The simplest answer is–not.
Direct Buy commercials have been coming on a lot in my area and I was rather curious about the group. I know that warehouse-type places can save you a lot of money and are great for the savvy and frugal consumer, but something here seemed off. It didn’t take much poking around the net to figure out what.
Let me outline what will happen (according to general consensus…and also Consumer Reports) if you consider joining Direct Buy.
You’ll get a sales pitch, whether in your home or in one of their stores (accessible only by invitation or appointment) about how DirectBuy cuts out the middleman to save you money. Apparently, you can save over 50% on home-improvement items and the like. Maybe they compare it to a place like Costco or Sam’s Club.
You’re not given specifics about which pieces they sell for what prices so that you can figure out whether or not it’s a good deal. They won’t let you keep a catalog or anything.
Then you’re told that it costs thousands of dollars join. I’ve heard prices quoted at between $3000 and $7000 (that’ll cover the first three years. After that it’s several hundred per year). Oh, and if you don’t join right now, you can’t join. Ever. Which means no walking out, comparing prices, and coming back next week (or later that day) to join.
Their reasoning? We don’t want other retailers hearing about our low prices so they won’t get mad at the manufacturers. (Mrs. Micah looks confused.) This cloak-and-dagger attitude is one good reason to just walk away. If they won’t be forthright about things and won’t even allow you to think about it, they’re probably hiding something–and I doubt it’s just fantastic prices. I’ve never met a legitimate store which didn’t brag about the great prices by showing the actual numbers.
While they have a website, some members report being unable to order or purchase through it (no comparison shopping possible for these people). Nonmembers can’t go and compare prices. The Consumer Reports people were able to look at some of these prices and found that many things cost almost as much as they would anywhere. Some were hundreds of dollars more expensive.
With DirectBuy, you also have to pay various fees for handling and such, since the items have to be shipped to your local store. They’ll finance at 17% APR (at least where the CR people went).
So, is it an outright scam?
Yes, no, maybe so. There’s a possibility that you’ll save lots of money by joining, they’re not lying about that (the possibility, anyway; they are lying if they say you’re guaranteed to save). Some things do sell for less than the prices you can get elsewhere. And for those buying lots of stuff in the next 3 years, it could be worth it.
If you’re planning to completely remodel your home to the tune of $50,000 to $100,000, then it might be right to take the chance and join. Maybe. But if you do so, you’ll have to be aware that there’s a big chance you might not save anything.
And if you’re planning to spend less than $20,000, then you’d have to save more than 25% on everything just to get back your (average) $5000 membership fee.
Is it a good idea to pay $5000 and not know if you’ll get anything in return? Not in my book.
Here’s Consumer Reports’ blog post — With DirectBuy, it will cost you a lot to save. The Consumerist also did a piece on the Cease & Desist letter which DirectBuy wrote to these two sites (infomercialratings and infomercial scams) about their unfavorable coverage. The site published the letter, but apparently C&Ds are “intellectual property” and therefore copyrighted. Oh, and if you go to RipoffReport and do a search for DirectBuy, the posters have quite a bit to say.
(P.S. Does this make anyone else think of Amway’s thing where you buy all your food and stuff from them at supposedly reduced prices in order to save lots of money but then it turns out that you’re actually spending more than in stores but you’re fiercely loyal to Amway and want to make money so you pretend it’s the best deal until you convince yourself that it is?)
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10 responses so far ↓
1 Andrew Stevens // Oct 27, 2007 at 3:47 pm
One of my hobby horses. It is so important to see the world as it actually is, rather than the way you want it to be or wish it was. I am constantly surprised at how often people confuse their wishful thinking with the truth, and how often this causes serious problems.
In the personal finance realm, this comes up most often with people trying to justify the decisions they have already made and resist learning information that will demonstrate to them that they have made a mistake. For example, many people have tried to insist to me that their new car is not only a worthwhile luxury (which it might be), but also financially savvy (which it isn’t). And they will twist their logic into a pretzel in order to continue believing that or flat-out refuse to follow my math when I attempt to demonstrate otherwise.
Your example of Amway and DirectBuy is a more extreme example of this phenomenon.
2 GreenPanda // Oct 28, 2007 at 5:49 pm
If someone doesn’t allow you to compare with other competitors, run away. They’re taking away your right to making an informed decision.
3 Chief Family Officer // Oct 28, 2007 at 11:10 pm
Interesting info about DirectBuy. I’ve only heard of it through the occasional commercial, which always seemed pretty scammy (can I make up that word?).
BTW, I don’t know much about Amway’s business practices, but I did grow up using their products, which really are high-quality.
5 ValleyGirl // Nov 1, 2007 at 10:43 am
(found you through “A Penny Closer”) We have friends who bought into DirectBuy and they’ve kicked themselves ever since. The only item they ever bought was a couch, so it ended up being an almost $4000 place to sit. The items they could choose from were very expensive, so even though they got their couch for half-price, it was still more than they’d have had to pay if they’d selected a different model at a furniture store. Not to mention their ‘membership fee.’
6 Mrs. Micah // Nov 1, 2007 at 11:41 am
Interesting. I hadn’t considered that they might limit their stock to more expensive items in the first place. Shadier and shadier.
8 Cindy B. // Nov 5, 2007 at 1:06 pm
We joined Direct Buy at the cusp of completing our whole-house remodel. I would have spent $18,000 for Kraftmaid cabinets from Home Depot or another cabinetmaker. We spent under $13,000 including tax and shipping. We saved on plumbing fixtures, paint, window covering, flooring, furniture, countertops, lights. We spent over $75,000 on finishing the house.
However, you still need to compare prices at retail stores; with the shipping time and 8% handling fee - it may be break even. CR is right and it may be more at DB.
Electronics and appliances have the lowest savings; furniture and window covering are the greatest.
The biggest trade off for me is that all DB is purchased from catalogs and shipped to their store or your home. Shipping is anywhere from 2-12 weeks, usually 6 weeks. You can walk into a retail store and see it and take it home that day if you need to.
Since the remodel, we have used it seldom. Maybe a few gifts during the year.
By the way when I joined, my husband was not with me and I couldn’t get his ok over the phone. They suggested that I sign up and would have three days to cancel. You can use that time to reconsider if its right for you.
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