Buying Etiquette for the Price Shoppers

There was a big flare-up recently for my store with Hancock and Moore caused by a client who made poor choices in their buying experience. This person, whom apparently has an order in with me at this time, caused a dealer in Washington State to go ballistic and light up the phones through Hancock and Moore management. I have several Washington State orders at this time, so not sure who it may be - but if you recognize who you are then I would appreciate your terminating the order with The Keeping Room and going back to your original dealer. You will get a full deposit refund.

Here's what i was told:

This H&M consumer went to a store in their home state of Washington and spent the better part of two full days shopping with them, and had their in-store decorator even made a trip to their home to help them in their choices. Then, once they had their selections they went price shopping and wound up at The Keeping Room, printed out the quote and asked that local dealer to match it. The Dealer declined, but took out their anger on H&M Management. And my store gets the reputation now as a sale-stealer and if this sort of thing continues to occur, my dealership is in jeopardy.

So let's talk about this.

* If you use the resources of that local store to do your shopping, and especially if you tie up their personnel, you owe them the sale. Nothing is free in this world and if you take store personnel's time for several hours, then you are denying them those hours to make an income. If you have to have the lowest price, then do your price shopping first - before you take up anyone's time. Then decide who is going to get your business and use their resources from that point on.

* What do you think happens when you present a printed out lower price quote from another dealer to the one you have been shopping? The management freaks out is what happens. Why should they inventory a manufacturer's product and invest in the line when they lose the sale to an out-of-area dealer who sells cheaper? Manufacturer's know this as well, and their solution is to revoke the dealership of repeat offenders. And it happens very quickly, with one phone call.

* I have lower overhead than any other dealer in the USA. Why? I have no employees but myself, I own the building and trucks I have in service. Zero Debt service, I have no loans. That allows me to sell at aggressive price points, but I can easily change that as well. As I told Hancock and Moore this week, "You need me to raise my prices, tell me how much and I'll comply" Simple as that. I am not out to steal sales, nor cause conflict. I prefer NOT to take your order if you are going to act like a horse's ass with a price quote and wave it in front of another dealer who is just trying to make a living. I prefer to earn my sales through knowledge and service, not because of pricing.

* As I write this I am considering raising my price margins not to make more money, but to prevent this kind of incident recurring. I am also considering suspending written quotes so there is nothing to print out. That means only verbal price quotes over the phone which is a headache for everyone and is a lot more work as there is no record of prior communication.

Perhaps people simply don't care as long as they get what they want. I get that. But there's the thing - you are going to ruin it for a lot of other people. Have some diplomacy and some discretion when you do your shopping. Be discrete. It's important. Reputation is more important to me than making money - I am not a sale stealer and really don't want that moniker attached to The Keeping Room.

Duane Collie

I am sorry that happened. I also price shopped but was lucky enough to have 2 dealers within 15 miles that sell H&M. I got to try out the sofa in their stores and only discussed prices between the two stores. I spent much more time with the sales person in one store and found her very helpful. They matched the other local store in price, and l knew I was still paying more than I would online from a non local dealer, but I appreciated having the help and the ability to try out the pieces locally so I thought it was only right to given them the order. Still not sure what I will do when I am ready to order a recliner. I won't ask anyone to match online dealers. But if I visit the other dealers and no one has whatever recliner I want in stock, I am not trying it out in their stores, and I am considering ordering it sight unseen, I will probably look to you to order it from. I appreciate the service you offer here as well as the services my local dealer offers. But anyone who does appreciate this site should also know what someone did here puts it in jeopardy for everyone, and it is in no way helpful to you.

Duane,

I think you (and H&M) would do well to remember that there are two sides to every story and the truth is somewhere in between. You have heard from the owner at the Washington dealership through H&M management, so why not take the time to hear the customer's side of the story? If I was H&M, I would want the dealer to tell me who the customer was so I could actually get all sides before putting another dealer through the wringer.

In any event, I am confident that I am the customer being referred to in your "story" (which is more fiction than fact when it comes to the Washington dealer who complained) and I think it is worth you (and H&M) taking the time to learn the customer's side of this story.

The dealer in question has two locations in Washington State, both in the Seattle area.

I first approached them in October, after I had already decided what I wanted to purchase.

The first time I entered the store, Mary approached me and asked me if I needed help. I told her I wanted to see what they carried in H&M. For whatever reason, I was steered away from H&M and towards Bradington Young, despite me specifically asking for the H&M section. Someone at H&M should ask the dealer why, when a customer is asking for a particular brand, this store's "designers" purposefully attempted to steer them to Bradington Young. Why they did it is beyond me, but that is what happened.

