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DirectBuy / The whole enchilada

United States Review updated:

I worked for DirectBuy for over 10 years, in the Midwest, Northeast, Southeast and California. First it was called United Consumer's Club then, UCC Total Home and finally, it's DirectBuy. When I began working for the "club" the 10 year membership was $1500 and today it's over $5000. Their business model, while flawed, is simple, sell memberships to generate revenue.

You (the consumer, invited to take a tour based on being selected as a finalist in some "sweepstakes") will be shown incredibly low "cost" pricing on all kinds of consumer goods. You'll be told that you have to make a decision today as to whether or not you want to become members, due to the confidential pricing you've just been shown and the fact that the manufacturers will only allow you to see them once (as non-members). This is not true. There is no such agreement between DirectBuy and any manufacturer. It is DirectBuy's own internal policy, aimed at closing the deal while you are still high on the ether of "confidential" cost pricing. The $5000+ contract (which does not include annual renewal fees, shipping fees and handling fees on all members' purchases) is worded to protect DirectBuy from disappointing you (with your expectations of realized savings) and, most importantly, from refunding any and all membership dues. Once you're in, you can't get out. I can tell you with absolute certainty that unless you're planning on furnishing a home (with high-end, high-dollar improvements) in the near future, you will be disappointed in DirectBuy's performance. The promises made in the pitch are absent from the contract. Read it carefully before signing. Once your state's rescission period passes, you own it. And if you stop paying for it (whether you've used it or not) DirectBuy will send the account to collections, negatively affecting your FICO. Just look around the web, there are 10 negative posts for every 1 positive.

In fairness, if you're a well-heeled consumer who doesn't mind shopping from catalogs, waiting 90-180 days for your purchases to arrive and saving a net average of 23% on those big-ticket items, then DirectBuy might be worth a look. However, if you're like me and the instant gratification of free next-day delivery is worth a few extra dollars, then save the $5000 and have fun shopping the retailers' sales!

You should know that I'm not a disgruntled employee, quite the contrary; I made a great living working for DirectBuy. I simply grew tired of coaxing people into joining that truly had no business doing so. That's why I say the business model is flawed. DirectBuy's clubs are 100% franchised and, as a result, each individual franchisee is responsible for the health and success of their respective club. Well, by the time they cover the rent, utilities, marketing, insurance, salaries, commissions, payroll taxes and benefits, they have to try and make a little profit of their own. After all, it's why they bought the franchise. So, the only revenue stream they have (since they don't profit from merchandise sales) is by selling more and more memberships. Do you think there's a stronger focus on sales or servicing members after the sale? I'll give you a clue: there are an average of 15 full and part time employees working at any given DirectBuy franchise. Out of those 15 people, 2 are dedicated service staff. The rest are in sales, telemarketing, accounting, reception and, of course, the owner. If you attend a pitch, ask 'em some real questions... "How many stores have failed in the US and Canada since United Consumer's Club was founded back in 1973?" or, "How many members decide to re-join the club after the 10-year membership expires?" or, "Has DirectBuy ever polled the members to gauge their satisfaction with the club's services?" "No? Why not?" and maybe even take a list of items you're interested in buying soon along to the pitch with you and have them show you the net savings (be sure to write down model #'s so you're comparing apples to apples). If that savings adds up to more than the net cost of the 10 year membership and you've factored in DirectBuy's shipping, handling, sales tax (many online purchases remain exempt, it varies by state) then go for it.

Otherwise, buyer beware!

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Comments

  • Je
      Nov 24, 2012

    I agree with some of the things you brought up, though as a current employee (four years and counting) I question whether you worked there, and if you did (for as long as you say) then why it is that you clearly just do not know several policies that have been implemented that fly in the face of what you have written. For starters if you were successful at DirectBuy then why is it that at least two different DirectBuy clubs granted you a release to work at a different center? You're telling me that a club that you have "clearly" shown only cares about memberships allowed a separate franchise to take away one of their producers willingly? Hmm, that seems odd. Also where were you when two years ago they rolled out different membership options such as the online only (1000$), or the silver lifetime plan (opposed to the gold lifetime that you referenced), or how about the term memberships down to 3 months for people who are only doing one big project and then do not need our services? Also you say that EVERY purchase has shipping and handling fees? That's odd because that's simply not true; while some products do include this cost, any good club clearly explains that on the very front page in the manufacturers book there is a line that states whether or not there is a shipping and handling fee and, if so, what that rate is (varies among manufacturers). Additionally while the claims you make about the manufacturers not actually having made DirectBuy sign a contract of any sort requiring that our clubs limit the guests choice of whether or not to join to that day, it is common knowledge among employees that this is an understood agreement with our manufacturers that helps us keep them. A great example is Viking Appliances. After years of working with them to carry their line (very high end) we finally came to an agreement with them to be able to offer it to our members. At the 11th hour Viking backed out because of the backlash from their retailers because they feared consumers being able to see the prices at cost, and thought that they would not be able to compete with that, so Viking pulled out and we do not have them as a manufacturer. Why you ask? For the reason the decision policy is in place, because in the past people have in fact used the pricing in here as leverage against retailers. So while you may have worked for DB in the past, I question just how much you truly understood what you were doing and the length of time you state that you were an employee.

