Stop Core

This is a post originally posted by Craig Nicholson on CraigN.net and talks about a complicated purchasing experience

No I’m not talking about the fruit although I do find similarities between the fruit and the people who represent Apple in South Africa. The first thing to note is that Apple products have one authorised distributor in South Africa and they are the Core Group. The same company that distributes the Nintendo products at such a ridiculous mark-up.

However it seems that there are plenty of non-authorised resellers in South Africa, but the Core Group can’t seem to decide who is who. They have a local site addressing the grey product issues and they even provide a form for validating your product serial number, albeit a non-automated process. If you compare the following two pages (page 1 and page 2) you will notice that they don’t agree on who the non-authorised resellers are. I think this is ridiculous, how is the consumer supposed to know which list is correct?

Regardless, I decided I wanted a new 15” MacBook Pro 2.8 Ghz,4GB of RAM and 320GB 7200 RPM drive. Yeah I wanted the fastest processor and hard drive that the Apple store in the US offers. I proceeded to call a few of the local resellers seeing as the local online store called the Za Store provided zero customisation options.

Authorised reseller #1: Questek Broadcast Technology

I started by calling local authorised reseller Questek Broadcast Technology for a quotation on the custom configuration I wanted. After numerous unreturned calls on Wednesday and Thursday, I finally managed to speak to the one person that seems to do quotes. She promised me a quotation on email before the end of Friday. To her credit she did call me later in the day and inform me that her email was down and she’d send it when it was up again. On Tuesday I got an email stating:

I do apologise for the inconvenience, however our systems have not been working.

Please be advised that you will be getting your quote today, I just need to finalise a few prices for you once that has been done you will be getting your quote.

So much for Friday’s excuse about the email being down, she doesn’t even have the pricing on Tuesday. Mind you, I never got the quotation on Tuesday either.

Authorised reseller #2: iStore in Clearwater Mall

I called the iStore in Cresta on Wednesday and was told to email Dimitri and he’d get me a quotation by the end of the day. I’m still waiting.

Authorised reseller #3: Digicape store in The Wedge

A few friends recommended dealing with the company DigiCape. So I called their Johannesburg store on Saturday late afternoon and my details were taken for a quotation on Monday. Once again, no quotation was received.

Non-authorised reseller #1: CAB Platinum Store in Sandton City

On Saturday I visited the slick looking CAB Platinum Store in Sandton City after being advised by friends that they are useless. The first thing I noticed was that all of the standard configurations were priced around R4000 more for the exact same box product. Ridiculous. I approached the so-called Knowledge Bar to find out about a custom configuration and was delegated to a back office woman who proceeded to quote me on a standard configuration machine with an additional 320GB 5400 RPM drive. Hmmm, useful, NOT! After I reiterated my requirements my details were taken down and a quotation was promised on Monday. To date, no quotation has been received.

After much frustration and irritation I realised that in South Africa, if you wish to buy and Apple product, you need to simply accept that the distributor, Core Group, knows what you want and its one of the standard configurations. However a few friends did suggest that I go to the USA and buy one there. My problem with this would be the warranty although I’ve heard that local warranty support has much to be desired.

Determined to get myself a Mac in time for Christmas, I called up Incredible Connection in Sandton City on Sunday afternoon and purchased a new 15” MacBook Pro with 2.53GHz processor, 4GB of RAM and 320GB 5400 RPM hard drive.

My advice to anyone considering buying a Mac, go for it, and hopefully the Core Group sorts their reseller channel out so you have a better experience that I did.

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Redi Direko has interviewed the spokesperson of Core Group SA, and also the owner of CAB Platinum in Sandton. While I will agree we need to give the best possible service to the end user in South Africa, this interview quickly got out of hand. Redi did not allow CAB to state their facts, and was instead looking for contradictions. On the other hand Core’s spokesperson was allowed to state his views without interruption and she ate everything up.

Listen here

While I respect Redi Direko a lot, I believe this interview was not handled well. CAB is not necessarily the bad guy – we need to focus on the way Core does its business in SA. Instead of fostering competition in SA, Core has decided to become a distributor and reseller in SA, which in my books is what I would call a monopoly. It is impossible for another reseller to undercut Core’s prices which is why you do get stores like CAB looking for alternative import methods. Go look at industry – competition is what ensures success.

At one point Core said that they cant be described as a monopoly seeing as they only have 1 percent of the computer market in SA. True. But that is 100% of the Apple share, and 1% overall might be a bit more if they charged reasonable prices. And that little 1% probably consists of the most vocal fans of any brand on earth.

