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Now, the beginnings of the online Apple Store actually go back to the 90’s.
Before there were any retail Apple stores, but after competitors had already established
their e-commerce presence.
And one of those companies who created an online store before Apple, was Dell, led by
CEO Michael Dell.
And if you don’t already know, Steve Jobs and Michael Dell had a very competitive relationship
back then due to a couple of things.
First, Steve Jobs’ computer company called NeXT, which he founded after leaving AppleD
in 1985, actually had Dell as one of their clients.
And what exactly did NeXT do for Dell?
Well, they helped the tech giant build an online store.
Which ended up being very successful by boosting sales and giving Dell a leg up over other
PC manufacturers.
So what caused the bad blood between Jobs and Dell?
Well, it had everything to do with this comment made by Michael Dell in 1997 when asked what
he would do to fix Apple.
He said, “I'd shut it down and give the money back to the shareholders.”
Now in 2011 Dell mentioned that his comment was misconstrued.
Clarifying that he would’ve closed down Apple since he was already CEO of Dell and
couldn’t imagine leading any other company.
Not because he didn’t have any respect for Steve Jobs or Apple.
But that clarification came fourteen years too late.
Steve Jobs was outraged by Michael Dell’s comment, and immediately targeted Dell as
the computer company to beat.
Apple decided to mount their first attack by building an online store that would be
even better than Dell’s.
But in order to achieve that goal Apple would have to completely transform their slow and
antiquated production system.
You see, Dell was founded as a direct-order business with no retail presence.
Instead of buying Dell computers in stores, customers would call the company directly,
or place an order on their website.
And this unique sales approach allowed Dell to utilize a logistics technique called just
in time manufacturing.
Which reduced waste and waiting times by creating products when they were needed, rather than
manufacturing them in advance.
That’s exactly why Dell could manufacture and deliver a computer it in just a couple
weeks, rather than the industry average of three months.
It also meant Dell could include something like the latest processor from Intel before
anyone else, giving them a distinct advantage in the market.
Steve Jobs quickly recognized the benefits of just in time manufacturing and poached
one of the best production experts in the computer industry, a man named Tim Cook.
Cook had served as chief operating officer of Intelligent Electronics before joining
Compaq in 1997.
Which, at the time, was one of the biggest, most profitable computer companies in the
world.
Steve Jobs wanted Cook on board to optimize Apple’s production process, but there was
just one issue.
Cook wasn’t looking for a job.
He was already six months into his Vice President role at Compaq, and leaving one of the most
successful computer companies to join Apple, a company on the verge of bankruptcy, would
be career suicide.
But that didn’t stop Jobs from trying.
Thanks to Cook’s eagerness to meet Steve Jobs in person, they ended up having a conversation
about the future of computing and how Apple could lead the industry.
Cook was deeply moved and decided to throw caution to the wind.
He quit his job at Compaq and became Apple’s chief operating officer in 1998.
One of Cook’s first tasks was to modernize Apple’s inventory system and supply chain
so that they could build computers even faster than Dell.
After several months of work, Steve Jobs announced the launch of Apple’s new online store during
a keynote, saying “I guess what we want to tell you, Michael, is that with our new
products and our new store and our new build-to-order manufacturing, we're coming after you, buddy."
And that’s exactly what they did.
But before I talk about the store on Apple’s website, I’d like to take a minute to mention
my website, appleexplained.com.
And although it isn’t full of content, it does have a very important purpose.
It allowed me to buy the appleexplained.com domain before anyone else, and therefore claim
a custom email address, info@appleexplained.com.
And I was able to claim my domain name, build my website, and create a custom email address
all with the same service.
And that’s Squarespace.
I’ve been using Squarespace for over a year now after switching between other services,
and I’m really happy with what they have to offer.
Squarespace had the highest number of website templates to choose from and they’re all
optimized for mobile so I didn’t have to do any extra work for that.
And when I wanted to sell a merch product I was able to add an e-commerce store to my
site without starting from scratch.
Plus the payment processor was built in and I could print shipping labels straight from
Squarespace as well.
When I say it’s an all-in-one platform, I really mean it.
