is DirectBuy a legit company or a rip-off

[JeenLeen]

I've learned I can get good feedback here, so I wanted to ask about the company DirectBuy. My wife and I recently attended a presentation on it and decided to decline.

For those who don't know, it's basically a 4-6k membership fee to join the club, then you can shop their prices which are (they say) the cost the manufacturers charge, so it's way cheaper than retailers since there's no markup. You go to a presentation and have to decide then to join or not; they said, if you say no, you can't join for 7 years. As expected, there was a bit of fast talk and I'm sure it emphasized the best deals, but it sounded more legit than a condo sale.

It sounded good, and I'm considering it when I next can or recommending it to family, but I wonder if anyone here is a member or has heard good or bad things from members. Anyone?

[LaZodiac]

Literally never heard of this before, but the "If you say no now you have to wait 7 years to join again" thing sounds fishy. Don't do it.

[Gnoman]

This company spends a huge amount on advertising, and would be taking a loss on every product sold if they did indeed sell things at manufacturer's cost (not to mention the absurd prices in their ads. It costs a lot more than $40 to make an iPhone, for example.) There is no way a $6000 fee would cover the product loss and pay for the ads. A cursory search turned up a number of lawsuits and company reviews bashing the high-pressure sales pitch and massive markups from the company.


It's a scam, plain and simple.

[Seerow]

I used to work for them, as the annoying guy who would call you to set up an appointment, refuse to tell you how much the membership fee costs, and then call you 20 more times to make sure you came to the appointment ready to buy.

I can confirm they're legit, but my biased opinion is going to tell you don't join up anyway, and make sure to ask to go on their no call list when you're done. Also, while you can save a lot of money on select things (including things you wouldnt expect. They had some nice cell phone deals at the store I worked at for example, but I think that was a contract to the specific store and not the whole direct buy franchise), to make back the 5 grand you're going to drop on membership, you're looking at a in-store spending of at least 15,000, likely closer to 20-30 depending on which merchandise you're after.

If you do decide to go on the tour, bring a list of items you're looking to buy with you. Before you have to make your choice, they should give you an option to browse their catalogs and see what manufacturers they have available, and the prices they offer. So come in with a bunch of model numbers and retail prices, to compare for yourself how much you'll save.


Oh also, if you really are interested, and have a spouse, make sure you bring them. If they find out you're married and didn't bring your spouse, they'll send you away before the tour. Or if after the tour you decide you want to talk to your spouse, you have the 7 year waiting period before you can try again.

[Seerow]

This company spends a huge amount on advertising, and would be taking a loss on every product sold if they did indeed sell things at manufacturer's cost (not to mention the absurd prices in their ads. It costs a lot more than $40 to make an iPhone, for example.) There is no way a $6000 fee would cover the product loss and pay for the ads. A cursory search turned up a number of lawsuits and company reviews bashing the high-pressure sales pitch and massive markups from the company.


It's a scam, plain and simple.

They run really low overhead pretty much. The store I worked in had thousands of members, but only a small shop/warehouse, with the call center in a room in the back. The entire building had about 12 employees, including management. The membership is a 5000 one time thing for the first 5 years, and after that it's something much cheaper like 200 a year.

I believe they do charge for shipping on items, but they don't hold a stock of anything. It's all a la cart ordering. So they only really need to make enough to cover a small employee base, pay for the property/utilities, and pay franchise fees. Selling a few memberships a month pretty much covers all of their expenses. The store I worked at sold on average 100 memberships monthly.

[thubby]

they wouldnt be doing it if it didnt make them money. so legitimacy aside, it's basically impossible for it to be worth it.

[Seerow]

they wouldnt be doing it if it didnt make them money. so legitimacy aside, it's basically impossible for it to be worth it.

It is possible, it just has a high point where it becomes worth it.


Direct Buy makes 100% of their money off of your membership fee. That's their total money from the customer. The manufacturer will of course charge more than what it costs to make the item, but the trick is they charge that amount to all of the stores.

After manufacturers make stuff, they mark it up for their profit and give it to retailers. Retailers then mark it up and put it on the floor and hope it sells.

Direct Buy charges you 5000 dollars, but doesn't mark up prices again, they just skip the part about putting it on the floor and doesn't order a damn thing until you order it. This makes direct buy slower (since you can't just walk in and get it, you have to order it and have it delivered), but cheaper. Until you count the membership fee, at which point it's either way more expensive, or way cheaper, depending on what you're buying and how much of it you are.