The interview had terrible structure and I had a overriding suspicion that Redi automatically classified CAB as the bad guy. She is entitled to her opinions. But then when you head over to the 702 website – here is what you find:

If you click on the ad, you will find a testimonial page where Chris Gibbons tells how much he likes Mac, with a direct link to one of Core’s pages. Having advertising on your page which is similiar to a product discussed on your show is not that bad – I mean, you cannot control ads these days right? But when that product is then also endorsed by one of your top radio presenters, and then it links directly to Core, I think credibility might just be lost.

I really hope 702 makes a follow up interview with RJ van Spaandonk, and that he answers some of the issues customers have with Core in South Africa. (for an idea of how many people have issues, look at Seth’s article).

A week ago I had a telephone conversation with a Apple EU representative. After posting my previous article on Apple’s pricing in SA they phoned me within 24 hours from Ireland. Now that is what you call service – at least they made me feel heard. They informed they were aware of the situation that Core is creating in SA, and they also told me that Core should have to honour international Apple warranties. (they also told me I should take VAT into account which I accept as an error). Still, I have not heard anything from Core when I asked similiar questions. In my opinion, Core is the company that does not cater to the end user. They charge ridiculous prices and their service is pathetic:

http://www.mpieters.com/2009/05/just-how-expensive-is-apple-in-sa.html

http://www.stopcore.co.za

http://www.macgeek.co.za/2009/05/31/open-letter-to-core/

http://www.2oceansvibe.com/2009/05/25/calls-for-apple-us-to-revoke-local-distributor-cores-license/

http://www.2oceansvibe.com/2009/05/19/core-group-insiders-come-forward/

To be honest, I am actually disgusted by Apple’s choice of distributor. A respectable company would come forward regarding these issues, not use scare tactics like www.stopgrey.co.za. If your prices and service was better, you would not be having all this bad press.

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This is the interview that occured today where RJ Van Spaandonk was on radio 702 on the Redi Direko show. He was supposed to speak to Sharon from CAB but Redi kept on interrupting Sharon. It is beyond the scope of this blog to take sides as both have their negative aspects but take a listen and make up your own mind. The aim of Stopcore.co.za still remains to inform the customer of the bad service and dubious price positioning of Core.

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To whom it may concern

I am sending you this email because I have had service from you in the past, and I was very impressed by the way Apple handled my request, even over international borders. I live in South Africa, where the sole importer of Apple is the Core Group. Currently there is starting to form a bit of a media frenzy over the high prices Core is asking for Apple products. Now this is not a complaint because of the high prices of Apple – I will by all means always pay more for a product if it is indeed better than alternatives, and I put Apple in that group.

I cannot however, understand how there can be such a big discrepancy in prices between SA and the US. While I understand the parties involved need to be make a profit, I refuse to believe that Apple will condone such high prices in other countries. In the US and Europe, Apple is trying to justify through effective marketing its premium prices on good quality hardware and great software, with which I wholeheartedly agree. However, imagine all Apple products was a minimum of 30% more expensive, and iPods an additional 50%. This is the sad state of Apple in SA, thanks to the Core group. (And do not think your recent hardware refresh, which have lowered the prices of macbooks across the board has made any difference at all, they still charge the same high markup.)

Here is some examples:

Computers:
Baseline unibody Macbook in SA: R15999
Baseline unibody Macbook in US: R11041 ($1299)
Price difference: 30%

Baseline New iMac 20 inch in SA: R14999
Baseline New iMac 20 inch in US: R10191 ($1199)
Price difference: 33%

8 Core Mac Pro in SA: R40000
8 Core Mac Pro in US: R28050
Price difference:30% (or more than R10000 on a single computer)

iPods:

iPod Nano 16GB in SA: R2699
iPod Nano 16GB in US: R1699 ($199)
Price difference: 38%

iPod Touch 32GB in SA: R5800
iPod Touch 32GB in US: R3400 ($399)
Price difference: 42% !!!!!

Peripherals:

Mini Displayport to DVI adapter in SA: R510
Mini Displayport to DVI adapter in US: R246 ($29)
Price difference: 52%!!!!

Now these are the cheapest prices available in SA. If Core is buying these machines at wholesale prices, I think it is safe to say this is plain old profiteering.

I plead you to pass this to your consumer relations department – I doubt Apple wants to do its name any damage, regardless of where it may be in the world.

