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Summer 2006 iPod iPassion

iSales

Consumers of all ages have gone absolutely nuts about Apple’s iPod. Not only has the company sold more than 40 million iPods since its debut in October 2001, but in January Apple announced that iPod sales for the last quarter of 2005 were up a whopping 207 percent from the same period the year before. The company sold more than 14 million iPods in that fourth quarter alone.

Because people love their iPods and take them practically everywhere, accessories including protective cases, chargers, earphones and speakers are in high demand. In fact, Stephen Baker, who tracks technology sales and trends for the NPD Group, a research firm in Port Washington, NY, says sales of iPod cases, rechargers for the car and docking stations totaled $850 million in 2005 and he expects, “sales increases of at least 50 percent” for 2006, to bring the total to “at least $1.3 billion.”

NPD research shows that consumers spend $1 on accessories for every $3 they spend on an iPod. Plus, every time the Apple Corporation introduces a new iPod, (a different shape, different size, different location of the docking outlet), consumers scramble to get matching accessories and a host of other iPod-friendly products. In fact, there are a reported 2,000-plus products on the market today designed with iPods in mind, including furniture and toys with iPod holders built in, and a variety of clothes and accessories designed to hold (and sometimes hide) iPods.

iFashion and more

Thomas Pink, London’s leading maker of fine dress shirts, now makes a Commuter Shirt that retails for $140 and features a hidden pocket for an iPod Nano (wires are also hidden). Luxury brands including Louis Vuitton, Coach, Dior, and Marc Jacobs have caught onto the craze by adding iPod cases to their varied collections. A classic canvas iPod Video holder with a smooth leather interior and slots for credit cards and cash made by Christian Dior retails for $240, while a striped iPod Mini case by the British designer Paul Smith sells for $130.

Then there’s the TuneBuckle—a line of belts designed to hold a Nano—launched earlier this year by Atlanta-based firm ProductM. A backpack with iPod-compatible speakers and stash pockets made for earphone and disc storage is also available from As Seen on TV Wholesale. The company also has a Music Case with integrated speakers designed for the “music lover on the go.” And most recently, Apple and Nike announced in May that they have teamed up on a series of footwear products that allow wearers to track their workout efforts and listen to music.

For less-extravagant iPod fans with slimmer wallets, there’s a host of inexpensive iPod accessories that won’t break the budget but still serve their purpose—to protect the iPod from damage and make it more fun and convenient to use, whether at home, in the car, or on the go.

Nagib Hanna, the owner and founder of Manplan, NJ-based Royal Hanna Communications, Inc., has sold electronics for nearly 25 years, but started selling iPod accessories (wholesale and retail) just two years ago. “Most of the iPod accessories customers, about 75 percent, are young people between 13 and 20 years old,” says Hanna. “They listen to music all the time.” He says this age group buys the most accessories, especially covers and cases, to add variety to their iPods and impress their friends. “It’s a thing of style, the same as with clothes,” he says. “They want to look cool. It’s a novelty item.”

For the iPod Video, Hanna offers silicon cases in 10 different colors. He says many iPod owners have several cases and frequently come back for more. “They do it for the image,” he says. “They like to change the color every day.”

For people constantly on the go who might throw an iPod in a gym bag, then on the passenger seat, then on the desk at the office, then in a coat pocket, Hanna offers TuffWrap, a modern-looking, form-fitting silicone rubber case that protects the iPod from scratches and bumps. It features heat-dissipating pores on the back and ribbed sides for a comfortable and secure grip, which prevents the iPod from sliding off smooth surfaces such as the kitchen counter or car dashboard.

imageSports enthusiasts like the convenience of the SportWrap, a moisture-resistant armband perfect for biking, jogging, power walking and working out at the gym. SportWrap has a built-in moisture barrier that keeps the iPod dry and the play-through cover allows for switching songs and controlling volume without removing the cover.

For customers who are primarily focused on style, Hanna stocks a luxurious leather case that fits all 30-GB models. Kids and teenagers love the cool Shieldz snap-on covers for the iPod Mini in six fun colors (Sky, Kiwi, Tangerine, Lilac, Rose and Ice) and a range of colorful, transparent plastic covers for the iPod Shuffle. Hanna explains that the latest craze among kids is the imprinted cases featuring Walt Disney characters or football teams.

His number-one seller is the $29 Navigator, which lets users drive, listen and charge the iPod simultaneously by plugging it into the car lighter outlet (or what may soon be called the iPod outlet). Another popular product is the set of $25 folding speakers, small enough to take along in a handbag (folded, they are only 3” x 6” and weigh about a half-pound) but powerful enough to fill a room with music.

iOpportunities

Hanna says selling iPod accessories is the best business he could imagine because of the high profit margin. Most iPod fans don’t even hesitate to pay $20 to $30 for a new case, he says, while the wholesale price is only $3 to $5. “If you want to invest $1,000 and make $10,000, then come to my business,” says Hanna.

