Stop Core

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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(This post is not built on fact but supposition)

The cost of a top of the range Macbook (2.4 Ghz) is 1125 pounds or roughly fourteen thousand rand. Somehow in South Africa this exact same laptop costs twenty thousand rand from essentially every Apple outlet in the country. Where does this margin come from? I’ve heard some rumour that Core imports from the UK rather than the US for shipping purposes

Assuming that Core would buy their goods from the UK at the price of fourteen thousand rand (it’s extremely, if not impossibly unlikely that they would buy at retail prices) they still need to factor in the costs of shipping, taxes and eventually sales in South Africa. I’m no import/export expert but here’s what I can tell you:

When it comes to taxes there is no cost on computers except for the 14% VAT. Now since we’re assuming a R14K price that’s a substantial R1960 in vat. This pushes the price up to close on R16K but there are two issues to consider here. The first is that Core most likely pays wholesale prices for their laptops thus making the VAT amount lower anyway. The second issue is that they will claim VAT back so it seems odd for them to charge extra for that. This is possibly showing a vast ignorance of the SA Tax system but this is, as I said, supposition.

Now the shipping is a difficult issue to consider due to Core bringing in bulk orders and also there is little info about the costs of shipping. What I did find is that you can pay up to 180 UK pounds for a 30 KG piece of cargo; equating to 6 pounds per kilo for shipping. Again, this is a rough calculation but the actual laptop weights two kilograms so even if in total the box is five kilograms then you’re looking at a cost of 30 UK pounds to ship or a massive cost of R360. Now this price is excluding bulk shipping discounts so would be most likely different but this still takes us to a grand total of R16360.

Now considering there’s no way Core pays the prices I’ve mentioned as they buy wholesale it seems excessive in my opinion.

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Regardless of whether you buy from an iStore, Incredible Connection or even a reseller such as Digicape you’re still stuck with paying Core for your Apple hardware. As the single licensed importer you’re left with no choice but to pander to their demands.

However you CAN make a difference to their bottom line:

If you can afford to buy Apple products at the prices Core charges then rather buy from a non Core store such as Digicape or Incredible Connection. Now Incredible Connection is normally one of the horsemen of the tech financial apocalypse in South Africa and charge the same price but at the end of the day the margin they make is not going into Core’s pockets. I recommend stores such as Digicape because they seem customer focussed and if they make more money they will hopefully pass on savings to the humble South African Apple lover. The moral of the story is to avoid Core as much as possible. What you must never do is go buy from a Core owned iStore. I’d also recommend avoiding the Cool Apple Buddy store in Sandton as it is not owned by Core, and brings in their own hardware at higher prices than even Core.

Yes, the decor might be sleek white surfaces with wooden floors but in my opinion you’re paying for (a very poor) retail experience. Even if the margin Core looses is ten percent it will still go a long way to hindering their ability to pay the rent of their slick stores in expensive shopping centers.

So let me summarise, you want to avoid all Apple shops that fall under the iStore brand and you want to avoid buying online from their online portal: zastore.co.za

While I don’t expect this to ruin Core (since they still make a fortune from their re-sellers) it would go a way to make them think twice.

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Today I had the pleasure of going to the Apple store in Melrose Arch although pleasure is far from apt. I walked into the store and no one helped me so I went to go help myself. Now I walked from the entrance, past the expensive Macbook’s, iMac’s and Macbook Pro’s to the back of the store. Now in this time there were about three sales people standing around looking bored and I walked past each and every one of them. Not a single one of them helped me and not a single one came to help me when I eventually got to the cabinet with earphones.

Now I wanted some earphone’s for my iPhone which means they needed to have a remote and a mic built in to be truly useful. I found a pair that supposedly had a mic and remote but wasn’t sure if they were compatible. When I finally approached a salesperson he wasn’t able to tell me whether the earphones would work and didn’t even know the price. Now I don’t expect them to know the price on everything but these were generic, Apple branded earphones so how hard would it be to know the price?

Behind me another customer was being helped with an adapter for his video output on his laptop and the salesperson had no idea which one to sell him. Now considering there are only two types of adapters how hard is it to impart this knowledge?

Not only are Apple salespeople incompetent (operated badly and trained by Core) but something makes them totally indifferent as well.

Shocking.

