Can i use my app store balance to purchase an apple product such as an iphone

See the following from What you can buy with your Apple Gift Card or Apple Account balance - Apple Support

In countries and regions where Apple Gift Card is available, you can use your Apple Account balance to buy products and accessories at apple.com or in the Apple Store app. 

Also see the information in Payment, Financing, Refunds and VAT - Shopping Help - Apple including the following:

To use your Apple Account Balance to buy products on apple.com or in the Apple Store app, make sure you are signed in with your Apple ID. Then simply choose an amount to apply to your purchase during the payment step in checkout. You can use the funds from your Apple Account Balance in combination with Apple Pay or one credit card and up to eight Apple Gift Cards. See Payment for details on using more than one payment method.