Why SA's Mr Apple prefers fine wine to bloggers - TechCentral

Why SA’s Mr Apple prefers fine wine to bloggers

RJ van Spaandonk

Rutger-Jan van Spaandonk says if his parents had known he’d eventually make a home for himself outside of The Netherlands, his country of birth, they’d have given him a name that’s easier for foreigners to pronounce.

The executive director of Core Group, who is known by most people simply as “RJ”, emigrated to SA almost by chance in the late 1990s. He says he’s since fallen in love with the country and, though he still travels extensively to Europe and West Africa on business, he says he has no intention of living anywhere else.

Van Spaandonk is a colourful character in SA’s technology industry. In the little more than a decade he’s been in the country, he has courted more than his fair share of controversy, particularly in his role at Core Group, the exclusive distributor of Apple products in SA, where he has been since 2001.

When we meet outside Core’s new head office building in Sandton, north of Johannesburg, Van Spaandonk, wearing his trademark braces and carrying a copy of the Financial Times, makes it clear he is keen to get down to business.

As we wait for our coffee in the company’s well-kept and peaceful gardens, overlooking the wealth of the Sandton central business district, he begins to recount the path that led him from The Netherlands — via the US and London — to the southern tip of Africa.

The son of construction firm executive and a high school teacher (both now retired), Van Spaandonk grew up in a small village called Berkel-Enschot. After school, at the age of 18, he was enrolled at Nijenrode, a private university built around a storied 13th century castle, where he completed a three-year bachelor of business administration degree.

He spent four years as a consultant in the property and infrastructure industries before securing a bursary from McKinsey & Co and heading to the US in 1995, at the age of 25, to do an MBA at the prestigious Wharton School at the University of Pennsylvania.

Why the US, I ask? “It’s very expensive,” he concedes, “but most international companies, especially in consulting and financial services, will repay your investment very quicky.”

Van Spaandonk adds with some hubris: “There are people who have an MBA and there are people who have an MBA. It’s something people in SA don’t want to hear but it’s very different studying at a local school and studying at one of the world’s top universities. If you want to do an MBA, go to one of the well-established institutions, otherwise you’re wasting your time and money.”

After completing his MBA, Van Spaandonk joined US consulting firm Mitchell Madison Group, a McKinsey spin-off, based in London. But the grey weather quickly got to him. So, in February 1998, when he came to SA on Mitchell business — the company was establishing an office here — he decided to stay. “I found such a great, positive vibe,” he says. “Everyone in SA had this attitude that they could make something of the country.”

Still with Mitchell Madison Group, Van Spaandonk helped Transnet and Standard Bank drive some of their e-business initiatives at the time.

However, Mitchell, which by then had morphed into MarchFIRST after various corporate mergers and deals, went bust.

“My pension fund, everything, was tied up in the dot-bomb bullshit,” Van Spaandonk says. “I know what it means to lose a lot of money.”

After the MarchFIRST collapse, Van Spaandonk struck out on his own, forming a small, Johannesburg-based consultancy called Future Foresight with several ex-McKinsey colleagues.

But it wasn’t long before he met Core Group CEO Rodney Ichikowitz. At that stage — it was 2001 — Core was a relatively small distributor of IT solutions for the media industry. Today, it has revenues of “well in excess of R1bn/year” and is the sole distributor in SA for the Apple and Nintendo brands.

Ichikowitz brought Van Spaandonk on board to help run the company as head of strategy and business development, and to be its public face.

It is in the latter role that Van Spaandonk has racked up a number of detractors, people who accuse him of being arrogant and defending a company whose prices, they say, are excessive.

Perhaps Core’s biggest strength — the fact that it has sole distribution rights in SA to the Apple and Nintendo brands — is also one of its biggest PR weaknesses. Because no-one else is allowed to import these companies’ products through official channels, some consumers have accused Core of monopoly pricing and behaving like a bully.

It’s a charge that makes Van Spaandonk see red. “I’ve informed every serious representative in the media in SA that the iPod attracts 25% import duty over regular ad valorem taxes. If people write blog entries accusing you of all kinds of things, you don’t respond to that.”

