Here is a letter I sent today to Apple’s European customer-relations representative. Core buys their stock from Apple Europe so they seem like the right people to contact. I hope I get feedback.
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 a bit of a media frenzy is starting to form over the high prices Core is asking for Apple products. Now this is not a complaint because of the high prices of Apple in general — 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 mark-up.)
Here are some examples:
Computers:
Baseline unibody Macbook in SA: R15 999
Baseline unibody Macbook in US: R11 041 ($1 299)
Price difference: 30%
Baseline New iMac 20 inch in SA: R14 999
Baseline New iMac 20 inch in US: R10 191 ($1 199)
Price difference: 33%
8 Core Mac Pro in SA: R40 000
8 Core Mac Pro in US: R28 050
Price difference:30% (or more than R10 000 on a single computer)
iPods:
iPod Nano 16GB in SA: R2 699
iPod Nano 16GB in US: R1 699 ($199)
Price difference: 38%
iPod Touch 32GB in SA: R5 800
iPod Touch 32GB in US: R3 400 ($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 most visited sites. All the comments are negative.
I really hope you can speak to whoever 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 iPods 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 you their address with which I had service in the past. If you have written a similar blog post or letter, send me the link as well, I will add it here.
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40 Responses to “Why are Apple products so expensive in SA?”
I agree 100% - Core is ripping us off. it is prob cheaper to buy overseas and get it shipped here.
Great that you’re giving this some publicity Minnaar, but you’re not quite comparing Apples with Apples. The Core gets stock from Apple Europe (pricier than the US). So iMac 20-inch retail in Europe is in fact closer to R12 400 if converted from Euro. I guess if you add on shipping and tax that’s another grand - R13 400. The resellers here only have a 10% margin (yes..that’s true!), but that would already be in the price if comparing to the retail price in Europe so I’m not going to add it in. Therefore Core is pocketing R1500.
you almost have a point, but that niggling thing called “purchasing power parity” means that in europe, apples are not ridiculously priced.
that said, during the days of $2/pound and $1.65/euro, apple’s target market were buying apple products in new york and miami, anyway; depending on the amount of items they bought stateside, teh plane ticket and hotel costs were covered in the exchange-rate related price differential. those seven months between the grumblings in the usa and the europe were gold for electronics vendors in new york.
So, why cant they buy from the US so that they can transfer the benefits to the customer? There are a lot of people who really like apple products out there but then find them unaffordable. If they could be better priced we will be talking something different.
@Minaar, just wondering why arent there other competitors to the Core group?
Thank you - I will add the twitition over at my own site at http://www.mpieters.com - thanks for your efforts as well.
That is true Daniel - I would really like to know what is the profit structure at Core. I am sure I can get some ex employees to maybe tell me what the wholesale prices might be.
Oh my god I wish they would drop this “grey” import crap, it’s nothing more than a moniker ensure that south africans are charged more for goods.
It does remind me of when sanctions were placed on this country, the same approach applies. If it’s from overseas, we hammer the crap out of the consumer as they can’t get it anywhere else.
Thats serious intimidation right there. Cant companies registered in that website as grey resellers sue Core Group for making them the bad guys whilst they are trying to provide some competition? Isn’t that against competition regulations that there is only one distributor because i think if reported to the competition commission definitely they will be interested.
A representative of Apple’s Consumer Relations EU phoned my regarding the article. I have made a few notes, but I want him to confirm it before I publish it here as a update.
They are aware of the situation Core is creating in SA. That is all I am saying at this stage.
Thanks for this - been convinced by a friend to get an apple - thought I would have to grow it myself, but now that I have been directed to the grey site, well, who knows, I might even find that I can afford to buy one here.
Anybody know the Competition Board’s email address? Maybe it could look into why all but one is “grey”? Core threatens public. Competition Board threatens Core. I wonder who would win?
You have not factored VAT into the equation or import duty. The prices quoted from the States do not include any sales tax. So you need to add on 14% for our VAT as well as the import duty, to the USA price before you can compare Apples with Apples.
These companies already have their products made in china/asia cheaply and then rip us off by their
enormous profit margins.Its immoral to us as consumers and towards workers in china.
Oh dear, I get it. Your system can’t handle certain characters that look like php code. Heh!
I repeat again:
The difference between retail and Core dealer prices was only about (less than character!) 5% anyway, when I last dealt with them (about 5 years ago). Which is one of the reasons why Apple is so badly marketed in S.A. Their (computer) retail outlets are primarily based on boutique stores in upmarket centers.
Further, their legendary bad technical service and support is another sorry reason why they gained the invidious title of Rotten Corps(e)).
If my past 20 years in the IT industry are anything to go by, Core must be getting a wholesale distributor discount of at least 25% to 35% off the American /retail/ prices you’re quoting.
