CompUSA Unaware of So-Called ‘Internet’

Rick CC’d us on a letter he wrote CompUSA after trying to get them to price match Linksys NSLU2 network storage drive. He could get the drive at Newegg for $84, versus CompUSA’s $100, but kinda wanted it that day instead of waiting for shipping. The clerk said they only price-match competitors in the area. As in, the geographic space surrounding the physical store.

“I’m confused,” writes Rick. “Did I time warp back to 1998? Does CompUSA not realize that they compete DIRECTLY with on-line retailers?”

Whether you think Rick is right or not, he says, “…I put the product back on the shelf. I did not buy any of the other accessories I was prepared to purchase from you. NewEgg got all of my business.”

Brick and mortar’s will become ash and dust unless they step up and match or beat online undercutters.

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  1. Hawkins says:

    Well… maybe not ash and dust right away. People pay extra for convenience. Also, when some people make a purchase decision, they decide that they need the product RIGHT NOW. The meatspace vendor is there to satisfy that need, irrational though it may be.

  2. ExVee says:

    While I think this is an outdated method of function for price match policies, the truth of the matter is that this is for all practical purposes the retail standard in the United States among those places that do offer price matching. And I think the truth of the matter is that online retailers are still not a credible threat to brick and mortar – yet. Fond as I am of having many of my purchases brought directly to my door (or front gate, anyway), there are simply some things that I want to have a physical presence available for in case of some problem. If I was buying something like a router, or other semi-important computer component, I’d definitely rather be able to go back to the local store and hand it back to somebody if it won’t work for whatever reason and not have to put it in the mail and wait for days to receive acknowledgement it made it where it was going. It’s not just computer stuff, but that’s a relevant example. I don’t think I’m alone in this line of thinking, either, setting aside the mess of people that don’t necessarily want to buy anything online in the first place, or even are incapable of doing so for any number of reasons.

    A time will have to come when the vast, vast majority of people have reasonable access to online alternatives, and actually take advantage of them before physical stores regard them as viable competition. Until then, the boxes still have people going in and out every day making purchases at the shelf price, especially when nearly all retailers require a competitor ad for price matching, and I’ve often found that sale items I want price matched are not referenced in the current flyer, and I’m out of luck. At that point I’d more likely go to the store actually having the sale (which I understand was not possible in this person’s case) than to buy in the other store or online. Hell, I’m probably the only person who’s ever went into Wal-Mart with a sales ad and the cashier tried to argue the price match! THAT was ridiculous. I guess I’m getting off track a bit, but the overall point is that not only will the state of people’s purchases in this country need to change before big box places acknowledge online stores are actual competition, but there will have to be changes to the way stores handle price matching, since the system currently in use would be inadequate to deal with the internet.

  3. homerjay says:

    I have to stick up for CompUSA on this one (a company I HATE, by the way). The costs associated with running a brick & morter retail store is much higher than an online retailer.
    That combined with the ‘convenience factor’ of being able to walk in and get it today instead of waiting, not to mention the ability to touch the product and- depending on the item- actually use the product before you buy it, justify their higher price.

    They offer something that online retailers don’t. Its up to you whether or not you think its worth it.

    On the other hand, CompUSA’s customer service is a total disaster. Its a wonder that they even have stores anymore.

    On another note- I went to but some curatins at JC Penney a couple weeks ago. I found what I wanted online and went into the store to get them. Not only did they not stock this item in the store, if I wanted to order it through the clerk at the store I had to pay the Catalog price, which was much higher than the internet price. On top of that, if I wanted to buy something in the store that was also available online, I had to pay a higher price in the store. So the store charges the highest prices, then the catalog, then the internet. Its all the same friggen company! They won’t even price match themselves!!!

  4. ValkRaider says:

    How nice our communities will be when all of the brick and mortar stores are gone. I hope you all enjoy sitting your house surfing the web…

    Seriously, the CompUSA store employees several local people, they allow you to touch and feel products before you buy, and provide a better mechanism for support and/or return.

    Now I don’t think CompUSA is a great store – I have my beefs with them too – but for the $15 just buy it at the CompUSA and go home and begin using it.

    Rick wasted time and energy going to CompUSA to only have to go home and wait for a product he could have already had…

    It is unfair to expect a store which has much higher expenses to meet the prices of every internet outlet… If price is your ABSOLUTE bottom line, then by all means shop 100% on the web.

  5. Pelagius says:

    It’s a bit unfair to expect a brick and mortar store that has to pay for all that brick and mortar (and employees to man it, and trucks to bring the products to it) to match some guy in a warehouse with a paypal account. There’s a certain premium attached to being able to get your goodies there and then. Does Rick mention whether the shipping cost from NewEgg brought his $84 drive closer to the $100 pricetag at CompUSA?

