Broadmoore Furniture Costco. Owning a full time retail furniture store business myself, I don’t get much time to watch TV. But when I do, I always come across those infomercials that help you get rich quick from stocks, real estate, and pyramid schemes.
The other day I came across a commercial for “Direct Buy” where you can buy furniture and home goods direct from the manufacturer, and pay wholesale prices, where you can join them as a member and get direct access to their furniture store and design center showroom.
First thing I thought was: “What’s the catch?”
Because Direct Buy has to make money, how does the customer only have to pay the wholesale prices? So I did some poking around and found some forums and posts where people are complaining that Direct Buy is a scam and their fees are outrageous. Fees? What happened to paying wholesale prices and saving a ton? But there were a few that said they had a good experience. So again, what’s the catch?
So after a reading a few posts on the Direct Buy topic at topix and various sources over the web, I got a good idea of what was going on.
The truth about the Direct Buy furniture store and home goods membership:
The commercial – you see it on TV spot ads where they pitch you a great idea about buying direct from the manufacturer and wholesaler. They have testimonials from customers that tell you they saved $20,000, $100,000 etc.
The sales pitch – So you are in the market to remodel your home and refurnish it, and you give them a call or visit their website. They give you a pass or invite you to their showroom tour. You visit one of their local showrooms and they herd you in seminar style and go through presentation slides about how great it is to be a member. Being a member you can buy direct and saves tons of money. And then they tell you how to become a member buy just paying the non refundable membership fee to get all these discounts.
The membership fee – Now are you ready? To know how much it will be to join this great network and become a member to save tens of thousands of dollars? The membership fee is a $5000 for a complete 2 year membership and $200 per year thereafter. (Supposedly, in 1996 it was around $1000).
The purchases – once you become a member after paying that membership fee, you can now have full access to their local showroom and design center to buy direct for your home.
Direct Buy is not the furniture store for everyone:
The way I see it is that Direct Buy is very much like an expensive Costco membership to buy a wholesale prices. So to save a lot of money you have to spend a lot of money. Based on my estimates, you would have to spend over $20,000 to make back the $5000 membership fee to save on discounts. Direct Buy pitches the fact that furniture stores and appliance stores have 200% markups. And that is not always true. If you took that membership money and translated it into some good shopping comparison time you will be able to get mark ups that are almost 10% to 20% above costs at some retailers. There is so much competition among stores and the internet, that prices are very close to cost nowadays, where business owners are just making enough to cover overhead and make money off of higher volumes.
Direct buy does charge a markup over the cost of the merchandise it sells, just lower than what the retail stores charge. But that is what you paid for by paying that $5000 membership fee. I am pretty sure they don’t offer financing, so you better have all the cash to make those purchases within 2 years, or else you risk paying more membership fees. Because I am aware of new homeowners or remodelers that take over 3-5 years to completely furnish their home. So I guess if you have $5000 lying around and about $30,000 to spend to save a few thousand dollars net, then Direct Buy is for you. Otherwise, take your time and be a bargain hunter, you’ll be able to save just as much and not have to lock yourself into a membership that will force you to spend money in order to save it (what a paradoxical statement).
Not everything you would expect compared to shopping a regular discount furniture store:
Buying direct from the wholesaler may not be everything you expected. You still have to pay sales tax and delivery fees. And you have the long wait times, because wholesalers allocate inventory for their bigger customers who are the retail stores, not the person that is trying to buy the single unit sofa. So compared to all the other customers, a Direct Buy customer probably is not viewed with high respect by the wholesalers. Items you purchase cannot be returned to the manufacturer if you decide it didn’t work out, unlike buying from the furniture store. And there are numerous comments that it is hard to get a hold of Direct Buy after joining or purchasing an item. So what about the customer service? You really need to know what you are doing if you join the membership. Because no one is going to let you into a club with the secrets of buying and saving direct for free, they charge you a fee and that is pretty much all you are going to get: access to buying direct from manufacturers. And you give up all the service and value of buying from a furniture store that values your business (because once you’ve joined, Direct Buy already made their money, they have no incentive to continue to sell you anything and provide you continued service – you’re already a member that can’t quit without giving up the initial membership fee).
If it feels like a scam and you’re asking what’s the catch? Then there probably is a catch. You just need to decide if you can live with that catch. If so, you’ve found what you need. I don’t believe in having to spend more money to save money. What I have said here are only opinions and all of you are free to comment, but I just thought that before you spend time calling and going to the seminars you should know what you are getting yourself into. The flexibility and freedom to spend when and where you want at your own leisure may be better than joining a club that costs you a lot upfront to know the secrets of saving money. If you decided you wanted to spend $30,000 in furniture for your home maybe you can try visiting my furniture store at visiondecor and contacting us through email or phone, I’ll be glad to have my customer service reps take care of you and give you a worthy discount. But I’m really not trying to sell you anything, I’m just trying to bring some light into something I saw as kind of “shady”.
Visiondecor products and blog was the resource and support for this furniture store [http://shop.visiondecor.com] article. Visiondecor specializes in dining room chairs [http://shop.visiondecor.com/dining-and-kitchen-seating.html], sectional furniture [http://shop.visiondecor.com/sofas-and-sets-home-theater-seating.html], and other home furnishing products.
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