Except, Van Spaandonk did respond — in a series of sarcastic and ill-considered messages on Twitter, the micro-blogging service, in which he took on his detractors. He admits the way he handled it was a mistake, and that it backfired. “The interesting thing is, though, that the discussion died down for a while once I’d put the facts out there.”

The question remains, though, why consumers — even if a small minority — get so het up over Core Group and its prices. I ask Van Spaandonk what he thinks the reason is. He says some of the blame must go to people who want to get their hands on the Apple distributorship. He says there are people in the market spreading anti-Core Group propaganda.

“I have a number of colleagues in the industry who would love to get their hands on the Apple distribution business and they bring [the pricing issue]to the attention of Apple all the time,” he says. “All this is aimed at other people positioning themselves to take over the Apple distributorship.”

Van Spaandonk defends the fact that there is only one Apple distributor in SA, saying in an environment where there are multiple distributors, resellers simply play them off against each other for the lowest price. As a result, the distributors have no money to invest in marketing the brand and creating demand.

This was the case when the now-defunct Siltek Distribution Dynamics was also an Apple distributor, he says.

Van Spaandonk says he has little time for bloggers who criticise Core Group and its prices without doing adequate research into prices in similar markets around the world. He seems to be trying his best not to let them get to him, but it’s clear he takes the attacks personally.

When I ask him what he does for fun, he tells me about his love for writing, and the articles he writes for Business Day’s Wanted supplement and for GQ magazine. But he quickly uses this to take a pot shot at Core Group’s critics. “I tend to write a lot, but not on blogs,” he says. “Please put this in your story: unlike bloggers, I actually get paid to express my opinion.”

It takes a little effort to steer the conversation back to his private life, but eventually Van Spaandonk eases back and begins talking about his love for the finer things in life: Cuban cigars, luxury cars, and good food and wine.

“I take food and wine very seriously,” he says. “I can wax lyrical about a bottle of wine for hours.”

And a meal in a restaurant is never to be rushed. “Taking someone out for a meal is the start of a relationship. Sharing food with someone is one of the most basic and meaningful things you can do,” he says. “That’s why when I meet people for the first time, I do it over lunch. And you’d better cancel your appointments for the rest of the afternoon.”

He says his favourite restaurants include La Colombe at Constantia Uitsig near Cape Town, Reuben’s in Franschoek and Auberge Michel in Johannesburg. But if he had to choose just one, he says he’d have to go with the Cleopatra Mountain Farmhouse in the Camberg area in KwaZulu-Natal, run by his good friend Richard Poyton. “You go there, you check in, and they just feed you.”

One of Van Spaandonk’s other great passions is reading. He gets through a book a week — fiction and nonfiction. And he doesn’t only read in English and Dutch. He is fluent in German and French, too. “It’s important to delve into ideas in depth,” he says of his passion for reading. “The Internet and television are not enough.”

He also enjoys travelling and says he is “not afraid” to explore Africa. He spends considerable time in Nigeria on business.

Van Spaandonk, now 39, is not married but is in a long-term relationship of more than 17 years. He has no children and professes to have no interest in having any. “I’m too busy enjoying life,” he says. “You need the freedom if you want to travel a lot. Kids are a drain on your energy and on your time.”  — Duncan McLeod, TechCentral

  • Brad

    I just stumbled along this now from twitter and I’m now extremely happy my new 64GB touch is on it’s way from the US for R3110 instead of R5500 and wont be buying some more fine wine for RJ.

    Core its utterly useless when it comes to Nintendo and Apple products here, over priced and next to no after sales service.
    I went to go ask when the new iPod touches were going to come out here and how much they would be at the Gateway iStore and just got a, “I dunno”.

    Core sucks :/

  • Core

    Agree with Brad in principle, although would like to caution him against sounding like a typical unintelligent and underpaid “blogger”.

    I apologise in advance for the negative tone of this comment. It is not intended that way. I understand that this comment is unlikely to have any effect, but I feel like it needs to be said.

    Apple serves a market of “high end” customers – who expect “high end service”.

    The two principal issues here, in my opinion, for Apple customers in South Africa are a) the inexplicably high prices (which remain to this day, despite what anyone claims, inflated well beyond the so called tax mentioned in the article, particularly on the upper band of the product line), but also b) the fact that Core comes across as providing almost zero benefit, value or service other than physically getting the machines into the country.