  6. sean says:

    You have to take into account the immediacy that CompUSA offers as well. CompUSA should match the on-line price including the cost of the fastest shipping available from the on-line retailer. Time is money afterall.

  7. Know what else? I went to a store the other day, and those bastards had the gaul to charge me sales tax. “But I don’t have to pay sales tax when I order online!” I moaned. How dare they? That’s the last time *I* ever get out of my house to go shopping. Pff.

  8. lintman says:

    Let’s compare:
    Compusa vs Newegg
    - Dozens/hundreds(?) of locations around the US to pay rent / electricity / heat / AC / etc on vs a few warehouses
    - thousands of employees vs likely at most a few hundred
    - Fast local returns for broken or unwanted products vs pay for shipping and wait several days for replacement
    - needs store security and has shoplifting/theft losses vs closed warehouses with no public access.

    I’m not a big CompUSA fan and love NewEgg, but has Rick put any thought into this:
    Retailing is not a fat business area with huge profit margins; it’s already very competitive within the brick & mortar (b&m) space, with tight margins. Online-only retailers can sell for less because they have a lot less overhead and provide a lot less service than b&m stores do, which means they can live with even smaller margins.

    If you can solve that problem, open your own chain of local stores that operate as profitably as online stores. Then everyone will shop at your store instead of online, and you’ll become super rich.

  9. Chi says:

    In response to lintman:

    First, I totally agree. Brick & Mortar stores have higher costs than a closed warehouse somewhere.

    However, I disagree with the notion that price matching can’t be done when comparing different sources of ordering. Take the outdoor retailer (of which Seattle knows as THE Outdoor retailer), which offers the same price whether it’s in the catalog, at the store, or even on the internet. Even it there was a great deal, the deal exists on all three formats.

    As for profitability, well that particular company does well enough that they are even ranked as one of the top 100 companies to work for and is expanding more and more here on the east coast (despite being a west coast chain).

    In response to it.goes.there:

    Technically, when you shop online, you (the buyer) is responsible for reporting what amount of sales tax you are liable to pay uncle sam. Yeah imagine my shock after my good friend (a CPA) informs me of the illegality of skipping on the sales tax by buying everything online. Fortunately, the IRS does quite have the manpower to track down every since human who buys things online (without paying sales tax), however on really big purchases you can bet that the IRS does investigate those folks.

    In response to several others:

    In general I completely agree that it’s inconvenient to have different prices depending on whether you shop online or in the store. Barnes & Noble is my particular company I pick on for doing business that way. I conceed that it’s merely a cost-of-business model, but still, there are times when the price difference is more than just the cost of shipping and other retail expenses (e.g. employee’s pay, rent, utilities, etc.).

    But despite all of that, let me just remind everyone what the bottom line is: People vote with their dollars (or money if you perfer). If enough people shop via online versus going to the store, then the big corporations will shift their focus on that. Instead of doing business with a store (which has goods on hand), they may resort to the Dell model (stores that have the public models, but all ordering is done via internet), or some other variant.

  10. rick020200 says:

    OK, I’ll add fire to the flames… I’m the Rick mentioned in the story. I’ll respond to some folks’ counter points…

    First off the point that brick and mortar have higher expenses, therefore shouldn’t be expected to price-match on-line: then they shouldn’t price-match at all. I’m a consumer, not a business consultant, and therefore I don’t care about the cost of doing business. What would you think if CompUSA said “Oh, we don’t price match GameStop because they only have stores in strip-malls and therefore have lower cost-per-square-foot in rent to pay.” Their costs are not my concern. Their prices are.

    Regarding the taxes and shipping costs comments: NewEgg happened to have free shipping on that item, other wise it might have wiped out any potential savings. Taxes: the state I live in “requires” sales tax to be paid even on Internet purchases, and that is beyond the control of CompUSA, therefore is not relevant to the discussion.

    So, I know I said that their costs aren’t my concern, but here is one last point. Everyone is so quick to jump on the “but look at all the other service CompUSA provides” bandwagon. What about user reviews, expert reviews, on-line forums, etc. that on-line retailers provide? No one cries when a device is researched for hours on-line then bought in a store. All businesses have overhead.

    My point to CompUSA was that their price-match policy (which includes matching the price of on-line retailers with a physical store presence in the geographic area) doesn’t make logical sense. They wouldn’t price match Fry’s because Fry’s doesn’t have a store in my city. But I could just as easily order something from Outpost.com as NewEgg.com, then all this debate about cost of doing business goes right out the window.

  11. Ben says:

    I wonder if the outcome would have been different had the CompUSA met him in the middle on price.

    “We can’t do $84, what about $92?”

    (I know this isn’t realistic, but perhaps something Brick/Mortar guys can write into their price matching agreements in the future)

    Would he have still walked? Would the convenience been worth $8?

