Direct Buy: Deal or Scam?

You’ve probably seen the commercials (whether the 30 second or the half hour version) for Direct Buy, promising “insider prices” to average schlubs. Being an average schlub myself, I was taken in by the commercial and called the 800 number for my free invitation to an open house. I bought the sales pitch and my wife and I became members. Was it a good investment? For us, no. Would it be a good investment for you?  It very well could be your ticket to saving thousands of dollars. Or it could just be a huge waste of money.

The pitch

The commercials promise significant savings over the manufacturers suggested retail prices. For someone building a home or remodeling, that can translate into huge savings, which theoretically would allow you to buy higher end products while staying within your original budget. All you have to do is call for an invitation to an open house. At this point, you have nothing to lose. So far, everything is free.

The open house

Basically you listen to a long sales pitch touting the benefits of joining the “club.” The initial membership fee is quite significant (four figures) as are the annual renewals (three figures). But the membership pays for itself, you see, if you make enough purchases. And with savings of up to 40 or 50% and more, it won’t be long until you start enjoying the real benefits of “paying what the retailers pay.” It almost sounds too good to be true, but they give a few examples and run the numbers. Everything seems to add up. It may take a few years, but in the long run, you can envision the potential savings.

The hard sell

Here’s the catch (and a huge red flag):  You must decide today whether or not you want to join. You can only join at the open house, and once you have used your invitation, you will not get another chance.  At least that’s what they tell you. I can’t imagine them turning someone away who later decides to join, but I don’t know of anyone who has tested this theory out. They don’t give you a whole lot of time to make this major decision, maybe an hour or so. I would have liked to have had a week or so to weigh the pros and cons to decide whether or not membership was right for me. Based on the sales pitch, though, it seemed like a good deal at the time.

The Cost

It ain’t cheap, as I have already mentioned. We’re talking 4 digits here, and the first one ain’t a “one.” But that covers three years before the annual renewal fees kick in. And your annual renewal fee is guaranteed for ten years– no increases.

How the club works

The club acts as a liaison between you and the manufacturer. Your local Direct Buy showroom is essentially a library which contains manufacturer’s catalogs with product descriptions and price lists.  You may also browse the member’s only website from the comfort of your own home. You are presented with the manufacturer’s suggested retail price and the special member’s price. Shipping options vary depending on the product and the manufacturer. Sometimes the item will be delivered directly to you. Other times it will be delivered to the warehouse and you will have to pick it up.  Sometimes the price includes shipping. Sometimes shipping is extra.

Why we let our membership lapse

The Direct Buy membership was a bad investment for us, for a number of reasons:

• We prefer to “see” what we are buying. Shopping on-line or from catalogs works well for some things, but not so well for others. Sometimes a picture just isn’t enough.
• Ordering takes time. A quick drive over to the department store is faster than ordering merchandise and waiting for delivery. Local retailers often deliver major furniture and appliance purchases within a couple of days. You may wait anywhere from a couple of days to a month for delivery of an order through the club.
• You’re on your own. Direct Buy employees may help you navigate the catalogs and some may be very knowledgeable about certain products or manufacturers, but they just can’t offer the same expertise and personal service that you can find at a regular retailer.
• The savings claims are misleading. If the manufacturer’s suggested retail price is $1000 and the member’s price is $600, you save $400, right? Well, not quite. In reality, there are few retailers that will sell at the manufacturer’s suggested retail. The retailer’s price may be $800. Now your savings are only $200. And there may even be additional charges on top of that.
• Selection does not always fit within budget. Direct Buy is great if you are looking to buy a $10 widget for $6. However, we had the budget for a $5 widget and couldn’t find any widgets in the $5 range. Yes, we would get more for our money but we spent more than we planned to spend on virtually every purchase we made through the club. 
• Our tastes tend to gravitate toward $5 widget anyway. We would have preferred to enjoy savings on $5 widgets. But $5 widgets weren’t among the offerings at Best Buy.
• We don’t always need the latest and greatest. Retailers have sales and sometimes sell below cost.  Deals abound at year end closeouts and overstock sales. Frankly, we are often happy with last year’s model if it serves our needs. In ten years, there won’t be much difference between something that is ten years old and something that was state of the art one year later.
• Retailers often up-sell warranties, offer in-home service, or entice you with other add-ons. With Direct Buy, you are buying directly from the manufacturer, so you will not have these after-market options. We usually decline extended warranties and the like, but it’s always nice to have that option.

The final straw

The final straw came last year when we ordered a tub/shower combination for our bathroom renovation. We ordered it at the same time that we hired the contractor and the contractor was ready for it long before it was delivered to the warehouse. 

We went to the warehouse to pick it up and it did not fit in the contractor’s van. I should have gone and rented a U-Haul myself, but we made the snap decision to hire a professional mover. The bottom line is that while we may have saved some money by ordering through Direct Buy, it cost us in the delay in the construction, it cost us in the time to go to pick up the merchandise, and it cost us in the alternative arrangements we had to make for the delivery. It’s hard to say if we saved any money at all.

The commercials for Direct Buy effectively lay out the “pros” of becoming a member. I have laid out some of the “cons.” But don’t misunderstand me. For some people, Direct Buy membership may be a good investment. That was not the case for us. I wish I could have had more time to decide before signing up. The high pressure tactics should have been a red flag. In hindsight, the membership fees we paid could have been better spent elsewhere.