Choosing and Buying Components - Buying Components
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We’ve bought hundreds of thousands of dollars worth of PC components over the last 20 years, for ourselves and on behalf of employers and clients. In the following sections, we’ll tell you what we learned along the way.
Until the early 1990s, most computer products were bought in computer specialty stores. Retail sales still make up a significant chunk of computer product sales—although the emphasis has shifted from computer specialty stores to local “big box” retailers like Best Buy, CompUSA, Fry’s, Wal-Mart, and Costco—but online resellers now account for a large percentage of PC component sales.
Should you buy from a local brick-and-mortar retailer or an online reseller? We do both, because each has advantages and disadvantages.
Local retailers offer the inestimable advantage of instant gratification. Unless you’re more patient than we are, when you want something, you want it Right Now. Buying from a local retailer puts the product in your hands instantly, instead of making you wait for FedEx to show up. You can also hold the product in your hands, something that’s not possible if you buy from an online reseller. Local retailers also have a big advantage if you need to return or exchange a product. If something doesn’t work right, or if you simply change your mind, you can just drive back to the store rather than dealing with the hassles and costs of returning a product to an online reseller.
Online resellers have the advantage in breadth and depth of product selection. If you want the less expensive OEM version of a product, for example, chances are you won’t find it at local retailers, most of which stock only retail-boxed products. If an online reseller stocks a particular manufac-turer’s products, they tend to stock the entire product line, whereas local retailers often pick and choose only the most popular items in a product line. (Of course, popular products are usually popular for good reasons.) Online resellers are also more likely to stock niche products and products from smaller manufacturers. Sometimes, if you must have a particular product, the only option is to buy it online.
Online resellers usually advertise lower prices than local retailers, but it’s a mistake to compare only nominal prices. When you buy from a local retailer, you pay only the advertised price plus any applicable sales tax. When you buy from an online retailer, you pay the advertised price plus shipping, which may end up costing you more than buying locally.
Ah, but you don’t have to pay sales tax when you buy online, right? Well, sometimes. In most jurisdictions, you’re required by law to pay a use tax in lieu of sales tax on out-of-state purchases. Most people evade use taxes, of course, but that free ride is coming to an end. States faced with increasing budget problems (which is to say all of them) are starting to clamp down on people who buy from online resellers and don’t pay use tax. States are using data-mining techniques to coordinate with each other and with credit card companies and online retailers to uncover unpaid use taxes. If you don’t pay use taxes, one day soon you’re likely to hear from the audit division of your state department of revenue, asking what these credit card charges were for and why you didn’t report the use taxes due on them. Count on it.
Although online resellers may have a lower overall price on a given component, it’s a mistake to assume that is always the case. Local retailers frequently run sales and rebate promotions that cut the price of a component below the lowest online price. For example, we bought a spindle of 100 CDR discs on sale from a local retailer for $19.95 with a $10 instant rebate and a $20 mail-in rebate. After the cost of the stamp to mail in the rebate form, they paid us $9.68 to carry away those 100 discs, which is pretty tough for an online reseller to match. Similarly, we bought an 80 GB hard drive for $79.95, with a $15 instant rebate and a $30 mail-in rebate. Net cost? About $35 for a retail-boxed 80 GB hard drive, which no online vendor could come close to matching.
In particular, local retailers are usually the best place to buy heavy and/or bulky items, such as monitors, cases, UPSs, and so on. Local retailers receive these items in pallet loads, which makes the cost of shipping an individual item almost nothing. Conversely, online resellers have to charge you, directly or indirectly, for the cost of getting that heavy item to your door.
Whether you purchase your PC components from a local brick-and-mortar store or a web-based retailer, here are some guidelines to keep in mind:
Make sure you know exactly what you’re buying. For example, a hard drive may be available in two versions, each with the same or a similar model number but with an added letter or number to designate different amounts of cache. Or a hard drive maker may produce two models of the same size that differ in price and performance. Always compare using the exact manufacturer model number. Before you buy a product, research it on the manufacturer’s web site and on the numerous independent web sites devoted to reviews. We usually search Google with the product name and “review” in the search string.
