Author Topic: DirectBuy salesman floored by our lack of debt  (Read 9647 times)

zolotiyeruki

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DirectBuy salesman floored by our lack of debt
« on: June 08, 2014, 05:14:15 PM »
This past week, my wife and I attended a sales pitch at our local DirectBuy.  For those familiar with it, skip to the next paragraph.  For those who are not, the concept is this:  you pay to join the DirectBuy club, and you basically pay factory cost + shipping + taxes for all sorts of things.  They can't publish their prices, because the traditional brick and mortar stores will throw a fit and dump the manufacturers.  You have one chance to join ever. 

The cost of joining the club is $5k (!) for the first four years, then $300/year after that.  I can conceive of a time in our lives when it *might* be worth it to join, say about 10 years from now when our kids will be old enough that we'll feel comfortable replacing the carpet and some furniture and finishing our basement and repainting the house, etc.  But not at this point in our lives.  We told the sales guy that, and he started giving us the hard sell: (paraphrased)

SG (Sales guy):"What if your HVAC goes out in the next few years?"
Us: "Well, we have money set aside for things like that."
SG: "So you *do* have enough money for the membership?"
Us:  "Yes, but it's allocated to other things."
SG:  "But you could do the installment plan!"
Us:  "We don't go into debt."
SG:  "What will you do when you have to buy a new car?" etc.
Us:  "Matter of fact, we actually just bought one last weekend.  Paid cash."
SG:  (dumbfounded look) "So you don't have any debt at all?"
Us:  "Other than the mortgage on our home, no."
SG:  "So you *do* go into debt."
Us:  "That's the only debt we do."

On our way home, we couldn't stop laughing about the presentation.  The whole tone of the evening was "because it's cheaper, we could buy more/nicer things!"   I turned to my wife and said, "did he even SEE the kind of car we drove up in?" ('95 corolla with close to 200k miles and peeling paint on the hood)  Of all the furniture in our very unmustachian-sized home, we've only purchased about four things brand new.

Here's another funny thing:  there's also the "online-only" option (order through the website without access to their showroom) for $3k, OR $300 down and $97/month for 3 years (total cost: around $3800).  So.....people want to save money by joining the club, but can't actually afford it, so they end up spending an extra $800 for the installment plan!?

homeymomma

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Re: DirectBuy salesman floored by our lack of debt
« Reply #1 on: June 08, 2014, 05:42:07 PM »
Who is it aimed at? Seems to make some sense for someone renovating a fixer-upper from the ground up, or who perhaps flips houses for a living. Does the average home owner actually buy that much stuff to make it worth that much $$?? That seems crazy high.

Bet that convo got the salesperson thinking on his way home that day...

zolotiyeruki

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Re: DirectBuy salesman floored by our lack of debt
« Reply #2 on: June 08, 2014, 07:38:29 PM »
Yeah, part of the sales pitch was the claim that each household in Illinois pays an average of $4000/year in profit gross margin to retail stores.  By bypassing the retail store, you can save a pile of money, and within two years, you've saved more than your membership costs.  Of course, they cherry pick their examples for the savings.

It's certainly not geared towards us, a family that almost always buys used for way below even factory cost.  Of my take-home pay, only about 10% (probably lower) is spent on retail non-grocery goods.

greenmimama

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Re: DirectBuy salesman floored by our lack of debt
« Reply #3 on: June 08, 2014, 07:56:37 PM »
Oh the horror you don't have lots of debt to fall into their trap ;)

Emilyngh

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Re: DirectBuy salesman floored by our lack of debt
« Reply #4 on: June 08, 2014, 07:58:04 PM »
If anyone is considering Directbuy:

"Tacked onto the cost of merchandise—which you select from catalogs since DirectBuy has limited showrooms—are a 6 percent handling fee, shipping fees, and tax. Goods are typically shipped only to your local center, so you might pay additional fees to actually get your new stuff home.