Kareem Makroum has been selling Hanna’s products at Click One, his East Brunswick, NJ store since the beginning of December. “We offer high-quality accessories at half the price of the Apple stores,” he says. “It’s the same exact thing, so people come to us instead.” He emphasizes with every sale that customers can come back to exchange or return the item if anything goes wrong but says he has had few returns so far.

Roni Mizrahi, co-owner of Edmond, WA-based retailer and wholesaler Sound Creations along with his friend, Itai Peer, sells iPod accessories and MP3 accessories on the same RMU. For iPods, the company has its own product line, Jebo (GEE-bo).

Mizrahi started the business with one cart. Things went well and he grew to his current five carts throughout Washington—and he now has a wholesale operation that sells to retailers across the US. He saw potential early on in the iPod accessories market and jumped right in.

Tapping his specialty retail experience, he created an iPod- and MP3-accessories cart- or kiosk-based start-up package for other specialty retail entrepreneurs. It includes start-up inventory (prices vary depending on the amount of product required), advice on marketing strategies, attractive point-of-sale displays, written training materials and on-site training for specialty retailers and their employees (retailers pay for airfare, hotel and training at $250 per day).

Thanks to his front-line retail and wholesale experience, “We know exactly what customers need and want, and can relay this information to our retailers,” says Mizrahi, adding that he and Peer continually attend trade shows to look for the latest products, styles and materials on the market.

According to Mizrahi, the amazing popularity of the iPod makes it easy for accessories retailers to succeed in the business. “The iPod is the number-one gift today,” he says. “Almost everyone has an iPod!” Another reason why iPod accessories sell so well at carts and kiosks, he says, is that specialty retailers carry accessories for all iPod models, while the Apple stores sell accessories only for the latest models. “We carry a huge selection of accessories, even for the first iPod.”

imageAmong the accessories offered by Sound Creations are docking stations, speakers, car converters and headphones. But because iPods tend to scratch easily, and because they’re not exactly inexpensive to begin with at about $140 to $400 each, cases are definitely the most-popular item. “Most people have more than one [case] and they always come back for more,” he says. “They buy them to stand out, to be different, to impress friends.”

Sound Creations offers a variety of cases in different price ranges, from a simple $10 plastic or silicone cover to leather models that retail for $35. Mizrahi’s advice for retailers wanting to get into the business is twofold: Stock up on a large variety of accessories, especially cases in various designs and colors, and do it as soon as possible. The most successful specialty retailers stock a large selection of accessories, he says, preferably more than 50 different products, clearly displayed so that customers can quickly find the items that best fit their needs. “The iPod-accessories market really started to go crazy in the past three years,” he says. “If you want to make it, you have to move very quickly.”

According to Morris Carasso, owner and founder of Margate, NJ-based accessory wholesaler Cellularum, iPod accessories are a great business opportunity for specialty retailers because the products appeal to all age groups. Although many buyers are part of the younger set, with each passing year the iPod expands its demographic reach. And no matter what the age of the
consumer, he says, when someone buys an iPod, they take really good care of it and are likely to invest in accessories that will keep it working and looking new for a very long time. “If you spend $300 to $400 on an iPod, of course you’ll want to protect it,” he says.

The Cellularum products include a variety of cases, from simple silicone slip-on covers to quality leather cases in different colors, as well as speakers, chargers, FM transmitters for the car and a variety of earphones. The iPod Video cases feature creative designs, from butterflies to Playboy bunnies, and colors from simple black to “BabyPhat pink.”

His best-selling item is Cellularum’s 3-in-1 Car Kit (a charger, holder and transmitter) that retails for $69. “People want to listen to their own music they have downloaded on the iPod” no matter where they are, he says. Even if they’re in a car with a CD player or radio, “They don’t want to change CDs or radio stations anymore.” Cellularum’s inexpensive, colorful silicon cases for the Nano and Video models are also big sellers, he says. He started out selling cellphone accessories but saw a much better opportunity in iPod accessories and hopped on board. “Competition is really big in cellphones,” he says. “It’s much easier to tap into the iPod market because there’s still room there.”

iAdvantage

Like others in the iPod marketplace, Carasso says that iPod owners prefer to buy from carts and kiosks because the prices are much lower than those at the Apple stores and the quality is comparable. Instead of spending close to $40 in an Apple store for one iPod case, customers can buy a case and another accessory for the same price at their local mall’s specialty retailer, he says. “In the beginning, people had no choice; they had to buy from the Apple store because there was no [other] market for iPod accessories. But today, most people would rather buy from carts and kiosks than spend crazy money at the Apple store.”

His advice for retailers reaching out for a slice of the billion-dollar and growing iPod-accessory pie? “The time to jump on the wagon is now.”

iPod Companies

Hot Headz Launches new iJackets Line

Hot Headz of America LLC, based in Philadelphia, PA, has been a leader in the specialty retail industry for nearly 15 years with several successful lines, including Nature’s Way (natural aromatherapy herbal packs), Hot Wavez (fleece apparel), and Cozy (sherpa fleece products). Now the company has expanded into the iPod-accessories market with iJackets, a line of cases for the Video and Nano that focus on the buyer’s personality.

