Daily Management Review

Details Of Physical Sales Through App Store Revealed By Apple-Backed Study


Details Of Physical Sales Through App Store Revealed By Apple-Backed Study
The App Store of United State based tech giant Apple helped to generate sale revenues worth $458 billion last year, showed a study that was backed by the iPhone maker that was released on Monday.  These sales revenues were generated from categories such as retail of physical goods, ride-hailing and advertising from which the company takes no commission.
This is the first occasion that the iPhone maker has focused on trying to quantify the activities of its App Store that does not generate any commission for Apple. In the face of platueueing off of iPhone sales globally, the earnings for the company through commissions from the App Store has assumed crucial sale driver. The App Store of the company is the only way that app developers are able to distribute apps to iPhones owned by consumers.
However there is a broader impact of the App Store as suggested by the Apple’s study. According to the study that was conducted by economic research consulting firm Analysis Group and supported by Apple Inc, $519 billion in billings and sales was generated by the App Store in 2019.
The study identified in app advertising had generated about $45 billion. Other activities such as digital goods and services such as music and video subscriptions or in-app purchases in games accounted for the rest of the 15 per cent of the overall App Store activity which was valued at about $63 billion.
For all digital goods and services that are purchased through the App Store provides Apple with a commission between 15 per cent and 30 per cent. That business policy has attracted scrutiny from antitrust regulators in the United States and Europe as competitors such as Spotify Technology Ltd alleging that their business is being hurt because of the business practice.
Rival such as Spotify needs to request their customers to sign up for subscriptions on their own website in order to avoid paying commissions to Apple. This process adds on a number of additional steps for the customers compared to making a payment directly while inside the App Store. This has created an uneven playing field, Spotify has alleged.
The study was supported and commissioner by Apple with the aim of gaining a better understanding of the physical goods and services activity in its App Store, said Apple’s representative in a conference call with journalists.
The study further showed that an estimated $268 billion in sales and billings was generated through the general retail apps available on iPhones and iPads - including the likes of Amazon.com. This was followed by sale of $57 billion and $40 billion in sale through the App Store for products related to travel apps and ride-hailing apps respectively.