Just how good are the prices? We compared them against those of other retailers. Prices for electronics and appliances were often only slightly better than those at online retailers and in some instances higher. For example, a 46-inch JVC flat-screen TV selling for $2,586 on DirectBuy’s site cost $2,095 elsewhere. We did find deep discounts on flooring and high-end furniture. In fact, one member we interviewed estimated that she saved about $50,000 over several years on furniture and a kitchen remodel using DirectBuy. Yet the club did poorly on some basics. We found a Kohler bath faucet for $300 less on a kitchen-and-bath Web site...

The Bottom Line
The lack of price transparency makes it hard to evaluate whether you’ll save by joining DirectBuy. But even if you were to save 25 percent on purchases after joining, you’d need to spend more than $20,000 just to recoup your membership fee. DirectBuy might save you money if you’re furnishing a house from scratch or doing a major renovation. But since you can’t shop around beforehand, you’ll be joining blind."

http://www.consumerreports.org/cro/news/2007/09/with-directbuy-it-will-cost-you-a-lot-to-save/index.htm

CarDude

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Re: DirectBuy salesman floored by our lack of debt
« Reply #5 on: June 08, 2014, 08:20:54 PM »
Yeah, I'm in IL and have never heard of them. It sounds like a really bad version of Sam's Club.

RyanAtTanagra

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Re: DirectBuy salesman floored by our lack of debt
« Reply #6 on: June 08, 2014, 10:14:22 PM »
My parents did one of these a while back.  They're fairly mustachian (bought a house w/ a 15-year mortgage and paid it off in 10, dad retired at what he considered to be a late 55), so I know they did their research.  They had a lot of upcoming home expense/upgrades they were planning and budgeting for, so they found one of these, compared prices, paid a one year membership and bought everything over the course of that year.  These CAN save money, but that is definitely an edge case and I imagine a disappointingly small percentage of their membership base.

Travis

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Re: DirectBuy salesman floored by our lack of debt
« Reply #7 on: June 09, 2014, 03:52:15 AM »
We got sucked in during our first home purchase a few years ago (this was waaay before I was paying attention to my bottom line).  Looking back I should have been deeply offended at their hard sale approach which has landed them in court more than once.  They pitch it to everyone who owns a home, but the only people who could benefit would be those with a lot of money to spend refurbishing or renovating their dream home.  Their selling points tend to be things like carpet, high-end furniture, and appliances where the price tag is high, but so is the savings (due to retail mark-up).  They give a video tutorial on the system and most of their examples are people who gutted their multi-story 4+ bedroom homes and rebuilt them using DirectBuy.  We bought some great quality nursery furniture and while we saved 30-40% versus retail, we never would have bought those models if we went into a Babys R Us to shop.  The experience of owning that home was a series of expensive lessons.

zolotiyeruki

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Re: DirectBuy salesman floored by our lack of debt
« Reply #8 on: June 09, 2014, 10:00:42 AM »
Yeah, the whole "if you don't join tonight, we will never let you in our doors" approach was a real turn-off.

Any time I see marketing that includes a false sense of urgency, I know to turn right around and walk away.

Zamboni

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Re: DirectBuy salesman floored by our lack of debt
« Reply #9 on: June 09, 2014, 10:52:56 AM »
We had some neighbors in my former McMansion neighborhood join this type of club.  They were all buying furniture to fill their gigantic new homes.  Ironically, all couples who did this were already empty nesters, so furnishing a 4 bedroom house was silly.

Jamesqf

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Re: DirectBuy salesman floored by our lack of debt
« Reply #10 on: June 09, 2014, 11:18:55 AM »
Yeah, part of the sales pitch was the claim that each household in Illinois pays an average of $4000/year in profit gross margin to retail stores. 

Shows how far off average I am. (I expect most Mustachians would be about the same.)  When you take out mortgage, utilities, and other things like gas & groceries that I expect their club wouldn't carry, I don't even spend $4000 a year.  Not $4000 in store profits (which even at a generous 100% profit margin would be $8K spending), but $4000 TOTAL.