Some sights against Core I have come across. I should mention some of these sites are the highest viewed sites in South Africa. If you go to Google now and type Core and Apple, and view pages in South Africa, some of these articles appear above official Apple or Core website results. You can maybe just look at how many people join the discussion at 2oceansvibe, one of SA’s top most visited sites. All the comments are negative.

http://www.stopcore.co.za

http://www.macgeek.co.za/2009/05/31/open-letter-to-core/

http://www.2oceansvibe.com/2009/05/25/calls-for-apple-us-to-revoke-local-distributor-cores-license/

http://www.2oceansvibe.com/2009/05/19/core-group-insiders-come-forward/

http://www.mpieters.com/2009/05/just-how-expensive-is-apple-in-sa.html

I really hope you can maybe just speak to whomever might be in charge of Apple’s international relations. If Apple is going to continue to be imported to SA by Core, I cannot help but believe you will do your brand irreparable harm. South Africans have no way of purchasing Apple products, whether it is iPod or Macs, through any other channel. They control the entire distribution system.

I welcome your feedback.

PS: To anyone who wants to contact them as well, PM me on twitter at @mpieters, and I will send them your request as well. If you have written a similiar blogpost or letter, send me the link as well.

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If you go down to ZAStore today, you’re in for a big surprise. Today Core released the prices of the new Macbook Pro range and again, the prices are quite confusing. Take a look at this page for the pricing.

The new 13-inch Macbook Pro is now R18999 for the top of the range 2.53 Ghz model. Now this top of the range 13-inch used to be R19999 so you might argue that Core is going in the right direction right? Unfortunately the price of the old Macbook 13-inch was $1599 and now it’s $1499 so that drop in price is actually coming from the top rather than Core. Long story short, $1499 equates to around R12100, a near seven thousand rand more expensive than buying the laptop from the states. The situation is even worse with the entry level 15-inch which goes for R23000 rand when the equivalent price in the states is $1699 ie R13600 so we’re looking at an almost ten thousand rand mark up.

You see, Core raised the prices last year due to the exchange rate jumping from seven rand to the dollar to over ten rand to the dollar. However, with the rand at around eight to the dollar pricing is still closer to where R10/$ rate rather than the R7/$ rate.

Again, it’s a fair assumption that as the distributors Core does not pay the retail price and instead gets a wholesaler discount. Now based on some (highly impossible to verify and thus supposition and not fact) information Core gets a further discount by taking what is known as a “domestic” license meaning they don’t offer the international warranty. Again, I cannot confirm this but if someone has tried to take their Apple product to an international store for a warranty claim and been laughed at, I would greatly appreciate that information.

All in all, the situation continues to be fairly gloomy.

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Originally from Macgeek.co.za

This is an open letter to Greg Hill from Core asking him to answer a few questions. Firstly, whether Core apply 51% markup to all of their products. Secondly, if Core hope that people reading Stop Grey will really be convinced to not buy grey Apple products. And lastly, what Core is doing to engage Apple users in South Africa.

The email reads:

From: Roger Saner
Date: 31 May 2009 11:52:28 AM
To: Greg Hill
Subject: Pricing for MacBooks, StopGrey.co.za and Core’s strategy to interact with Apple users

Hi Greg

I’ve been directed to you by Rene Firsing, who gets the contact emails sent to ZA Store via the website. I’m very confused about a few things, and she said that probably only a Core Executive could answer my questions.

My first question is about prices. Today’s Rand/Dollar exchange rate is 1$ = R7.94. You charge R24,000 for the 15 inch 2.4 GHz MacBook Pro ( http://www.zastore.co.za/macbookpro0810.php ) and it’s available from the Apple site for $1,999 ( http://store.apple.com/us/browse/home/shop_mac/family/macbook_pro )

Using the above exchange rate, $1,999 = R15,869.16. That’s a difference of R8130.84 which is 51% markup. Do you apply 51% markup to all of your products?

My second question is about Stop Grey.co.za, a website which makes no definite claims, but makes lots of hints – and uses a fair amount of scare tactics – as to what will happen to someone if they buy a grey Apple import. Do you hope that people will be convinced to buy from Core, even when they are so much more expensive than grey imports?

Core is widely perceived as a command-and-control old-style organisation who doesn’t understand that who you are is more important that what you sell. My final question is this: what is your strategy to start and continue an online conversation with Apple users in South Africa, so that you can continue upholding the good reputation Apple has, while at the same time repairing the damage Core is doing to the Apple brand?

Regards
Roger
[Update: No response yet. Resent to Greg on 7 July 2009.]

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