“The basis of the line is personal expression,” says Jon Scheerz, the company’s vice president of sales and business development. “The iJackets all come with different patterns and designs to really tap into consumers’ desire to use their iPods to express their personalities.”

The company offers more than 400 different designs, “everything from dollar bills to sports to Southwestern themes to hearts and floral patterns to toilet-seat covers, raindrops and dolphins—hundreds of designs that fit just about anyone’s lifestyle or personality,” he says. “Everything on the market is plain silicone cases or Neoprene cases, and music is a personal expression, so that’s what we’re going after with iJackets… And they’re loaded with features and accessories, including the lanyard neckwear, the belt clip, and front and back body screen protectors.”

“It’s not your typical electronic gadget-y product… It’s got a gift appeal to it.” The iJackets are a “perfect product” for an iPod-accessories specialty retailer, Scheerz says. “It’s a tremendously huge market. We got into it for two reasons. One, because we saw a market that lacks expression. If you think about music, it’s all about expression. And two, we looked at the market and it was virtually untapped.

And the trend shows no sign of letting up any time soon.

Nike+iPod=$ales

In May, Nike and Apple announced their partnership to bring “the worlds of sports and music together like never before with the launch of innovative Nike+iPod products,” the first of which is a Nike+iPod Sport Kit wireless system that allows Nike+ footwear wearers to use an iPod Nano to achieve “the ultimate personal running and workout experience.”

According to the companies’ joint press release, “With the Nike+ footwear connected to the iPod Nano through the Nike+iPod Sport Kit, information on time, distance, calories burned and pace is stored on iPod and displayed on the screen. Real-time audible feedback also is provided through headphones. The kit includes an in-shoe sensor and a receiver that attaches to iPod. A new Nike Sport Music section on the iTunes Music Store and a new nikeplus.com personal service site helps maximize the Nike+iPod experience.”

The kit is expected to be available in mid-July and sell for $29 retail, available online through the Apple Store (apple.com) and Nike (nike.com), as well as in Apple’s brick-and-mortar retail stores, Niketown, NikeWomen stores, select retail stores in the US, and all Apple Authorized Resellers. The new Nike Air Zoom Moire shoe ($100) is the first model available to work in conjunction with the Sport Kit. Additional Nike-branded iPod-focused products to come include jackets, tops and shorts with waterproof pockets for a Nano, as well as Nano armbands.

Nike CEO Mark Parker and Apple CEO Steve Jobs unveiled Nike+iPod at a publicity event in New York attended by seven-time Tour de France champion Lance Armstrong and marathon world record-holder Paula Radcliffe. In a release, Armstrong, who is preparing for his first New York City Marathon in November, said, “If you can incorporate time, distance and calories burned together and make it function for both the fitness runner and the high level athlete, it will take working out to a whole other level.”
With backing like that, there’s little doubt that the Nike+iPod sales will be off and running in no time.

Zoom-ing Business

imageZoom Systems of San Francisco, a Preferred Apple Reseller, announced in February that within five years it hopes to have 10,000 Zoom Shop “robotic stores” in airports, hotels and other high-traffic areas, selling everything from iPods and accessories to printer cartridges, DVDs and computer accessories.

At each Zoom store, product is displayed in well-lighted cubbies behind shatterproof glass. A touch screen delivers product photos and detailed product information. Customers make their selection, swipe their credit or debit card, and a robotic arm retrieves the product and delivers it to the customer.

Once the product is delivered, the customer’s card is charged and a receipt is printed. The network is monitored 24 hours a day, and should any purchasing issues arise, a toll-free number is prominently displayed where customers can get personal assistance 24 hours a day.

In mid-May, Terry Lundgren, chairman, president and CEO of Federated Department Stores, Inc., announced that his company had signed an exclusive agreement with Zoom to provide iPod robotic stores in Macy’s stores under the Zoom @ Macy’s brand. Speaking at Federated’s annual meeting of shareholders, Lundgren said, “This [agreement] will be exclusive to Macy’s in shopping malls beginning this fall in at least 180 high-volume locations nationwide. We expect the number of stores will grow in late 2006 and 2007 as we gain experience. Zoom @ Macy’s is exciting because it brings most-wanted merchandise into our stores in a unique, new way.”

Zoom is currently seeking more retailers who want to work with the company on either of two levels: either operating a “store within a store” concept like that of Macy’s, or operating “satellite stores” in a mall where the retailer has a nearby or adjacent venture. Zoom says it will capitalize most of the cost of each store, and its retail partners receive a revenue share or pay Zoom a monthly lease. Revenues per square foot are “many times that of traditional retail,” according to the company, and “our average transaction value is often many times that” of traditional retailers.


Kasia Dawidowska

Dawidowska writes frequently for both trade and consumer magazines. She can be reached at .

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