BigRed

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Re: DirectBuy salesman floored by our lack of debt
« Reply #11 on: June 09, 2014, 11:43:40 AM »
Why did you go to the sales pitch?  I'm curious.  Were they offering something to get you to come?

Travis

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Re: DirectBuy salesman floored by our lack of debt
« Reply #12 on: June 09, 2014, 11:48:57 AM »
Why did you go to the sales pitch?  I'm curious.  Were they offering something to get you to come?

Flier in the mail came with a chance to win $50,000. We just closed on the house and were inundated with sales pitches so we took the time to hear them all.  They're very aggressive with their sales pitch and we were young and stupid first time home owners. The flier didn't mention this was an all or none kind of thing.

Hunny156

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Re: DirectBuy salesman floored by our lack of debt
« Reply #13 on: June 09, 2014, 03:52:42 PM »
It's also not really a one time only thing.  We considered attending a sales pitch in NY, but I did my research and figured out this wasn't for us.  When we called to cancel the appt, they told us this would void our one time only invite.  Two years later, they were calling us back.  About a year ago, they cold-called us here in TX.  I mockingly said "I thought we already gave up the opportunity to join years ago!"  They back-pedaled, saying it was a very special exception.  Whatever...

zolotiyeruki

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Re: DirectBuy salesman floored by our lack of debt
« Reply #14 on: June 09, 2014, 03:53:59 PM »
Why did you go to the sales pitch?  I'm curious.  Were they offering something to get you to come?
A free android tablet and $100 restaurant gift card.  Considering the time we put into it, the minimal amount of gas we used, and the cost of the babysitter, we came out about $100 ahead :).

Mississippi Mudstache

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Re: DirectBuy salesman floored by our lack of debt
« Reply #15 on: June 09, 2014, 04:21:12 PM »
Why did you go to the sales pitch?  I'm curious.  Were they offering something to get you to come?
A free android tablet and $100 restaurant gift card.  Considering the time we put into it, the minimal amount of gas we used, and the cost of the babysitter, we came out about $100 ahead :).

I'd have done it for that! Of course I would have sold the Android tablet. I hate tablets.

Reminds me of the story of when my grandparents (Depression-raised Mustachians) went to a timeshare sales pitch for free tickets to Hawaii back in the '70s. Granddad said they were the only ones in the entire room who didn't fall for the pitch, and by the end, the salesman was basically yelling at them, while my granddad just calmly repeated, "We're just here for the plane tickets".

unix_kung_fu

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Re: DirectBuy salesman floored by our lack of debt
« Reply #16 on: June 09, 2014, 04:36:27 PM »
Heh, risk vs reward here, I'd think I would have more fun putting money down at the track.

paddedhat

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Re: DirectBuy salesman floored by our lack of debt
« Reply #17 on: June 09, 2014, 09:33:48 PM »
A customer of mine did this on a custom home I built for him. The guy was a real pain in the ass, so I actually had to work hard at not laughing when the  deliveries showed up. He bought his kitchen appliances, and toilets from them. The toilets arrived weeks late, nearly preventing the place from being finished in time. The appliances arrived about six hours after the scheduled delivery time, as it's getting dark. The delivery guys are two giant, partially shaved apes out of Philly. The look like mob enforcers. They hand me their delivery list and ask for directions to the next job.  I then break the news that they still have a day's worth of work, and 250 miles of driving scheduled for the day. They drop the dishwasher off the back of the truck, sending the lower frame right through the tub. The dishwasher isn't even worth dragging into the house, it's a total loss. The stove looks like somebody hit the side with a sledge, and the fridge is too big to fit in the house without major disassembly.  They ask for a signature and the owner refuses. The driver say, "look buddy, this is just like the post office, you either take the goods, or you don't. Damaged get handled by the sender, not me. Delivery is to the curb. I don't put stuff in your house, and I don't install it. Keep what you want and sign here. I don't have time for your problems."

