Thursday, April 28, 2011

Private Party Sale

When you buy things from an individual, the transaction is usually very simple - and cheaper as a result!

Suppose you went to a garage sale and were looking at buying a used armchair.  The owner comes up and says "buy this chair, and I'll throw in this toaster FREE!  But this offer is only good for a limited time!"

You demur, so he counters, "Sign up for my Frequent Garage Saler card and get a 10% coupon good for any purchase of used baby clothes!"

You give him an odd look, but he doesn't give up.  "You know, if you really like that chair, we can finance it, 90 Days Same As Cash! - and you can take it home today!"

But still you don't budge.

"But wait!" he says, "We're offering a mail-in rebate on this used chair!  Buy it today and get a $10 rebate by mail in 60-90 days!"

At this point, you are slowly edging away.  This is one freaking weird garage sale!  And you start running toward your car, as he shouts after you, "Hey!  This is marked down below invoice!  70% off! Buy One, Get One Free!"

And you drive off in a cloud of dust.... you can still hear him shouting, "5 cents off a gallon of gas!  S&H Greenstamps!  Frequent Flyer miles!  We take plastic!  Financing available!  Everyone is Approved!  Bad Credit Specialists!  Buy Here Pay Here!  Rent to Own!"

* * *

While that would be the oddest garage sale ever, as I noted in my hypothetical Cash Store posting, the retailing business is so complex today that the idea of offering products for a basic price - without any ancillary gimmicks - is nearly impossible.  And all of the gimmicks listed above - plus more - are used every day in nearly every retail transaction you attempt to make.

The closest the average consumer can get to a "pure" transaction - exchanging cash for goods, with no kick-backs, airline miles, cash-back, coupons, rebates, discounts, interest paid, shopper loyalty clubs, credit card surcharges, or whatever - is to buy from an individual.

You buy something on Craigslist, for example.  You go to someone's house, they have a used microwave.  You dicker on the price, you reach a bargain with the individual, you pull our you wad of money, pay him, and load it in your car.

And if you think about it, this sort of transaction, in addition to being very simple, is usually very cheap as well.  Granted, used appliances may have some of their life used up, and may have nick or scratch in them.  They are no longer under warranty - but then again, they are past that infant mortality stage.  But oftentimes their price is a mere fraction of the price new 1/2 to 1/4 - even though the amount of remaining service life is huge.

As I noted in an earlier posting, a friend just bought a used Mercedes with 58,000 miles on it - possibly 1/5 to 1/3 of the service life, for about 1/3 of the cost when new.  And as a straight cash-deal, there were no gimmicks, rebates, discounts, lease agreements, loan interest, or other nonsense to distract from the basic transaction.  Buying a car from an individual is even simpler.  You-give-cash-they-give-goods.

For this reason, it pays to at least look online for products when you need something - as opposed to wanting it.  For example, I was looking for some circuit breakers the other day.  The local store has them - for about $50.  But online, they are $20 new and $10 used, including shipping, and I don't have to dick around with a 10% off coupon.  I was also looking for a discontinued breaker ($250 online, if you can get it) and found a used one also for $20 - a considerable savings.

Some people, of course, use emotional reasons not to buy used equipment or to buy online.  They are too good for that, or they deserve better, or some such.  But if you can get a GPS unit for half price online, why not?

But of course, like anything else, you have to be astute.   There are some things for sale used that are not worth anything - and are horribly overpriced.  Used tires, for example, are often a bad bargain simply because the cost of mounting and balancing two sets of used tires makes the cost higher than simply buying one new set (which provides the equivalent mileage).  Or people have unrealistic ideas on prices - thinking that offering 10% or 25% off the price "as-new" is a real bargain, when in fact, 50% to 75% is more often the case.

But there are some things that wear like rocks - they never wear out - and can be bought cheaply used.  For example, as I noted in my Patio Furniture posting, the "wrought iron" (steel) patio furniture that has no cushions will last forever, provided you don't immerse it in salt water.  Just hose it off and occasionally spray paint it.  And yet, a used set goes for less than half the price of new.  Why screw around with those flimsy yet attractive-looking sets at the home improvement stores that cost hundreds of dollars?

And increasingly, of course, even online sales are getting complicated.  Amazon, eBay and PayPal pummel you with offers for kickbacks, flyer miles, rebates, frequent shopper rewards, or whatever.  And increasingly, of course, these mainstream online retailers don't offer the best prices anymore.  Often you can find the best price from some wholesaler's website, directly.

Of course, even in private party sales, there can be hoopla and distraction.  My partner works in retail and understands human psychology all-too-well.  At our numerous garage sales, he can often move merchandise by knocking money off a price, or combining two things into one.  "Buy this broken CD player, and I'll not only cut the price in half, but throw in these five cracked CDs for FREE!"

And people buy, too.  It is interesting to watch.