CAVEAT EMPTOR

As many of you are aware, I am a retired accountant who specialized in startups and turnarounds. If you didn’t know you should spend a few moments to read my profile. I had, I think, one of the most interesting careers that an accountant could have. I have written and funded 22 projects for startup businesses and taken over 10 companies in financial trouble and turned them around to profitability. One of the things that you must do when considering a business to startup or when examining a business as to its ability to be successful is the pricing analysis of your market. Every on going business, to better survive and to know its market, must constantly know that it’s pricing is fair to both themselves and to their customer. A business that charges too little for its product can soon go under for lack of profit regardless of how much product it sells. The old analogy that you can make it up in volume does not work if you’re losing money on every sale. Inversely if you charge too much so as to make a profit you can still lose by not being able to sell enough. In this day and age when every knowledgeable consumer can go online and check pricing and order a product without ever speaking to a live person it becomes even more important that a business knows that it’s pricing is right and that the business does everything it can to educate the consumer as to the benefits of it’s business over the competition.
To this end I’ve spent the last couple of days doing some pricing analysis of the online plumbing fixtures market so as to better understand the pricing situation and to know what I can do to help educate the potential customer, my reader, so that they can make the best buying decision and to buy with confidence. The following are points that I see that are significant in the market today:
1. Most businesses offer some sort of price guarantee. If you can prove that a vendor beats your price then they will match or better it. This harkens back to the original principle of HD when it offered to match plus 10% on any product from a competitor. Obviously if a business is out of touch on both its own and its competition’s pricing they can soon lead to absolute failure by giving away a lot of merchandise at too low a price.
2. Secondly, especially on Ebay, the costs of shipping become a very integral part of price consideration. An Ebay merchant can offer to sell something very cheaply but when they steer you in they make their profit by charging exorbitant shipping and handling fees. Many times the customer is baited, hooked and reeled in before they know what these fees are. The same applies in the online plumbing business where freight and handling charges can be very high. A customer goes online simply looking for the best price, makes the decision to buy, loads his cart and then finds out that his shipping costs have made the price far higher than other merchants offered. Without some careful analysis before pushing that button to buy can this pitfall be avoided. This is what the devious merchant is hoping , you’ve fallen in love with his product, his web site and are tired of the chase so you forget what better pricing other sites offered.
3. Customer service is a major factor to consider. You may buy at a great price but what happens when the sale goes wrong? A part is missing? The product isn’t what you thought it would be? Does the vendor offer an easy return operation? Are you gigged with high restocking fees even on something that is their fault? I read a complaint in a forum last week where an online merchant charged a 15% restocking fee plus return freight on an item that was missing parts or offered to sell the customer the parts that were missing. Now that’s a way to make a profit! Charge the customer twice for the product or get your profit by service charge and never have to sell the product plus make a profit on marked up freight, that’s a whole new slant on inventory control.
4. Lastly you have the merchant who offers a product at a low price, gets the customer’s attention and gets the order, then pops the news that that the product is out of stock and can’t be delivered for some interminable amount of time. A good price on an item that you needed day before yesterday that won’t ship for 6 weeks is not a bargain, especially if you are on a construction schedule and the lack of the product holds up the rest of the work. A good merchant will show you his product availability before you push the buy button and will give you a good promised delivery date. Absent of this, a good price is not always the best price.

What does all this lead too? After doing my pricing analysis of some of the online plumbing supply businesses I find most guilty of all or most of the above problems, especially one of the vendors who is offered in many forums as the leader in the business and whose name most often shows up in product searches and paid advertising. Their initial pricing was the lowest but when you get to check out you find that the freight charges of $50 to $75 per order soon raises the price far above anyone else in the market. The availability, in the vast number of products reads “call for availability” which leads to finding that the low priced item is out of stock and an effort to up sell to another item presents itself. This is a smart move for the vendor but unfair to the customer. After all of that , the customer finds that the overpriced freight charges are based on the speed of a home loving snail and you will get your product in a few weeks as opposed to a few days or sooner. In other words they are not shipping by the fastest method while charging for it. I can only guess what their customer service would be like with the above things already in their modus operandi.
In summation, CAVEAT EMPTOR (buyer beware), becomes the phrase of the day. You have the ability to shop for the best pricing availability and shipping at your finger tips online. Take the time to examine your choices and don’t hesitate to “empty that shopping cart” before you become victim to one of these online tricks.
A reminder, as I have discussed before, National Builder Supply offers the following without equivocation:
1. Low price guarantees
2. Free freight on any order (to the contiguous 48 states) over $100, shipped promptly
3. Availability on each item up front and a vast inventory of stocked items as opposed to relying on drop shipments from secondary sources.
4. World class customer service backed up in writing from satisfied customers.
DON’T FALL VICTIM TO ONLINE PRICING TRICKERY, SHOP WITH CONFIDENCE AT NBS