    On the price issue.

    In the article, RJ failed to mention that Core cut the prices of some of their product line soon after the blog articles he mentions appeared. So much for not paying attention to bloggers. Please explain why the top end Macbook Pro models are still so expensive when bought through Core, compared to the UK or Europe?

    Or why Brad’s iPod Touch is arriving at such a low cost, including shipping?

    Let’s do a little exercise. Even if we add a 35% (not just 25%) tax mark up onto Brad’s iPod Touch, that means that Core is earning a gross profit of R 1300 per iPod. The cost of transporting these will decrease, the more units you import. Let’s say the cost of shipping is a staggering R600 per unit, including shipping through to the retail store. (Although this is included in the R3110 Brad is paying). That means Core is making a profit of R 700 per iPod touch sold. Multiply that by let’s say a very conservative 25 000 units sold in ZA this year … R 17 500 000. Hmm.

    Now lets say Core’s office building and other overheads of staff etc (maybe 25 people involved in the iPod Touch) come to R 1 000 000 per year for fixed costs, and 25 salaries, lets say R 7 000 000 per year. Core passes on lets say about 5% to its dealers (who knows how they survive), so that’s about a million. Leaving a bunch of millions, per year, net profit, from the iPod Touch alone. Just one product that Core brings in.

    I understand that iPod Touches are luxury goods that are purchased by the elite. But I also believe that if Apple opened a local distributorship, they would be able to sell more products (because they would be cheaper, since they are the manufacturer). Not only that, I bet the service would be better. And we’d have an American company bringing their expertise into the country and training support personnel up to an appropriate level of competence.

    So now let’s talk about service.

    For an example of the poor service that Apple customers regularly endure: I have a faulty Macbook Pro; it is my own fault that it is malfunctioning. I accidentally dropped it when visiting a friend in a hospital ward. Apart from the DVD drive being broken, it works perfectly. I am writing this comment using it. It is a wonderful product that has given me three years of almost flawless service, despite the fact it was dropped horrendously.

    That’s why I bought an Apple!

    I have asked for help in having it fixed at several distributors and iStores, but no one can help me. My machine is now out of warranty. I want to order a new DVD SuperDrive. Alas, no-one imports those, and to my knowledge they don’t even appear on Core’s stock list. I’m not prepared to hand my machine in to a technician who can’t even find the part on the list of parts.

    Here’s a different example, where Core actually subtracts value: Try ordering a customised Macbook on the local Core web site. They don’t offer the same (simple) customisations available from the Apple store in the states (e.g. add in some extra RAM, choose a different graphics card).

    Obviously this kind of advanced customer service would require far too much effort and cost – since this would mean Core would have to do something apart from unload the machines from the shipping containers and deliver them to the retail store.

    Another example of the poor service Core provides: It took weeks (in some cases many weeks) before any local Apple distributors could provide simple details about the latest OSX operating system, such as when it was arriving, and how much it would cost in ZA. This is unacceptable, we’re talking about an operating system here, it’s not like it’s a “nice to have”.

    A “high end service” company would know that this is the kind of detail that is important to its customers. It would have those pertinent product details prepared and proactively disseminated to the dealers weeks before the product arrived, and would be taking “pre-orders” via its dealer network; in fact even actively using their dealer network to promote the product. Not in South Africa. At least, not at the dealerships I visited. Oh yes, you can always put your name “on the list” in the store (cough).

    I feel sorry for the Core distributor partners, specially the “smaller players” who are loyal to the brand but have no “clout” against Core.

    I could have had my copy of Snow Leopard shipped to me from the States long before some of the local distributors would even have known about its existence.

    With regards to distributors: I personally know of one local distributor who complains that when they call Core for stock on particular items, they are repeatedly told “No stock is available” … but if they walk into one of the Core retail stores, the item they are looking for is on the shelves.

    Why should the Core owned / sponsored retail stores get preference over the other independent dealers? It is not appropriate that the only licensed importer is also competing in the retail space. Is this not a clear conflict of interests?

    All of the above leads me to the conclusion that there is no smoke without fire. In fact, I suspect all is NOT well at Core.