I've heard stories on both ends of the spectrum, where people had their membership pay for itself twice over in a week, and people who after getting a membership only did a couple little projects like redoing floor, and never really made their money back. That's why I recommended bringing in stuff you're looking to buy when you go into the tour, to see for yourself if it'll be worth it for you.




Not sure why I'm defending direct buy here tbh. I got screwed there. Fired quite literally for the reason "I don't like you and we have a new guy coming in". But while direct buy isn't for everyone, it's not a scam.




Edit: Oh yeah, the "If you don't sign you have to wait 7 years to come again" thing is a part of Direct Buy's contract with the manufacturers. Apparently the manufacturers were afraid consumers would come in on these tours, get a bunch of quotes, then outraged at the retail markups demand cheaper prices. The waiting period was a compromise necessary to make their business model work. If direct buy had their way, they would be more than happy to take you in again a week later to sign you up.

[LaZodiac]

Seerow, listening to you amazes me. It's great to have someone who's been on the inside giving advice like this.

[Arminius]

They run really low overhead pretty much. The store I worked in had thousands of members, but only a small shop/warehouse, with the call center in a room in the back. The entire building had about 12 employees, including management. The membership is a 5000 one time thing for the first 5 years, and after that it's something much cheaper like 200 a month.

I believe they do charge for shipping on items, but they don't hold a stock of anything. It's all a la cart ordering. So they only really need to make enough to cover a small employee base, pay for the property/utilities, and pay franchise fees. Selling a few memberships a month pretty much covers all of their expenses. The store I worked at sold on average 100 memberships monthly.
Sounds like the membership price goes up then after 5 years. $200 a month * 12 months = $2400 for a year, so for another five years it would be $2400 * 5 = $12000.

Assuming Seerow's intel is right, it seems like it would be best to go along with his advice and make sure you will actually buy enough from them.

[Seerow]

Sounds like the membership price goes up then after 5 years. $200 a month * 12 months = $2400 for a year, so for another five years it would be $2400 * 5 = $12000.

No, it's like 200 a year after the first 5 years. And the exact number may be a little off, I never really handled contract renewals or anything like that. I just know that the price drops significantly after the initial payment


edit: Just realized my other post did say month. Editing that now.

[Arminius]

Ah, that is much more reasonable then. I suppose over the very long term it might be worth it. But this assumes that you can plan out a decade plus in advance and that they will still be in business in that time.

[Seerow]

Also be sure to ask about silver membership and payment plans. I'm sure they'd bring both of these up anyway, but if they don't and you don't want to spend 5 grand up front, I'm pretty sure there is a payment plan to get it down as low as 90-100 dollars a month for the initial signup. Your sellers are going to push hard against that, as if their store is anything like mine was they won't get **** for a commission off it, but unless things have changed drastically in the last year it should be an option still.

[Bouregard]

While it doesn't sound like scam to me it is a pretty shady business practice.

What happens if the company defaults or can't get competitive prices anymore? Do you loose your money?

If they want to press you into signing a contract then something is shady. They don't you to calculate risk vs. reward so it is quite possible not to your benefit.

You pay money in advance so you will get no interest from it. Keep that in mind.

In my line of business a reseller gets a discount from 10% to 30% depending on how expensive marketing is. The highest discount in this line is usually for things like cellphones and hightech "toys" = Things with a low material value but high resale value. So you have to decide for yourself how much do you spend in a year on cellphones etc. Everyday items like food and services are usually not covered in such companies, or if they are, with low discounts.

If we say best case: 30% off all your electronics you buy while having such a contract, this means you have to spend at least $8000 on electronics (2400 a year and 30% off).

The offer could be interesting if they offer a discount on cars and other highly expensive items you will only buy every 5 years. Get a one year membership and buy what you can.

However without proper information on what discounts they offer it would be a no go for me.

Look at your income and how you spend it. If you make $20000 a year and spend half that for room, food and electricity it will quite possible not be worth it.

[grimbold]

this is...
most fascinating... Oo

[Seerow]

While it doesn't sound like scam to me it is a pretty shady business practice.

What happens if the company defaults or can't get competitive prices anymore? Do you loose your money?

If they want to press you into signing a contract then something is shady. They don't you to calculate risk vs. reward so it is quite possible not to your benefit.

You pay money in advance so you will get no interest from it. Keep that in mind.