    I worked in many retail places over the years, and one pervasive rule of thumb is “if you ain’t got it, you can’t sell it.” The big advantage the internet (and before that, catalog shopping) has over a local store is if they are out of stock I can look somewhere else within seconds. If I drive to my local computer store or Best Buy or whatever, I can waste a lot of time just to find out they are sold out or don’t even carry what I want – and trying to call them on the phone is a joke.

    Each serves a different audience. I can buy eggs a lot cheaper at my wholesale club, but when I’m in a hurry I’ll pay the extra sixty cents and go to a grocery store and avoid the lines, or $1.50 more if I’m in an extreme hurry and go to the Stop N Go on the corner, where I can leave the motor running while I get what I need. None of the three will go out of business because of the other two, and I’m not going to ask Stop N Rob to mach Costcos price because I know what I’m getting into.

  12. AcidReign says:

    …..it.goes.there’s comment about sales tax was supposed to be sarcastic. I think. CompUSA can do what they want with the fine print, unfortunately. However, the consumer does have the choice to shop elsewhere. I tend to try to limit my CompUSA purchases to sale items, where I can get a great price.

    …..But I’m not big on their service, and I would never buy a whole PC there! I once had a CompUSA employee tell me that a Pentium II motherboard could employ any sort of RAM. And they did NOT like it when I brought a “bricked” Linky router back under their TAP plan. They tried to assure me that the Linky was still working even though the red “diag” light was always on. And you have to buy a new TAP plan ($17 on that router) for the replacement, if you still want the coverage!

    …..Full disclosure: the Linky’s failure was not Comp’s fault. The power went out while I was flashing new firmware to it. I have a UPS on my router, netdisk, firewall, and DSL modem in my network closet these days!

  13. rick020200 says:

    Here is their response, less than one business day after I sent in my “complaint” (not bad at all). I think their use of the term “Internet offers” reveals their bias toward viewing on-line retailers as less than real competitors. By the way, the misspelling “Dear Custmer” is theirs…

    —– Original Message —-
    From: Customer Service
    Sent: Monday, June 12, 2006 2:54:33 PM
    Subject: Re: In-Store Customer Service: Price Match

    *** Authentication Certificate ***

    Dear Custmer,

    We’ll match any local retail competitor’s advertised price on every technology product we sell, either at the time of purchase or within the following 21 days. Our low price commitment covers all new, factory sealed products of the same brand and model number that are available, and in stock, at any local retail store. Our commitment does not apply to Internet offers or any one-of-a-kind or other limited-quantity offers, discontinued or close out items, refurbished products, trade-in sales, or special financing.

    Customer Service

  14. ExVee says:

    “First off the point that brick and mortar have higher expenses, therefore shouldn’t be expected to price-match on-line: then they shouldn’t price-match at all. I’m a consumer, not a business consultant, and therefore I don’t care about the cost of doing business. What would you think if CompUSA said “Oh, we don’t price match GameStop because they only have stores in strip-malls and therefore have lower cost-per-square-foot in rent to pay.” Their costs are not my concern. Their prices are.”

    Their costs may not be your direct concern, but they affect the factor you do declare as your concern (plus I’ve always been under the impression mall-space rent was kind of expensive for the amount of space which is why those places are practically in walk-in closets as it is. Regardless…). Believe me, you’d care about their cost of doing business if wide-reaching price matching forced a 30-40% hike on their regular prices and at some point you had to buy something not-online. Whether you want to directly concern yourself with it or not, their costs impact you because the stores sure aren’t going to sit back and just have their little profit lines vanish to keep your prices low.

    The stores are not under any obligation to match a competitor’s price in the first place. That they do is first to keep business in the store and secondarily (or further down the line) as a convenience to the customer since it’s easier to take the loss of a few dollars on a percentage of units sold within a certain timeframe than it is to take the loss of all those sales entirely. But it’s not an all or nothing deal, and just because they price match to begin with doesn’t mean they by default have to price match any and every location and kind of retailer. The policy is at their discretion, and so long as it doesn’t discriminate between customers (“We’ll match any competitor’s advertised price. Unless you’re female and have red hair because a girl with red hair dumped me in high school!”), they’re free to manage it how they like. Whether they have to price match any store within a certain area or not legally is a question for those here that are versed in such matters. But no matter what, that does not yet extend to online businesses, and probably doesn’t necessarily have to include the online ends of places with physical locations within the covered area. That CompUSA does so is certainly convenient, but I’ve never found it to be a normal procedure.

    I’ll tell you another thing: When online stores do become a credible threat to physical stores, the first things that’s going to go is price matching. As K-Mart spiraled further and further downward, their price matching disappeared Damn Quick. They couldn’t afford to lose any money on any sale. Of course they don’t sell much since they can’t hardly get new stock since their credit is so bad because they couldn’t sell anything that they weren’t getting undercut on by other brick and mortar places. These practices are only viable when the store is doing fairly good business to start with, and doing that well, they’re not going to see the possible distant threat of online retailers gaining more financial power as anything to be concerned with or to compete against, and they’re right to think that way until there’s a drastic change in the way Americans buy things.