    I have nothing personally against “Mr Apple” – I think he may even to a certain extent be unaware of the level of service his company is not providing to its distributor network and clients.

    To you, sir: It’s not enough to just bring the product into the country, add a markup, and then try sell it. That is not perceived as a value add. You need to add value. Otherwise I (and soon others, like Brad) will just go around you. This is a different generation who know how to order products over the internet, and do so all the time. Imagine if all the Brads bought through you – suddenly your market might be bigger than you realize.

    Look at what happened to the music industry in America – Apple showed the big music companies that people were willing to buy music online through the iTunes store and skip out the CD stores. The same thing will happen to Core. I’m sure Core has a few more years to keep doing what they’re doing, but eventually, it’s going to burst. Specially if our postal service improves.

    The only ethical way that I can see for Core to survive in the long term, is to get really good at supporting its customers, engaging with the larger Apple user / developer / dealer community, and to start answering the hard questions (like how can I find a replacement SuperDrive?). Or relinquish its monopoly so that someone else can run with the opportunity.

    This seems to be something RJ is clearly worried about having to do some day. So what, if some of those “bloggers” want to start their own franchise? Maybe they will do a better job than Core, or will actually care about the Apple brand and it’s customers?!

    If Core can’t help customers with certain things because they can’t *afford* to do so, because of economies of scale …. or because Core doesn’t offer the same level of service as Apple can and does in the States … (which Core currently clearly can’t/doesn’t) … admit it to your customers.

    Don’t just blithely use the Apple brand and adverts, as if people will get the same Apple experience in ZA, which they won’t … rather be humble, honest, and try get the whole company to a place where Core can at least say “we’re doing the very best we can, given our limited scope and the small South African market size”.

    That would be much better than the current “take it or leave it, we don’t care” approach to service.

    Core is going to need a really good reason to give people to justify why they should pay so much more for buying through Core than by going direct… and if Core is going to say that the reason to buy through themselves is “after sales service”, then they better PROVIDE GOOD after sales service.

    Another small example of how we’re limited in ZA compared to the US (from the ZAStore – the Core retail online store):
    “Do you sell the AppleCare extended protection plan?
    Unfortunately this product is not offered to South Africa at this time, so we are unable to supply. ”

    A standard Core response. What if you NEED an extended protection plan?

    How much *does* Core spend per year on supporting Apple products, relative to income and shipping costs? How many support technicians are there in the country? How are they trained? Who trains them? Can Core support technicians be shown to be on a par with US technicians? Why is extended AppleCare not offered in ZA? Can companies have their own support technicians trained by Core? I don’t think these are questions RJ would be comfortable discussing over lunch any time soon; but that’s just my guess.

    I rest my case. I love Apple products, but the current attitude and uncompetitive practices shown by Core leave a rotten taste in my mouth.

    Sorry for the good people who work at Core (they are in there!!) – but the truth needs to be said. Eventually, the customers are “revolting”.

  • It is not illegal to import Apple goods privately, and simply pay the VAT, clearance and any duties (none as far as I can tell).
    I saved R5000+ on my last Macbook Pro by doing this.
    And I received it in a week, which is shorter than it’s taken to get simple things like replacement batteries via the Core group.
    Search eBay and look for sellers with large amounts of positive feedback.
    Also saves you getting punished for Core’s ‘forward cover’ blunders.

    RJ – I hope you read this comment and a little seed is planted – you may be paid for your writing in newspapers and magazines, but they are on their way out, and you ignore the internet and social media at your peril

  • alexk232

    “My pension fund, everything, was tied up in the dot-bomb bullshit,” Van Spaandonk says. “I know what it means to lose a lot of money.”

    Honestly, the prices you charge for your products, and the service you provide, I’m sure you’re doing ok now, but can’t say I’d feel sorry for you if it happened again though.

    All the greedy distributors with horrible prices and terrible service (Core being one of them) are really lowering the quality of life in SA.

  • Brian

    What an arrogant, pompous, self opinionated w*****…

  • Marais

    @ Core (The commenter)
    You forgot the cut to the retailer in your sums concerning the iPod touch. And you obviously Brad paid retail price (in US) and Core would buy the stock at some wholesale price, well below the ~ R3110 (including shipping I assume)

    It’s pointless doing those sums.