In my line of business a reseller gets a discount from 10% to 30% depending on how expensive marketing is. The highest discount in this line is usually for things like cellphones and hightech "toys" = Things with a low material value but high resale value. So you have to decide for yourself how much do you spend in a year on cellphones etc. Everyday items like food and services are usually not covered in such companies, or if they are, with low discounts.

If we say best case: 30% off all your electronics you buy while having such a contract, this means you have to spend at least $8000 on electronics (2400 a year and 30% off).

The offer could be interesting if they offer a discount on cars and other highly expensive items you will only buy every 5 years. Get a one year membership and buy what you can.

However without proper information on what discounts they offer it would be a no go for me.

Look at your income and how you spend it. If you make $20000 a year and spend half that for room, food and electricity it will quite possible not be worth it.

What you say is mostly true, but it is worth noting Direct Buy doesn't even pretend to offer food and such. They offer some electronics but not many, and the selection of those isn't great. If you're looking for the newest iphone, or a new desktop/laptop, you'll probably be disappointed.

They market themselves as a home improvement and furnishings store, and that's really what they are. The vast majority of the stuff they sell are appliances, cabinets, flooring, light fixtures, etc. They also do have a somewhat decent selection of home entertainment stuff (tvs, sound systems), though I could be mis-remembering on that.

Direct Buy is the place you want to go if you just got yourself a fixer-upper house and are about to blow a load of cash renovating it. Or are about to redo your old home, or something along those lines. It can be worth it to other people, but it typically takes a much larger perspective or a much larger income bracket for that to happen.

Oh and some of the stores DO have connections with car dealers. The store I worked at did. But the contracts with car dealerships are (or were) made on a store by store basis, not as a franchise, so your mileage may vary.

[Don Julio Anejo]

No idea about the company itself as I'm pretty sure we don't have it here up North, but here's a hint: shop around your friends and see if they want stuff that DirectBuy stocks. Even if it's technically not allowed by the membership agreement (don't know if it is or not), nothing is stopping you from buying 10 TV's where only two of them are going to go to your house and the rest are for friends.

PS: TV's, except for the latest and highest end models actually have really low markup towards the end of the calendar year. Stores are lucky to get maybe 10% profit on them. It's the accessories that make money.

[purple gelatinous cube o' Doom]

For what it's worth, a quick search shows the two closest DirectBuy showrooms to me (Northern Virginia/DC area) to be accredited Better Business Bureau organization(s). Based on that, I'd say they're a legitimate business. Seems to me, that it pretty much works on the same principle as Sams's Club/BJ's/Costco etc. I'd say unless you plan to furnish an entire house in the next year, the initial membership cost would likely not be worth it. If you're interested in getting a piece here or there, you can find quality furniture for very good prices at places like Ashley Furniture, or even Value City Furniture. The web for some things (I got a bookcase and tv stand that way).

[Seerow]

For what it's worth, a quick search shows the two closest DirectBuy showrooms to me (Northern Virginia/DC area) to be accredited Better Business Bureau organization(s). Based on that, I'd say they're a legitimate business. Seems to me, that it pretty much works on the same principle as Sams's Club/BJ's/Costco etc.


Spot on. Direct Buy sells big ticket stuff where the ones you mentioned sell food stuff and other typically low cost items, but works on a similar principle.

[Trixie]

You pay money in advance so you will get no interest from it. Keep that in mind.

While I don't disagree with the rest of your post, I have to ask - what interest? :smallconfused:

Sure, bank will add a few $ to your account now and then, {Scrubbed}, any "interest" added was largely illusory and your 1000$ was worth more than 1100$ five years later, relatively speaking. {Scrubbed}

So, getting even on inflation often involves risking your money on some riskier savings plan, and while DirectBuy might not be the best place to do it, sometimes paying up front for some long time plan is the best interest.

[Extra_Crispy]

For what it's worth, a quick search shows the two closest DirectBuy showrooms to me (Northern Virginia/DC area) to be accredited Better Business Bureau organization(s).

I would not take the BBB as a sign the company is ligit. The BBB is payed by the companies to place them on their list, the more you pay the better listing you have with them. Some companies are very very good but small and cant afford the BBB so they are not listed but are still honest good companies. Others know they are shaddy but make lots of money, so can pay lots of money to the BBB to get a high score and look good. Eventhough they are less than legit.

As to direct buy. As has been said before it is legit, you just have to weigh cost for membership against how much you will save and decide if it is worth it.