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  • Fe
      Nov 25, 2012

    It's curious that you spent quite a bit more time questioning my tenure and knowledge of the business rather than addressing even one of the "things" I brought up, with which you say agree. I'm curious about what those are, exactly, and how it is you continue to stand behind them.

    I heard that Viking bit 15 years ago so, save it for the next "up", my friend. If there were agreements (and there aren't) with manufacturers, why wouldn't DirectBuy simply paste them to the inside jacket of every single one of those "confidential" manufacturer's catalogs? It would make your job (sales, right?) a lot easier, wouldn't it?. It would certainly lend some much-needed credibility to the whole "one day decision" wouldn't it? You say it's "common knowledge among employees that this is an understood agreement with our manufacturers that helps us keep them." and I won't argue that. It is common knowledge amongst DirectBuy's employees. Trouble is, it's just not common TRUTH. Ask your club owner to produce an agreement, any agreement, for you to use in your next "Open House" and see how that goes...

    You see, I spent a long time in your shoes and it's easy to justify and rationalize internally (and to prospective members) that what you do for a living is legitimate. However, deep down inside, you have to admit to yourself that while sound in philosophy, DirectBuy is flawed in execution. It's why I had to walk away, I finally found my conscience and I couldn't continue to lie to myself and to all of those prospective members.

    By the way, I never said that I worked for a franchisee. I know they don't like their assets going to work for other clubs elsewhere. Good help, after all... And no, I'm not aware of the trial plan or the online only plan, the silver, gold and other plans named after precious metals. When I was there, one plan existed. Apparently, the times they are a changin' and as fewer and fewer prospects are saying "Yes!" to a $5000+ membership, DirectBuy is forced to adapt and find newer, less expensive ways to separate consumers from their money... I am aware however, that while you use "some" in your definition of the number of products available to members which carry a handling and shipping fee, I will argue that "most" would be a more accurate vernacular.

    Ever heard of a guy by the name of Rod Troutman? If not, ask around. He worked for UCC for 24 years until he was fired in 1997. During his long career, he helped Jim Gagan get the franchise model started and developed the "baseball diamond" that all clubs adhered to when trying to find the one hire-able employee out of 25 applicants. He wrote the scripts which all the clubs were contractually bound to use. From telemarketing, greeting, the entire (verbatim) presentation, all the way through the close and finally, the oft dreaded "buyers remorse" statement. ALL of them. Rod was also charged with traveling to failing franchises and corporate clubs where he worked his magic by either turning these clubs' numbers upward, facilitating the sale to another potential franchisee, repossessing the failure and absorbing it back into the corporate club inventory or simply closing it forever, leaving all of those local members swinging in the breeze. I worked in Rod's circle. At the risk of damaging 25 year-old relationships, that's all I'm willing to divulge about my time with DirectBuy other than to note your suggestion that I didn't have an intimate understanding of the public image vs. internal policies is quite bewildering.

    You've been there over 4 years now, you know the truth, the WHOLE truth and nothing but... Are there success stories of members that get a full ROI? Hell yes! However, and most importantly, what percentage of DirectBuy members feel that they themselves fall into that "success" demographic? Oh, that's right... DirectBuy doesn't care to ask it's members whether or not they're satisfied. C'mon, every other day my inbox has a survey from one vendor or another... Whether it's eBay asking me to rate my experience on that new plasma screen or Jiffy Lube wanting to gauge it's performance on my last oil-change... Your company possesses zero data on customer satisfaction because if it asked them, compiled the numbers and published the data in say, The New York Times, it would be out of business by Christmas.

    If I'm wrong (I have been... twice) and you are able to look every single new member in the eye and unequivocally believe that you just helped them, well you, my friend, have a bright future in membership sales! Otherwise, don't waste your talent on something you're constantly forced to defend.

    You're better than that, kid!

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