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This post is originally from http://www.mpieters.com/

In South Africa we are pretty used to monopolies who do not actually care about the consumers. Over the years we have dealt with Telkom and Eskom amongst others, and only recently we have started to see the results of competition in our communication industry. Now if other groups can just also follow suit.

Apple products in South Africa are imported by only one company, the Core Group. Core has a its own retail stores (iStores) and they also resell to other retailers like Incredible Connection and Digicape. The service at the iStore in the Waterfront has always been horrendous – for example, walk in a week after a new iPod has been released, and their staff still would know NOTHING about it. Like about a year ago I had this little conversation:

“What do you mean new iPod? With Touch? I think you mean iPhone…” Pathetic.

Today I just checked out what is the price difference of Apple products in South Africa. 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 I know VAT is 14%, which I accept. But as long as there is a sole importer of Apple in SA, we will never ever get decent prices of Apple gear in SA. How can an iPod cost almost double in SA? Shocking!

In the US, Apple is trying to defend its high prices in the current economy, while in SA we pay even more than the rest of the world (Prices for a 8GB Nano accross the world, obviously changes with exchange rate fluctuation:).

1. Brazil $369.61

2. Bulgaria $318.60

3. Argentina $317.45

4. Israel $300.80

5. Peru $294.08

6. Chile $294.06

7. Malta $293.83

8. Egypt $269.10

9. Romania $266.60

10. Uruguay $260.00

11. Turkey $256.12

12. Hungary $254.50

13. Azerbaijan $252.11

14. Serbia $249.14

15. Croatia $245.41

16. Czech $242.54

17. Slovakia $234.13

18. Estonia $226.67

19. South Africa $226.60

20. Finland $225.82

21. France $225.82

22. Russia $220.32

23. Norway $220.20

24. Sweden $215.35

25. Belgium $211.62

26. Austria $211.62

27. Italy $211.62

28. Portugal $211.62

29. Ireland $211.62

30. Germany $211.62

31. Netherlands $211.62

32. Denmark $209.26

33. UK $201.92

34. Mexico $201.87

35. Cyprus $201.85

36. Luxembourg $201.12

37. Poland $200.52

38. Philippines $198.39

39. Spain $197.42

40. Greece $196.51

41. Switzerland $195.43

42. India $183.47

43. Malaysia $181.82

44. Korea $180.60

45. New Zealand $180.58

46. China $179.63

47. Pakistan $179.48

48. Australia $175.42

49. Thailand $174.89

50. Canada $169.68

51. Singapore $167.31

52. Taiwan $165.82

53. Japan $154.21

54. U.S. $149.00

55. Hong Kong $148.12

Source: CommSec, Apple

Over at 2Oceansvibe, Seth has managed to start a small frenzy about the ridiculous service of Core South Africa. Give it a read.

If someone over at Apple is reading this, we in SA are tired of the poor service and high prices that Core forces on us. Please give another group import rights as well, the sales of your products suffer because of their incompetence.

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I stumbled upon this article the other day about how Core (the distributors of Apple products in South Africa) were unhappy that one of their bigger distributors CAB (Cool Apple Buddy aka the Apple store in Sandton City) was no longer selling Core products and rather brought in the stock themselves. CAB basically felt they were losing business due to the poor delivery time of stock by Core.

I must wholeheartedly agree with CAB, Core is one of the worst companies I’ve ever had to deal with and this is assuming you can ever get hold of them. When I was told to phone them about getting my HSDPA modem working they basically had no recourse for me and told me to bring in the laptop. Sure, I understand it’s hard to diagnose over the phone but that’s just indifference on their part. They could have at least given me some generic steps to try fix it. Core knows they are the only distributors and frankly don’t really care about customer service. Why should they, you have to buy from them either way.

Whining about the Core situation aside, I think it’s rubbish that they should have to be the only company bringing in Apple products and if CAB wants to get the products from a different source then good for them. The problem is however that whether you walk into a CAB store or a Core store you’ll pay the same price for your Mac products. One would hope that CAB could lower their prices somewhat considering if they are importing the products themselves there should be some cost savings.

It seems that despite the distributor South African consumers are going to get shafted with regards to price. So ultimately let Core and CAB fight it out, once one company wins we’ll just get to pay more than we currently do to get our Apple fix.

Such is the life of a South African Mac lover.

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