and Cagey Consumer Highlights
This was originally published at http://www.jacksonville.com/tu-online/stories/030308/bus_252574101.shtml and is reproduced here without permission under the Fair Use Doctrine of the copyright act.
© Copyright The Florida Times-Union
By DIANA MIDDLETON, The Times-Union
The members-only DirectBuy furniture showroom tucked in a complex off Philips Highway doesn't actually have much furniture in it.
True, there is a room with a heavy wooden dining table layered with flatware and coordinating glasses and plates. And the walls are covered in fabric samples for chair upholstery or curtains.
But DirectBuy's actual selection of products, aesthetically ranging from classic American to modern Chinese, is contained in hundreds of thick catalogs stacked like neat soldiers in bookshelves. Aimed at customers embarking on massive remodeling of their homes, DirectBuy sells an array of merchandise - appliances, floor tiles, kitchen cabinets - to consumers straight from the manufacturers.
While most retailers must increase prices for their own profit margins, DirectBuy says it cuts out the retailer mark-up. The brands are, apparently, the same brand names shoppers see elsewhere.
"We protect our relationships with the manufacturers very carefully," said Randy Cover, owns the local franchised location with his wife, Lorraine.
The catalogs were treated like classified documents by the local franchise owners during an interview with The Times-Union. The catalogs contain the members-only prices: The retailer's infomercials promise to cut out the price overhead other retailers must load onto items to keep profit margins healthy.
But the company, despite its promised savings, is controversial. Consumers have complained that DirectBuy pressures potential customers to buy expensive $5,000 memberships during consumers' first and only sales presentation. DirectBuy would not reveal the membership fee, but this was the amount given to The Times-Union by a dozen customers. And in late 2007, Consumer Reports reported roughly the same price on its consumer blog.
If consumers decide to opt out that day, they can't be DirectBuy customers.
Ever.
When Charles Bailles, a retired Navy pilot, went to an informational session with his fiancee, he was surprised that he had to make the expensive decision to buy a membership immediately.
"We were astounded that after we took the tour, they told us that we would have one chance in our lifetime to participate in the program and that the cost would be thousands," he said. "I just thought that was a very strange way to do business."
They didn't go through with it.
For serious remodelers
"The company isn't for everyone," said Sara Shragal, a spokeswoman for DirectBuy. "This is geared toward anyone who is building a home or remodeling, extensive work. If you just want to buy one couch, it's not necessarily the way to go."
During the 90 minute tour, customers (typically married couples) get a tour of the facility and get to scan the catalogs to check out the savings.
However, they are not given free reign or "unrestricted access" to check out all prices, Randy Cover said.
Consumers are then told it will be their only chance to join, although nothing to that effect is explained on the company's Web site or during the commercials. DirectBuy is stringent about immediate memberships in order to keep the company's portfolio of manufacturers happy, Shragal said.
"If we were allowing consumers access to whatever price they wanted, whenever they wanted, they could see our catalogs and turn around and demand the same price at a retail store," she said. "This eliminates those risks."
DirectBuy also doesn't want to put their vendors in an uncomfortable position with the full-price retailers, Shragal said. DirectBuy keeps track of those who turn down memberships in a database with personal information such as addresses and phone numbers, she said.
Customers report mixed results
The company justifies the membership fee by saying the fee will pay for itself with all the savings.
Demeca Davis was thrilled with all the savings she got when she redecorated her children's and family rooms in the new home she purchased last July. She scored with a dining room table, an entertainment center, a sofa and several chairs - and a DirectBuy designer came to her house to create the arrangement. Davis estimates she spent between $3,500 and $4,000.
"I could have been overwhelmed, looking at all those books," she said. "But they knew what types of furniture I ought to look at."
But others complain that the company lured them into expensive contracts with a glossy sales pitch but were met with additional costs down the road.