[Karoht]

I would look at it kind of like this.
Are there better ways to spend $5000?
If I had 5 grand to burn, no matter how cheap the stuff is, I doubt I would really net any significant return on investment. I can do better with the stock market thanks.
But that is just me personally.

If I had a 6 figure income, was about to buy a house and renovate it completely as well as furnish it, and could actually pay cash for all of the above? And would be likely to return to the place to buy more stuff at a later date, or buy things for my friends? Yeah, I might be able to gain a significant advantage then.

As for 'manufacturer direct' pricing, one can easily obtain that kind of pricing on some goods but not all. Go to the company website, or phone them up. Roofing companies work that way. Visit their factory, offer to take their remnants, they'll typically cut you a severe discount.

In fact, when I heard about Directbuy, that was my initial concern. The items would be below standard from the manufacturer or showroom refurbishes. Usually you can get those cheap enough from the store, no 5000 dollar deposit required.

[grimbold]

I would look at it kind of like this.
Are there better ways to spend $5000?
If I had 5 grand to burn, no matter how cheap the stuff is, I doubt I would really net any significant return on investment. I can do better with the stock market thanks.
But that is just me personally.

If I had a 6 figure income, was about to buy a house and renovate it completely as well as furnish it, and could actually pay cash for all of the above? And would be likely to return to the place to buy more stuff at a later date, or buy things for my friends? Yeah, I might be able to gain a significant advantage then.

As for 'manufacturer direct' pricing, one can easily obtain that kind of pricing on some goods but not all. Go to the company website, or phone them up. Roofing companies work that way. Visit their factory, offer to take their remnants, they'll typically cut you a severe discount.

In fact, when I heard about Directbuy, that was my initial concern. The items would be below standard from the manufacturer or showroom refurbishes. Usually you can get those cheap enough from the store, no 5000 dollar deposit required.

oh the magic of the internet!

[Tyndmyr]

I've learned I can get good feedback here, so I wanted to ask about the company DirectBuy. My wife and I recently attended a presentation on it and decided to decline.

For those who don't know, it's basically a 4-6k membership fee to join the club, then you can shop their prices which are (they say) the cost the manufacturers charge, so it's way cheaper than retailers since there's no markup. You go to a presentation and have to decide then to join or not; they said, if you say no, you can't join for 7 years. As expected, there was a bit of fast talk and I'm sure it emphasized the best deals, but it sounded more legit than a condo sale.

This. If this were a legitimate business, there is absolutely no reason for this rule. It's clearly meant to pressure you to make a hasty decision. This is definitely not a rule that's in your interest.

I'm sure you can buy things from them...but now you're basically locked in to buying things from them, you have no way to actually verify the manufacturer's cost thing, and you have to buy a giant pile of stuff to recoup 4-6 grand even if the discounts ARE sizeable.

Costco sounds a helluva lot easier and safer.

[Karoht]

This. If this were a legitimate business, there is absolutely no reason for this rule. It's clearly meant to pressure you to make a hasty decision. This is definitely not a rule that's in your interest.

I'm sure you can buy things from them...but now you're basically locked in to buying things from them, you have no way to actually verify the manufacturer's cost thing, and you have to buy a giant pile of stuff to recoup 4-6 grand even if the discounts ARE sizeable.

Costco sounds a helluva lot easier and safer.Indeed. Even if I had to pay for a membership (I don't, it's a secret, one that doesn't violate the rules I assure you), I'd make that cost back in one, maybe two trips buying common items. Do you have any idea how much money I save on cheese on a given trip?

The Shop-at-Costco-Without-A-Membership trick.
My mom works at Costco. Has for years. This is perfectly legit.
Buy a Costco gift certificate. Any amount, it doesn't much matter.
Walk into Costco, when they ask for your membership card, show them the gift cert.
Buy stuff. Pay for it all, using the gift certificate funds first.
When you are done, have the cashier ring up another transaction, namely to buy another gift certificate. Worst case scenario, they look at you funny, say it's for a family member who is down on their luck, technically they can't stop you from buying another gift certificate. Next trip, repeat. If you want to be really clever, buy a different amount gift certificate each time, helps sell the story a bit.
If anyone gives you crap, inform them that they can not stop you from spending the gift certificate in their store. Tell them it was a gift from a friend, etc.
Costco is fully aware that the membership isn't needed anymore, and will probably do away with it in the next 5 years, after they renew their contract with Amex.

Works in Canada. My mom figures that about 1 in 4 Costco shoppers do not have a Costco card because of this trick.