And you can get all this for cheaper than you might think, especially if you use the
link squarespace.com/appleexplained since you’ll get 10% off your first purchase,
you can find that link in the description.
Now, Apple’s online store was not only sleek and fast, but also delivered orders in record
time thanks to Cook’s work on the company’s new and improved manufacturing system.
Effectively beating Dell at their own game.
In its first thirty days of sales, Apple’s
online store generated twelve million dollars in revenue.
But they didn’t stop there, Apple also employed a retail strategy that paid off in 2001 when
they opened their first stores in Tysons, Virginia and Glendale, California.
Over 7,700 people visited the stores during their opening weekends, spending a total of
nearly $600,000.
But the success of their online and retail stores didn’t cause Apple to become complacent.
Instead, they invested even more resources in growing and refining their stores to stay
at the forefront of the industry.
Now, at this time, Apple treated their retail and online stores as completely different
entities.
In fact, each one had their own Vice President.
Jennifer Bailey was in charge of Apple’s online store, while Ron Johnson was the head
of retail stores.
And believe it or not, there was very little overlap between the two.
This philosophy was even reflected on Apple’s own website for over a decade.
Until 2015, apple.com had a dedicated ‘Store’ tab that separated the online shopping experience
from the rest of the site.
So if you wanted to learn about the iPhone, you clicked the iPhone tab.
But if you wanted to buy an iPhone, you clicked the Store tab, and then navigated to the iPhone
section.
It was a pretty convoluted process that was eventually sorted out in 2015 when Tim Cook
decided to take a new approach to their stores.
Instead of distinguishing between online and retail, Apple would blur the line between
both.
That’s why, when hiring Angela Ahrendts, former CEO of Burberry, Tim Cook combine the
roles of online and retail into one position called Senior Vice President of Retail and
Online Stores.
This new approach, led by Ahrendts, resulted in many changes.
Instead of a separate ‘store’ tab on their website, Apple integrated the buying experience
into each product page.
This not only made the site easier to navigate, but also made the transition from learning
about a product to actually buying it much more intuitive.
Also, further integration of Apple’s retail and online stores allowed for features that
weren’t previously possible.
Like reserving a product for in-store pickup, or skipping lines for a new iPhone launch
by preordering it online instead.
But the popularity of Apple’s online store has led to some positive and negative unintended
consequences.
For example, its become a very effective a marketing tool, but not in the way you might
think.
Apple is one of the most secretive tech companies in the world, with products that are in very
high demand.
So it makes sense that analysts closely track the company’s every move for any signs of
a new product release, including supply chain and inventory trends.
But there’s no clearer sign of an update than when Apple’s online store goes down
for maintenance.
Once visitors see the usual “We’ll be back” placeholder, it almost always means
Apple is adding new products to the site.
Which immediately causes excitement in the tech community and speculation about what
might be released.
So while creating this hype may not have been a goal of Apple’s online store, it definitely
has that effect regardless.
But attention isn’t always a good thing.
Because back in 2019, the online Apple store was bombarded by one star reviews from some
pretty upset users who were having issues with Apple branded USB-C adapters.
As you probably know, every MacBook model now features USB-C ports exclusively, and
that has led to people relying on Apple’s adapters to connect HDMI projectors, SD cards,
thumb drives, and more.
But theses adapters haven’t been performing reliably, so customers expressed their frustration
by posting one star reviews on Apple’s online store.
This led to many articles and even YouTube videos bringing attention to the problem,
which was something Apple certainly didn’t want.
So in November of 2019, the user reviews feature of the online store was removed.
Effectively silencing critics of Apple’s USB-C adapters, and giving the company more
control over how customers perceive their products.
So while Apple is experiencing more sales success on their online store than ever before,
it didn’t come without a price.
Risks taken by Jobs and Cook back in the 90’s ended up paying off, and laid a strong foundation
for others like Jennifer Bailey and Angela Ahrendts to take things even further.
Today, Deirdre O’Brian is in charge of Apple’s retail and online stores, and only time will
tell how her leadership will impact customers shopping experience.
Alright guys thanks for watching and I’ll see you next time.