Lyn Deckman had been a DirectBuy member for years (paying a $100 annual fee to keep up her membership) when she decided to redecorate her kitchen with new cabinets. After picking out the cabinets in the showroom, she utilized the contractor recommended by DirectBuy to measure the kitchen. But the measurements were incorrect, and Deckman had to tweak a new floor plan to have running water by Thanksgiving.
"This reminds me to 'measure twice, cut once,' " she said. "The people who work for Direct Buy have been very nice and helpful. On the downside, when there is a problem, you run into additional expenses that were unexpected. Incidences like this can negate the cost of the membership and any savings one might have had."
The kitchen project still isn't complete, and she contacted an attorney to chase a refund - but DirectBuy wound up giving Deckman a $600 credit for the store before legal action was taken.
She wasn't the only one reaching for a legal hand: In Ohio, customers argued that the company used high-pressure sales tactics and key components of membership were not disclosed during the initial sales presentation. In an agreement that was recently reached between the retailer and the state's attorney general, DirectBuy will allow Ohio customers three days to opt out of the membership.
DirectBuy will also pay $20,000 for consumer education and financial literacy, according to The Columbus Dispatch.
22 complaints in 36 months
The Better Business Bureau has received 22 complaints about the Jacksonville location in the past 36 months, a "satisfactory" amount, according to the bureau. The store's selling practices, refund practices and delivery disputes were among those contested. All but five complaints were resolved by DirectBuy, according to the BBB Web site.
According to Consumer Reports, DirectBuy's contract stipulates that there are no exchanges or returns allowed, except in the case of a manufacturer's defect. And consumers will have to find a way to ship purchased items home from the local store.
The majority of the complaints regarded DirectBuy's aggressive sales practices and buyer's remorse, said Tom Stephens, president of the local BBB.
"Twenty-two complaints isn't a lot when you consider the company's aggressive sales tactics," Stephens said. "And from what I've seen, the company has been pretty cooperative with its customers."
The bureau, which reports and facilitates consumer complaints, has suggestions for consumers pondering memberships in DirectBuy-type businesses posted on its Web site.
Shoppers are urged to do their homework beforehand, by researching the brands and prices a retailer can offer.
According to the BBB's Diane Kaplan, DirectBuy is a unique concept. Only buying clubs like Costco and Wal-Mart's Sam's Club are somewhat similar - but they have much lower membership fees: Coscto costs $50 per year, and starts at $35 for Sam's Club.
But as unorthodox and controversial as the company's selling tactics are, the company is continuing to grow. By spring, the local store will expand its floor plan by 4,800 square feet, including more furniture vignettes and six kitchen displays, franchise owner Cover said.
"Right now, we are focused on attracting new customers and retaining our current membership," he said. "We have our own little niche."
Comments:
I suspect the reporter would take exception to any suggestion to the effect that this is a "puff piece". It does, after all, provide comments from both DirectBuy, DirectBuy's critics, as well as presumably neutral parties such as the Better Business Bureau.
The headline says that DirectBuy's secretive approach "yields success." It's intentionally ambiguous: is that success for the people who buy memberships, or it is success for DirectBuy's franchisees who succeed at getting more people to plunk down the cash for new memberships?
I'll put it this way: if I were working for DirectBuy, I'd view that as a fabulous headline. For someone who couldn't be bothered to read the article, the most likely impression is that the benefits to be obtained by buying a DirectBuy membership should override my concerns about the failure of DirectBuy to disclose the kind of details I would want to have to make an informed decision about purchasing a membership.
It really makes me wonder where the idea for that headline came from, and how many ad dollars DirectBuy was dangling in front of the Times-Union when they chose it.
OK, that's not the only thing that causes me concern about the "fairness" of the article, but I don't want to beat a dead horse. Jus don't rely on the Times-Union to alert you to businesses offering deals as bad as those calling themselves DirectBuy.
If the Times-Union article doesn't deter you from considering a membership in DirectBuy, you might want to consider the comments at DirectBuy Food For Thought .
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