And you can’t blame shipping costs, either, when you can bundle (hundreds of) thousands of iPods into a single container. Also, as far as I know, ad valorem tax on technology goods was scrapped years ago.
I guesstimate Game and Macro, and whoever else resells these consumer items, are also seeing no more than a 5 - 10% margin through the Core channel.
Don’t be fooled. This is a fight between Core and the Grey importers/retailers under the guise of breaking the Core monopoly.
Well, I have been charged the earth and experienced truly shocking service from both Core and especially the ‘grey’ Platinum store in Sandton who conveniently don’t tell you they are grey but outfit the store identically. Wait until your R4000 Platinum iPod disappears for over 3 months for “repair” at a non-official “but just as good” workshop. You speak to spectacularly indifferent staff and managers who don’t phone back (not once during the entire ordeal!!). When it is eventually found (after I threatened to serve a summons on them)there’s no apology & they try to hit you R900 to fix it or R250 handling fee. Both Core and Platinum are a disgrace. We are badly under-serviced & overcharged by both. But as long as Apple don’t bother and people put up with it they continue. Apple should turf them all and do it themselves. We are being taken big time. I hope someone benefits from my story.
I agree that Core have really spectacularly messed up for many years now.
I own a Macbook Pro and am very happy with the product itself, but find that the after sales service here in ZA is almost non-existent and far below the service levels experienced by those with even the lowest-end PCs.
The sad thing is that the normal “capitalist” response of spotting a business opportunity cannot be taken here, because of the rotten Core.
I know friends who run IT departments that appreciate the superiority of Apple products but would not touch them now because of being burnt by the inflated up front cost and shocking after sales service.
Apple has some great products. But unfortunately in this country it seems that monopolies that squeeze every last cent out of consumers without really caring about the people who use the products are still the way things are done. This is a culture that South African businesses and consumers will take some time to “unlearn”.
When friends or colleagues ask if I am happy with my Mac, I reply “Yes, but I wouldn’t recommend you buy one unless you’re prepared to swallow the ridiculous local mark up, and deal with zero after sales service.”
Fortunately, the products themselves tend to be relatively reliable (compared to cheaper brands), so you are less likely to need after sales service.
I know Apple isn’t a perfect comapany and some of their products are arguably over priced (even without the ridiculous Core mark up), and some of their marketing / sales tactics are a little hardcore at times, but it certainly doesn’t help having a company like Core just sitting raking in the cash without delivering any discernable value back to the customer… so I, for one, will be happy to see them gone when Apple finally wakes up and kicks them out the picture.
It’s not just in South Africa, it’s everywhere. If you buy a 3,000 US dollar Mac, about 1,500 US dollars goes to name brand recognition, to keep the tv ads rolling. I haven’t seen a Windows commercial in YEARS, except for the “You find it, You keep it” PC commercials. Not only that, but Apple makes it’s own hardware. That’s another 1,000 bucks down in the toilet. If Apple ever sells it’s OS in a box, not preinstalled, it would be…mmm…500 to 900 US bucks. It’s better to get a Windows machine, rather than a $3,000 e-mail machine, but it is something to consider when choosing a computer.
the problem is, clarion, most people buy apples because they don’t want to have to buy new computers every 2-3 years. windoze boxes are pretty disposible — and have prices to match.
i’m do a considerable bit of work on my machines and i’ve yet to have a windoze box last for more than two years without having to do serious work to keep it afloat.
there is a higher upfront cost to an apple, yes. but you win out in the long term due to maintenance and replacement issues, not to mention lost productivity when systems crash.
This great. We need to complain more. I sent a email to steve jobs about a year ago saying how bad the core groups service is and got a call from the international relations officer!! Don’t think anything changed but was worth the try. I recently heard from a very good source that Apple are considering coming to South Africa in 2010????
It is Apple who is responsible for the prices anyway, it is a commercial multinational using the poor labor and even corrupt governments to get their products achieved.
The iPad is assembled by Foxconn, which also manufactures Apple’s iPod, iPhone and Mac Mini, in its largest plant in Shenzhen, China
the prices for a 27″ led cinema display in Holland € 1.099,00 and in the US costs the same display € 760,00
A better world will not come with Apple
Yes I know the VAT is in Holland about 25% all-inn, so 760 + 190 = 950
Apple still makes a profit on 1 display of 150 euro thats more then 20%.
and dont tell me about importing the things because america imported them too, and really import is not that expensive you talk about maybe 0,50 cent each and thats more then enough
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Here is a letter I sent today to Apple’s European customer-relations representative. Core buys their stock from Apple Europe so they seem like the right people to contact. I hope I get feedback.
I agree 100% - Core is ripping us off. it is prob cheaper to buy overseas and get it shipped here.
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