I suppose I shouldn’t be surprised. I even said myself that “the MBP will never be sold in SA for R10000”. But still. While everyone has been holding their breath for the new iPhone and 3.0 OS, I was secretly hoping that I’d finally be able to afford the new 13” Apple Macbook Pro. But I won’t. And neither will many South Africans, come to mention it. And all the blame for that goes to Core.
The Core Group, you see, is the official and exclusive importer and distributor of Apple Computer in South Africa, and has been since the early Eighties. All Apple distribution in South Africa, then, is operated independently of Apple Inc., but rather by Core, including but not limited to iStores, and even the online ZAstore. Any Apple products which are not distributed by Core are so-called ‘grey imports’, being as they were not brought into South Africa by the approved route. Essentially, then, Core receive the products from Apple under their exclusivity agreement, and then set the prices for the South African market. And they’re ripping South African consumers off in a big way.
Maths has never been my biggest strongpoint, but let’s take a few examples of Apple prices as listed by the official Apple online store, and compare them to Core’s prices according to the most recent pricelist I received from them as a registered dealer. According to today’s exchange rate, $1 will cost you 8.04 Rand, but I can only assume that Core allows for some flexibility in the exchange rate (perfectly reasonably so), so I’ll set it at a very liberal R9 = $1 (it’s easier on my mathematical ability, too).
| iPod Nano 8GB: | Apple price: $149 = R1341 | Core price: R2429 |
| Mac Mini (2GHz, 320GB): | Apple price: $799 = R7191 | Core price: R10102 |
| iMac (24” LCD, 2.66GHz): | Apple price: $1499 = R13491 | Core price: R18379 |
| Macbook 13”: | Apple price: $999.00 = R8991 | Core price: R11938 |
And then the new stuff…
| Macbook Pro 13” (2.26GHz): | Apple price: $1199 = R10791 | Core price: R13775 |
| Macbook Pro 15” (2.66GHz): | Apple price: $1999 = R17991 | Core price: R22041 |
| Macbook Pro 17” (2.8GHz): | Apple price: $2499 = R22491 | Core price: R27550 |
On the new Macbook Pro line we’re talking an average markup of around 25%, remembering that these are:
a) Assuming a very generous exchange rate
b) At absolute cost price!!
c) And, most importantly, that Core is not paying the retail Apple prices.
So this markup profit is in addition to the markup on the wholesale price they pay to Apple Inc.
Essentially, I would not be at all surprised if the real markup was more in the region of 50%, and that’s before it even reaches South African dealers, who then charge their markup, too. For a more realistic idea of what Apple products will set you back in South Africa, head along to ZAstore.
While I understand that Core pays shipping costs and taxes on their imported products, it’s also equally important to remember that it also benefits from economies of scale, in the sense that it is less expensive to import a few thousand products than it is to import two. There is no way that their markup can be justified.
The effect of this goes far beyond a mere ripoff of consumers. It is having a real and negative effect on the Apple brand in South Africa. Not only are people turning away from Apple in favour of competitors’ products, but consumers are turning to so-called ‘grey’ Apple products. So much so that Core themselves started a StopGrey campaign to warn people about the possible consequences of buying Apple products which are not distributed through them.
So what do we do about it? Well you hope that Apple realize what Core is doing to their brand in South Africa, and avoid Core and iStores where you can, and instead buy grey products where you are sure that you’ll have some form of international warranty.
I’ll be doing my little bit by selling Apple products at absolute cost price so that at least the iStores won’t make profit, too.
You can sign our very own Twitition asking Core to explain and justify their product pricing structure here…