In any event, the service was non-existent. The "designer" didn't have a clue about the H&M line and I ended up looking through swatches, wood samples and nail trims on my own. Eventually I left, disgusted with the "service" my partner and I had received. Mary did offer to come to my house and measure things and I declined. In fact, no one from this dealer (or any other dealer) ever came to my house to measure, as I am perfectly capable of doing this so whatever they told H&M about this is a COMPLETE fabrication.

I then spent several weeks shopping other dealers and furniture lines in my area. At another Seattle area dealer, I was told I should just buy Leathercraft, even though the dealer sells H&M. What turned me off with that dealer (who has a single location) was his foul mouth (highly inappropriate sexual content). Even my kids thought he was a nut job when he starting telling me I should buy a hair on hide sofa from Leathercraft, rather than what I wanted from H&M.

That was it for local dealers. As a result, I was forced to consider buying online. I contacted several online dealers and received quotes from them that were more in line with what I was willing to pay (50% of MSRP, as you yourself note, is not unusual).

Armed with this knowledge and these verbal quotes, I went back to the first dealer (the one whom, I believe, complained to H&M), with the two Seattle area locations, to try and make a deal on what I wanted. Keep in mind, the dealer does NOT have what I want in stock and it's just a special order to them, requiring not much more than a phone call and sales order faxed/emailed/mailed.

The second time I went, I was approached by another "designer", Erin, who, as I later discovered, is an independent contractor employed by the dealer. I told her up front that I didn't need her to come to my house and design my room for me. I let her know several times that I only wanted the best price that she could offer me and that if I needed to go direct through the store manager to get the best deal, that was my preference, since I didn't need her "design services" anyhow and was really just looking for someone to write up the special order and take my deposit to get the pieces on order.

Erin told me that the best she could do was 20% off of MSRP with a "sale" ending that weekend and that her store "doesn't discount". I asked her if she really wanted to lose an easy sale this way and she insisted that my 50% of MSRP would never happen (For the record, I have received price quotes from dealers that are 43% to 50% of MSRP on H&M. What I have learned is that the furniture industry is not much different than the musical instrument industry, with highly inflated MSRP's and huge room to negotiate).

Keep in mind, I was TRYING TO BUY from my local store and, despite my insistence that I do not want, nor need, a "designer" to "help" me, she refused to listen to my request to let me just speak to a manager to complete the sale and avoid paying the "designer" commission.

Finally, and frankly, I gave up with that store location as they were wasting MY time. It is easy for a third party, without knowing all the facts, to assume that I wasted the store's time, but guess what? My time is also valuable and spending it listening to a "designer" drone on and on about accessory items that I have no interest in buying is also a waste of MY time.

However, I still wanted to buy local, so I took time out of my day about a week later to drive up to their second location and try again. I called before I left and spoke to the manager, Alla, to ask if they carried the swatches, etc. so I could make my decision and place my order. I specifically asked Alla if she would be there and if I could ask for her directly when I arrived and, once again, it was suggested I just need to speak to any "designer".

When I arrived, I asked for the swatches so I could be precise in my order and told Elizabeth, another "designer" forced onto me, that I just wanted to place an order for the pieces I had selected. I was met with the same insistence that no one sells H&M for 50% of MSRP, etc. I told them, at that point, that if I cannot buy for 50% of MSRP from them, I would be forced to just order from an online dealer. I finally asked to speak to Alla, who told me the same thing, however, as I was walking out of the store, finally told me I could buy them for that. What I showed her was a text file from my smartphone that showed the item numbers from H&M along with the MSRP from the H&M price list and the 50% of MSRP discount that I was seeking.

To be clear, these MSRP numbers were taken from the H&M MSRP price list that I obtained ON MY OWN and MY OWN CALCULATIONS. When she asked who suggested I could get 50% of MSRP, I told her it was a common practice and well known on the internet, including online furniture forums (I would surmise that THIS was how they linked my "quote" to your store as, for better or worse, you have a pretty extensive site for H&M information and furniture buying in general).

I went ahead and placed the order and paid my deposit of 50% to them via personal check (I had already told them they would be saving the card transaction fees with me because I wasn't going to use a credit card). The order totaled $13K at that point and consisted of three items at 50% of MSRP, plus $1300 in freight from H&M to Washington, $250 in local delivery fees and applicable sales tax.

Two days after this sale, I emailed Elizabeth to ask if I could add on another piece to the order and that I expected the same discount to apply again.

Elizabeth said it was not possible to do that. I told her I thought it would be worth checking with Alla on this and CC'ed Alla on my reply.