The funniest part is that nothing on the load was unusual, or hard to get. It was all readily available at Lowes, and priced about the same.
« Last Edit: June 09, 2014, 09:36:19 PM by paddedhat »

MrsPete

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Re: DirectBuy salesman floored by our lack of debt
« Reply #18 on: June 13, 2014, 08:26:35 AM »
Hmmm . . . since we're planning to build a house, I was reading excitedly, wondering if this was a good deal for us -- but, no, y'all've convinced me otherwise. 

The phone call reminds me of a call I received some time back -- I'm not sure why I even talked to him.  It went something like this: 

Him:  After some discussion of whether we rent or own . . . he says:  We'd like to lower your mortgage payment.
Me:  Well, that'll be awfully hard to do.
Him:  Oh no, we work with people with credit scores of all types -- we guarantee we can help you!
Me:  I really doubt that. 
Him:  How long have you been in your house?
Me:  About eight years. 
Him:  What are your mortgage payments?   
Me:  Nothing. 
Him:  No, I mean how much are your house payments each month?
Me:  Zero.
Him:  Silence . . . then, so you do rent? 
Me, in a normal tone of voice:  No, we own the house, it's paid off.  We owe nothing -- I told you you couldn't lower our payments!
Him:  Stop yelling at me!   And he hung up. 

dragoncar

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Re: DirectBuy salesman floored by our lack of debt
« Reply #19 on: June 13, 2014, 10:55:40 AM »
Hmmm . . . since we're planning to build a house, I was reading excitedly, wondering if this was a good deal for us -- but, no, y'all've convinced me otherwise. 

The phone call reminds me of a call I received some time back -- I'm not sure why I even talked to him.  It went something like this: 

Him:  After some discussion of whether we rent or own . . . he says:  We'd like to lower your mortgage payment.
Me:  Well, that'll be awfully hard to do.
Him:  Oh no, we work with people with credit scores of all types -- we guarantee we can help you!
Me:  I really doubt that. 
Him:  How long have you been in your house?
Me:  About eight years. 
Him:  What are your mortgage payments?   
Me:  Nothing. 
Him:  No, I mean how much are your house payments each month?
Me:  Zero.
Him:  Silence . . . then, so you do rent? 
Me, in a normal tone of voice:  No, we own the house, it's paid off.  We owe nothing -- I told you you couldn't lower our payments!
Him:  Stop yelling at me!   And he hung up.

In other news, people at the payday loan office were astounded at my sizeable assets, clerks in the pawn shop were confounded when I wasn't willing to get ripped off in exchange for fast cash, and the new car salesman was flummoxed at my paid-off car.

stubby

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Re: DirectBuy salesman floored by our lack of debt
« Reply #20 on: June 14, 2014, 10:18:34 PM »
Company is deep trouble, IMO.

A year ago or so they closed the local showroom with no notice, called some people and said either come get your crap, or we'll haul it to Tulsa (3 hours). Told people who bought these awful expensive "memberships" then only had the option to drive 3+ hours to the closest showrooms or shop via the web.

There are many examples of similar happenings

http://sacramento.cbslocal.com/2014/01/20/call-kurtis-my-directbuy-showroom-closed-should-i-get-a-refund/

http://www.nwitimes.com/business/local/directbuy-shutters-its-flagship-m-ville-showroom/article_64602e68-5689-5e60-b065-f298be9f8526.html

In 1971, James Gagan founded the business, which sells home furnishings and home improvement items at cost.

The company grew substantially, even during the stagflation of the 1970s, and once brought in hundreds of millions in revenue, Jim Gagan said. The number of locations has dwindled from a peak of 167 to fewer than 100, he said.

Half million dollar settlement due to sales practices in NY

http://www.ag.ny.gov/press-release/ag-schneiderman-reaches-500000-settlement-directbuy-reimburse-new-york-consumers