  15. ValkRaider says:

    Another note:

    More of the money you spend at a brick and mortar store will stay in your local community, than money you spend online. (Unless you live in the town that the online retailer is located in).

    For example:

    Brick and Mortar stores pay corporate taxes, collect income taxes, pay property taxes, and usually donate to the community in some way. They employ people who pay income taxes and then also spend their money at businesses in the local economy.

    And local businesses keep even more money in your local economy than do regional or national chains.

    The end result is a better local economy. More money for schools, roads, firemen, police, parks, and other things that we all seem to love. In addition, the more vibrant a local community and it’s shopping is, the more attractive it is to other businesses, which could provide jobs for – say – YOU.

    So in something like this – I would say the $15 was not a big deal and buy it locally. Sure – if I can save hundreds online then it only makes sense. I am generous – not stupid…

    But remember that when shopping. How much of your dollar will stay in your community? When local governments raise taxes think of the dollars you send out of town and how maybe keeping it in town might have helped keep tax burndens lower or services well funded.

    :)

  16. gvonk says:

    It’s interesting to note the relative size of these companies. Newegg will bring in $1.7 billion in sales this year. I know, I was amazed too.

    By comparison, CompUSA had sales less than that as recently as 2000. Newegg is definitely on its way up.

    Now, a little more of an on-topic response. Price-matching is a necessity of an economy rich with information. Consumers are many orders of magnitude more informed than they were just decades ago. (Thanks in no small part to sites like this one.)

    But the Internets are home not just to big, trusty sites like Newegg. There are umpteen painful examples of sites whose prices are just a mirage. Well, maybe not umpteen, but enough that categorically excluding these retailers is probably a safe bet for brick and morter types.

  17. LintMan says:

    >First off the point that brick and mortar
    >have higher expenses, therefore shouldn’t be
    >expected to price-match on-line: then they
    >shouldn’t price-match at all.

    I walk into an Acura dealer and ask the price of a new Acura RL. Then I tell them that they should sell it to me for invoice price, because the Chevy dealer down the street is selling his cars at invoice price, and I just want the best overall deal. They’d laugh me out of the dealership. But say it’s the Lexus dealership down the road selling at invoice price – they’d likely take that pretty seriously.

    My point? In *your* eyes, Newegg and Compusa are direct competitors, but it *compusa’s* eyes, they are (at least partially) in different market segments. Compusa’s retail stores see themselves as competing against other local retail stores, so they price match against their direct competitors. Apples to apples, as they say.

    >I’m a consumer, not a business consultant, and
    >therefore I don’t care about the cost of doing
    >business.

    Fair enough, but that doesn’t help you understand the situation or have useful insights. But let me try it:

    I don’t care how gas engines work but car makers are stupid for not making a 200mpg car! Don’t they realize how much money they could make with one of those?

    Or how about:
    This stupid stone! No matter how much I squeeze it, no blood will come out! What’s wrong with this darn thing? It must be broken or something.

    :-)

    >What would you think if CompUSA said “Oh, we
    >don’t price match GameStop because they only
    >have stores in strip-malls and therefore have
    >lower cost-per-square-foot in rent to pay.”

    Well, I would think it was pretty lame, and too much of that would kill the price matching as a selling point to shop there, but that’s their prerogative.

    >What about user reviews, expert reviews, on-
    >line forums, etc. that on-line retailers
    >provide? No one cries when a device is
    >researched for hours on-line then bought in a
    >store. All businesses have overhead.

    1) Retail store like compusa also sell online, so for them, those costs you mention are *in addition* to their b&m store overhead.

    2) Those costs you list are trivial compared to the costs of operating hundreds of retail stores. Enthusiast web sites of any and all kinds provide that same stuff (forums, reviews, links) for free for their interest area; it’s not hard or expensive to provide.

  18. Ben Popken says:

    Carbunkle writes:

    “The largest barriers to online shopping overtaking brick and mortar are still Fedex and UPS. If you knew your stuff would definitely arrive in one piece at the correct address, would you even bother to drive to the store to begin with? That aside, quite a few brick and mortar stores with online ordering seem to have caught on to the idea that they can boost their profits by sending out catalogs full of items that aren’t ever stocked in the stores and then price gouge on shipping. Maybe if the delivery guys were getting anywhere near the amount I am spending on shipping my packages would arrive in better condition… “

  19. bullfrog says:

    It’s a lot more simple than previous posts state, it has nothing to do with “brick and mortar” vs. “online shopping”

    it has to do with “printers” and “faking up your own coupons”