Alla's reply is copied below:

"Unfortunately the price Elizabeth sent you is the best price we can accomodate, this would be included in the delivery so you will be saving a delivery fee should you choose to add this on . I do understand pricing is important to you so if you feel you would like to order elsewhere we understand... If you feel more comfortable canceling the order I also understand. Let me know if I can be of any assistance to you. "

I then asked to speak to the owner, Jake Cross, and explain my frustration with their sales model around "hiring" these 1099 contractor "designers", as they have no way to accommodate a buyer who simply wants to buy what they want and doesn't need someone to try and tell them what they want. The owner, Jake, called me and said, "Please put a stop payment on your check, we are going to cancel your order".

In the end, I didn't buy H&M at all and went with a competing manufacturer from a dealer in Oregon.

I would suggest you take this post, print it out and send it to H&M and share with them my side of the story as the customer, who, in the end, was the only person who put money on the table, only to have it handed back by the local dealer. The sale was not "stolen" by the Keeping Room nor anyone else, it was refused by the Seattle area dealer who didn't want to complete a sale from buyer who did their research and didn't want to be rooked by them. In the end, the Seattle dealer was the one who lost the sale for all concerned and the blame lies squarely with them and no one else. The fact that they whined to H&M about a buyer asking for what is a pretty normal discount of 50% of MSRP just proves what I told Jake Cross at the time, namely, that refusing my money would end up hurting them more than it would hurt me.

Clearly, it did.....

I think you missed the first part of my post, where it said "This person, whom apparently has an order in with me at this time" means it was not you, whitepenguin. At the time of this post (November) I had (5) orders in process from Washington State and it was one of those clients.

Why would I forward your comments to any management personnel at Hancock & Moore? Clearly you had a personality conflict of some kind with the dealer in question and to such a degree they returned your money and cancelled your order. It appears you were pressing a point and not wanting to work within that dealer's sales structure and operations. When that happens, I would suggest you just leave, don't try to tell them how to run their business.

Here's what most people fail to grasp, the dealer-store / client relationship is very simple.

1) The dealer has a product they offer for X amount of dollars
2) The customer then decides if they wish to purchase that product for that amount.

It is no more complex that that. No different than if you were buying a loaf of bread at the grocery store. If you don't like the price on the loaf of bread, move on and go get it elsewhere.

Something happened in your back and forth with that dealer that made you jettison the brand. All you had to do was pick up the phone and order if from my store - you had your price, it gets there just as quickly. Simple, fast, effective. Why get into all that conflict, were you trying to get them to change their business model?

Quote:

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Originally Posted by drcollie

Here's what most people fail to grasp, the dealer-store / client relationship is very simple.

1) The dealer has a product they offer for X amount of dollars
2) The customer then decides if they wish to purchase that product for that amount.

It is no more complex that that. No different than if you were buying a loaf of bread at the grocery store. If you don't like the price on the loaf of bread, move on and go get it elsewhere.

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New to this forum and just soaking up the trove information you've provided (thank you!), but something to probe on in this conversation:

I think the source of much of this frustration and friction is the lack of price transparency, and a business model seemingly designed to stack the deck in favor of the dealer in terms of who captures the most surplus from the exchange. A provider-consumer relationship is almost that simple, but not quite, as you obviously must know:

1) The dealer has a product they are willing to sell for price X
2) The customer is seeking a product they are willing to buy for price Y
3) A trade takes place at price Z. If there is any difference between X, Y, and Z, someone is making out with surplus value.

For commodities like a loaf of bread, price information is so broadly available that X and Y pretty much converge to Z. I know that the same loaf of bread is not going to vary by 50% in cost between two stores next door to each other (and if they do, I can just see the price and get the cheaper one). But buying unique, heirloom quality goods is different, on purpose. There are fewer transactions to draw data from. MSRPs are usually hidden and deliberately inflated. Actual producer prices are hidden. Dealers of course don't reveal their true willingness to sell. Dealer licensing arrangements and territory curb competitive entry, which would otherwise push X closer to Y. Sales processes are engineered to reveal the customer's budget and cross-sell other goods and services. And even getting to an initial offer price is obscured until you have been run at least partway down a sales funnel.

What the customer knows is that, unless there is good reason to think otherwise, the offer price is almost certainly above X, the true willingness to sell. And we know that employee incentive structures like commissions and 1099 workers are set up push Z as close to Y as possible. But as consumers we (in U.S. culture anyway) are often made to feel dirty for pointing it out, as if we are trying to cheat someone when we are just trying to do exactly the same thing with fewer resources. Heck, I feel like such an a** when I would question a price, I just move those purchases to more transparent and up-front channels. The internet has in many ways shifted this balance; case in point, the insider data you have shared personally on this forum.

