I went searching for a couch this past summer and vowed not to spend more than I had to. After all, as a personal finance blogger just by buying furniture that isn’t used or stolen from the garbage dump, I’m basically committing a sin in some of my peers’ eyes. I’m pretty frugal in day-to-day life. I don’t eat out very often, I buy maybe six coffees a year from Timmy Ho-Hos, and my entertainment budget is smaller than most people’s phone bills. That being said, I like the odd video game and sweet HBO series (we’ll just say I get those very cheap and leave it at that). I also tend to do a lot of reading. All that to say, I will likely spend a fair amount of time (like most North Americans) sitting on my couch, and I don’t spend a lot of money frivolously. With that in mind, I set out to get the most comfy, and most durable sectional or couch set that I could get my hands on for a reasonable price.
“Buy Straight From the Source”
My search led me to this distributor known as DirectBuy. They market themselves as having over 150 franchises in the USA and Canada. The main concept behind DirectBuy is that they are an “insider’s club” where members can purchase brand-name goods directly from manufacturers’ warehouses and by doing so avoid the large retail markups that we see on most products. The main catch is that membership is certainly not free. It is impossible to say what a membership will cost anyone specifically because each DirectBuy franchise is independently owned and operated and sets their own price. Most media sources I looked into reported the probable membership fee at $3,000 to $7,000. Needless to say, that pretty much ruled out my interest, but I was kind of curious about this consumer model and if their prices really could beat those in a cut-throat retail world by enough to justify that hefty membership.
Good… and Bad?
What I found when I looked into DirectBuy in various online hangouts was a ton of complaints and a lot of praise as well. I don’t know if I’ve ever seen less consensus about a consumer business online before. DirectBuy was roundly criticized for its pressure-based sales pitches that routinely stated, “You must buy your membership now or we will never give you the opportunity again.” Yet, but the same token the company boasts a fairly impressive rate of membership retention. DB defends itself on this account by saying, “This policy is in place out of respect for our members, manufacturers and the retail industry. It prevents consumers from asking traditional retailers to match DirectBuy prices.” Some people claim the service and support they received as a member of DB was great, while others reported it was terrible. It could be as simple as the fact that different franchises operated within a large spectrum and some were just better than others.
Price Comparison
When it got down to the nitty gritty of comparing numbers, it appears that DirectBuy’s prices did live up to the claims they make in most cases. This was especially true in the more “high-end” items that would obviously have the most mark up. DB claims that if you can find the product somewhere else for a cheaper price, they will immediately contact the manufacturer to resolve this issue. While I admire the principle behind this, doesn’t the idea of comparison shopping promises sort of put you right back at the level of retailer? If the promises of buying direct from the source are true, shouldn’t there be no logistical way that a retailer should be able to drop their price below yours?
From what I could tell from multiple consumer websites and forums, it seems that Direct Buy was able to offer a 20-25% average discount to most customers. This means that one would have to be purchasing around $20,000 worth of home furnishings to make it worth the memberships. I should note that DB management claims that members should count on savings numbers close to 40%, but that number seems pretty dubious.
Is It Worth It For You?
I think that at the end of the day a Direct Buy Membership could be worth the substantial fee if you are furnishing a house from scratch and prefer higher-end brand names. If you take the plunge be prepared for some weird sales techniques and having to wait a couple of months for your orders to come in. Finally, online orders aren’t allowed – all DM orders must be placed through a showroom. From what I can tell, it is best to check with someone you know is a member of a specific franchise to see what the practices are in that area. As for me and my couch, I decided to take a quick run to the USA and picked up a great reclining sectional for $1,700. Is it a little more than I could have got something for on Kijiji? Sure, but it’s a luxury I can only justify by saying I enjoy it every day!
My impression of DB was that it is a bit of a scam (you’re never going to save what they say you’re going to). I think you’re correct in your assessment, that if you’re going to entirely furnish a house completely from scratch it might make *some* sense. Perhaps money-wise it’d work for somebody who’s furnishing several houses.. Also, to me, a lot of the positive reviews you read out there seem like astroturfing, but that’s just my two cents.
Even if you furnish an entire house, their selection will never have exactly everything you want. And at this price range it’s not like Ikea, you want to pay for what you want… not what they offer.
I have read a ton of articles on them and I would not deal with them even at half price.
Is Direct Buy a scam? I would say yes. I have been in furniture retail management for 23 years. Direct Buy like to give the impression there is massive margin on furniture, appliances, electronics and major home improvement products, unfortunately this isn’t the case. The retail environment is VERY competitive and margins are as low as can be. Occasionally when Direct Buy do advertise big discounts on sofas for instances, the pricing is the same or more then major furniture retailers. They take advantage of people since most just trust this quoted savings is real, it’s not. If only we could charge customers thousands of dollars just to be called members!! This borders on evil.
A smart shopper will shop around and confirm this to be the case and not spend $3000-$7000 (OMG!!) just to be a member and trust there will be savings to cover this rediculous fee. If a fee of the amount isn’t a red flag I don’t know what is!
As Direct Buy is discovering people won’t make major purchases based on a picture so they have to add brick and mortar stores to do business which alas is exactly what they claim to be avoiding. Of course with people paying huge fees they can afford to lease buildings can’t they? So they are a retailer arn’t they with showrooms you have to buy through, so how is this different exactly? You pay a fee whether you buy anything or not is the difference.
Please take some advise, shop around at retail get the best price on the best products you can afford from a reputable dealer and save the $3000-$7000. You could furnish numerous rooms for that amount.
One last point why is it when customers get cold feet and want their $5000 back they have to fight to try to get it? This is a company you want to do business with?
Some customers act like being a Direct Buy member is quite the status but to people that really understand the numbers they are labeled “suckers”.
Don’t be a sucker.
Peace.
Bob
Thanks for a “insider’s look” Bob.
I have to admit that the $5000 membership fee is a lot and would not work for someone looking to buy a single couch.
I have purchased several items and the average savings is 25% or higher on the larger high end items.
A simple way to look at it is if you are going to spend more then 25k then you will make your money back and save on everything after that.
So your overall experience has been good Adam?
you spelled Kijiji wrong…