Buying from an online store as opposed to the traditional method of shopping in a mall has rapidly gained in popularity over the last couple of years. Marketing Daily reports that U.S. consumers will purchase more than $204 billion dollars worth of goods and services online in 2008. This is up from $174 billion in 2007 and $95 billion in 2006. It is clear that consumers now trust their hard earned dollars to online merchants in ever greater numbers due to a number of factors including price, convenience, choice, and delivery.
Online shopping is generally where consumers will find the product that they are looking for at the best price. Online stores do not carry the cost overhead of traditional stores, because they are able to operate with less staff and warehouse costs. As a result, they do not have to make as much margin as a traditional store.
Assuming that you are somewhat computer savvy, it is far more convenient to be able to shop online. You can sit in your housecoat, sip your tea, and nowadays find pretty much anything on the Internet at a price that is very competitive. Many e-commerce sites are also able to deliver within a couple of days, so you do not have to wait for your goods.
Of course, there are also a couple of disadvantages to buying online. When purchasing from a traditional store, you get to take your product home immediately. The other difficulty with respect to purchasing online is controlling the temptation to overspend. I can speak from experience on the latter point especially!
Despite the ever increasing amount of sales, many people still wonder if buying online is safe. Will you get what you paid for? Will your personal information be sold or otherwise compromised? With this in mind, I have created Sam’s Commandments (in no particular order, because they are all equally important) for buying online to ensure that you have a safe and enjoyable shopping experience.
Mailing Address
Any company that you are considering purchasing from should have their contact information and mailing address clearly published on their website. In the event of a dispute, you will be able to send them mail via courier if need be. If the company does not list this information, should you consider doing business with them?
As an aside, in researching this article I came across an interesting website, in which the owner has taken pictures of the storefronts of many of the online resellers based out of Brooklyn, New York. E-commerce sites based out of Brooklyn are notorious for their various bait-and-switch tactics, selling products without accessories, or the grey-marketing of consumer electronics.
Privacy Policy
A company’s privacy policy is important due to the fact that you do not want your confidential customer information sold to third parties who will use that information to send you all sorts of advertisements (or worse yet, unsolicited phone calls). Your privacy should at all times be respected and the company that you are considering doing business with should have a clear published privacy policy on how your information will be used on their website.
Online Ordering
When ordering online, it is imperative to ensure that you are doing so via a secure server. A secure server will be denoted by an https:// in the URL, and or a key or lock in the bottom of the browser window.
If the site offers a secure server, they should accept credit cards. When performing an online transaction, credit cards are the preferred method of payment due to the fact that they limit your liability in the event of fraud. If a site only accepts wire transfer or Western Union, you have no recourse if you pay by either method and do not receive the product that you paid for.
Federal law states that all retailers (including e-tailers) must ship an order within the time frame stated on their website. If the company does not provide a time, it must ship the order within thirty days after receiving it. If the company is unable to ship within the promised time, it must advise the customer and allow them to either agree to the delay or to cancel the order and receive a refund.
Hidden Charges
Also known as "additional costs" or "surcharges," hidden charges can quickly change a bargain into a rip-off. Shady e-commerce sites (such as those based out of Brooklyn, outlined above) often find many different ways to add costs to your bill.
Freight charges are the most common method. Depending on what you are ordering, the shipping cost can either be reasonable or ridiculous. Surveying a number of different websites, and using a 50" flat screen television as a reference, we encountered shipping rates that varied from $85.00 to $680.00. The terms of the delivery were five business days.
One way to avoid these random freight charges is to purchase from an e-tailer who offers no additional charges (for example, the price you see on the website is the price you pay to your door). While the initial price will in all cases be higher than other sites, you know exactly what you are going to pay prior to purchasing. In the end, after the "hidden costs" have been added, those websites that have included shipping as part of the purchase price will often be cheaper.
Bait and switch is something you see from time to time. Essentially, this tactic first works by the online company enticing you to purchase a product from them at a spectacular price. This is the bait. The switch occurs when they call you up a few days later to advise you that they cannot ship the product unless you purchase additional extras (such as an extended warranty), or they will give you the option to purchase another, more expensive, item. Given the fact that you have already trusted this company with your both your personal and credit card information, psychologically many people do not realize that they have been subjected to this tactic.
Occasionally, you may be charged sales tax upon purchasing your product. Depending on where you live and where the e-commerce site is based, this may be unavoidable due to state or provincial law. However, this should be summarized in your shopping cart prior to you having to enter any of your personal data.
Another hidden charge that will commonly rear its ugly head is duty. Duty is generally charged on any purchases made across the border (such as purchasing goods from the United States and shipping them to Canada). While some savvy shoppers know how to avoid duty, in many cases it is a nasty surprise that you get when you are receiving delivery of the goods. Now you are faced with paying the duty (and negating any savings that you thought you may have had) or refusing the product, which the reseller will generally return less the shipping and the restocking fee.
Product Warranty
Prior to making your purchase, you should verify that the merchandise has a valid warranty in the country that you reside in. There are many bargains to be had online, but if a price seems too good to be true, it probably is.
Grey marketing is a common occurrence in the consumer electronics industry. Grey marketing is defined as the legal reselling of products through unauthorized, unofficial, or unintended distribution channels. Grey marketing occurs when products are sold in one country in which they are normally unavailable or more expensive than in another country.
If you choose to purchase a grey-market product (and any legitimate reseller will clearly label a product as grey market), caveat emptor applies. You will likely not receive any manufacturers warranty beyond the warranty that the reseller offers unless you choose to ship the product back to the country of origin at your own personal expense.
To receive full warranty with your merchandise, a company must be authorized by the manufacturer to sell the goods. Sometimes the company will be listed on the manufacturers’ website, or they will be able to provide you with a contact number to verify their legitimacy. Most (if not all) consumer electronics products are serialized, and if you are in doubt you can call the manufacturer directly to verify that the serial number is valid in the country that it was purchased.
Return Policy
Prior to making a purchase, it is recommended that you obtain the e-commerce sites’ return policy. As with their address, it should be published clearly on the website. Most reputable online companies will offer a thirty day exchange policy for defective merchandise.
A return policy in most cases does not include a provision for buyer’s remorse. Buyers remorse occurs when someone feels regret due to purchasing a product and wishes to return it. Most companies will generally allow you to return the product; however expect to pay the return shipping and a restocking fee of up to 25% of the purchase price. The restocking fee is charged due to the fact that the merchandise is opened and cannot be resold as new.
Product Knowledge
An excellent intangible indication that an online retailer is legitimate is the amount of product knowledge that they offer before and after the sale. Online scam sites will not spend the time to learn the items that they are fraudulently peddling.
With respect to the consumer electronics industry, knowledge about the products that the company offers is critical. The technology is changing at a geometric rate, and having someone that can point you in the right direction and get you the product that will work best for you (rather than trying to sell you anything that they may have in stock) is a valuable asset indeed.
Customer Feedback
Many websites offer links to “pricing portals” which feature dealer reviews. Dealers pay these websites via pay-per-click to be listed, and the sites do not check if the reviews are legitimate or not. The more reviews an e-commerce site has, the more click-throughs they will get, which in turn makes the pricing portal more money. Because of this catch-22, dealer ratings can be a false positive and should not be used in of themselves to judge an e-commerce website’s trustworthiness.
Alternatively, some e-commerce sites will constantly e-mail their customers to post reviews for them, bumping up their ratings. This occurs after the sale has taken place, and while it is by no means an indication of the e-tailers illegitimacy, it can be irritating and preclude you from wanting to purchase from that company again.
Images courtesy of the Office of the Attorney General, State of New York.