I want to follow good etiquette as a consumer and put focus on where it should be: on the product. Instead, we have to face this charade of flat out lying to each other back and forth to get to Z. For me personally, this is a huge deterrent to making the leap into these to-the-trade producers, even though I would much rather support them than some overseas operation. This would be made much easier if we could all just lay our cards on the table and have an honest conversation with transparency over price and why there might be differences between dealers. Sure someone else might offer 20% lower price but perhaps they are back-ordered by an additional three months, or you would make that up that difference in shipping costs. Maybe that extra 20% comes with augmenting services the customer actually values, but by being up front they can make that decision as a consumer. There are a lot of good reasons for price differentials.

There's probably a counterpoint to this, in that the internet has set unrealistic expectations on pricing and has pressured many manufacturers to find ways to cut corners. I see this finger pointing a lot. But I think that the lack of transparency and confusing smoke and mirrors in supply chain relationships is more to blame. Younger generation consumers are not educated enough in the differences to appreciate the hidden costs and trade-offs in these purchases; there is a ton of room for better marketing in this regard. More than this, the difficulty of even getting to a price sends a strong signal to up-and-coming consumers: by not telling you we are going to try to get you on emotion and psychological tricks. The world is done with that, and dealers need to catch up.

A very insightful reply! Thank you, I appreciate well-thought out comments. And you are correct in your assessment of the buying procedure and how it appears to consumers. You appear to work in the world of retail/marketing/wholesale consumer chair products as most people don't grasp what you have laid out - at least to this level.

I have fought MSRP for my entire furniture career, but my store is small and I don't have the weight to push the industry into change. I don't even object to talking about it because I like transparency. The problem becomes if a purchaser knows the landed cost, then the next step they try to make is determining how much margin they think you should make as a dealer. Typically they pull that number out of thin air, or compare it to buying a car, but it doesn't cross over as furniture stores don't have a service department or parts department that makes the real money for car dealerships. I've had people go so far as to pull out a calculator and decide my hourly rate is worth $ 40 an hour and compute handling time into the price they are willing to pay based on their determination of wholesale cost - never figuring in the cost of the building, the costs of my delivery trucks, insurance, taxes (lots of taxes) and so on...it becomes a real slippery slope and a game I won't play.

Business runs on margin. A percentage on sales. There are very few businesses that can operate successfully and not make 18% net per year after all costs of operation are paid. I set my pricing to target that 18% net and that's why I am still in business 36 years later. I also don't "price match" because that puts me below my target margin if I come off my selling prices. Nor do I offer additional discounts to any sub-group (teachers, medical personnel, military). If you don't make margin, then you can't pay the rent or send the kids to college. Of course you also will never get wealthy on a target margin so there's the flip side of it all. Apple, for example has a 21.5 % net margin on all its operations, but they do millions and millions of transactions - just as a data point. Volume is key, you can run lower margins if you can pump out quantity.

MSRP in the furniture industry is 3x the dealer wholesale. So what the dealer pays $ 1,000 for, the MSRP is $ 3,000. Discounts of 50% are common so that brings us to a $ 1,500 sale price. But shipping and handling are not free. On that $ 1,000 piece, the shipping is $ 100 to $ 150, then you have warehousing, handling, unpacking, pay the Federal Government taxes, the State taxes, the Local taxes, and the credit card companies have their hand out for 3% of that amount as well. Add in operating costs and your $ 300 of that $ 1,500 is gone, leaving a profit of $ 200. That's it. And if that is a typical recliner, the client won't replace that for 10 to 15 years, so it's a long time before you see them again.

What I am always amused by is the person that walks in all puffed up and demands a big discount off my selling price and says he can get it for "X" amount elsewhere. Right. I sometimes pull out my wholesale book and show them the price they are saying they can buy it for is UNDER the dealer cost. That never stops them, they stick to their story because they have already decided to pick a number in hopes that they can buy it for less. Good luck with that.

I like my one price policy. It works well for me. I decided to do this many years ago when I saw customers who were not very good at negotiating (primarily older women) vs the sharks that wanted to barter on everything. Back around 1988 I switched to one price - take it or leave it and it's been that way ever since. Fair across the board. However, many stores do not do this, so yes - it can be confusing. Shop around for sure, buy from whom you are comfortable doing business with, and remember too that the lowest price dealer in the country is also the least likely to answer your phone call if there is an issue after the buy.

Duane,

I never thanked you for the wonderful and thoughtful followup to this. I'm not from the industry, just background in business strategy and economics on the services sector side (where speaking of margins, it's hard to survive without a 50% net on projects to make up for lean months). I've watched this in a bunch of markets; I've found it similar with audio gear for example. For what it's worth I really admire your approach here and think it's all spot on. The work you put into this forum and information you share is a great service, but more than that exemplifies how real transparency establishes trust and credibility (I'll probably look you up once really in the market for your product lines). We'd be better off if more operations shared you style.