Vendors vary greatly. Some we trust implicitly, and others we wouldn’t order from on a bet. Some are always reliable, others always unreliable, and still others seem to vary with the phases of the moon. We check http://www.resellerratings.com, which maintains a database of customer-reported experiences with hundreds of vendors.
The list price or Suggested Retail Price (SRP) is meaningless. Most computer products sell for a fraction of SRP, others sell for near SRP, and for still others the manufacturer has no SRP, but instead publishes an Estimated Selling Price (ESP). To do meaningful comparisons, you need to know what different vendors charge for the product, and fortunately there are many services that list these prices. We use http://www.pricescan.com, http://www.pricewatch.com, and http://www.pricegrabber.com. These services may list 20 or more different vendors, and the prices for a particular item may vary dramatically. We discard the top 25% and the bottom 25% and average the middle 50% to decide a reasonable price for the item.
Many components are sold in retail-boxed and OEM forms. The core component is likely to be similar or identical in either case, but important details may vary. For example, Intel CPUs are available in retail-boxed versions that include a CPU cooler and a three-year warranty. They are also available as OEM components (also called tray packaging or white box) that do not include the CPU cooler and have only a 90-day warranty. OEM items are not intended for retail distribution, so some manufacturers provide no warranty to individual purchasers. OEM components are fine as long as you understand the differences and do not attempt to compare prices between retail-boxed and OEM.
The market for PCs and components is incredibly competitive, and margins are razor-thin. If a vendor advertises a component for much less than other vendors, it may be a “loss leader.” More likely, though, and particularly if its prices on other items is similarly low, that vendor cuts corners, whether by using your money to float inventory, by shipping returned product as new, by charging excessive shipping fees, or, in the extreme case, by taking your money and not shipping the product. If you always buy from the vendor with the rock-bottom prices, you’ll waste a lot of time hassling with returns of defective, used, or discontinued items and dealing with your credit card company when the vendor fails to deliver at all. Ultimately, you’re likely to spend more money than you would have by buying from a reputable vendor in the first place.
The actual price you pay may vary significantly from the advertised price. When you compare prices, include all charges, particularly shipping charges. Reputable vendors tell you exactly how much the total charges will be. Less reputable vendors may forget to mention shipping charges, which may be very high. Some vendors break out the full manufacturer pack into individual items. For example, if a retail-boxed hard drive includes mounting hardware, some vendors will quote a price for the bare drive without making it clear that they have removed the mounting hardware and charge separately for it. Also be careful when buying products that include a rebate from the maker. Some vendors quote the net price after rebate without making it clear that they are doing so.
Some vendors charge more for an item ordered via their 800 number than they do for the same item ordered directly from their web site. Some others add a fixed processing fee to phone orders. These charges reflect the fact that taking orders on the Web is much cheaper than doing it by phone, so this practice has become common. In fact, some of our favorite vendors do not provide telephone order lines at all.
It can be very expensive to ship heavy items such as CRTs, UPSs, and printers individually. This is one situation in which local big-box stores like Best Buy have an advantage over online vendors. The online vendor has to charge you for the cost of shipping, either directly or indirectly, and that cost can amount to $50 or more for a heavy item that you need quickly. Conversely, the big-box stores receive inventory items in truckloads or even in railcar shipments, so their delivery cost for any individual item is quite small and they can pass that reduced cost on to buyers. If you’re buying a heavy item, don’t assume that it will be cheaper online. Check your local Best Buy or other big-box store and you may find that it actually costs less there, even after paying sales tax. And you can carry it away with you instead of waiting for FedEx to show up.
Most direct resellers are willing to sell for less than the price they advertise. All you need do is tell your chosen vendor that you’d really rather buy from them, but not at the price they’re quoting. Use lower prices you find with the price comparison services as a wedge to get a better price. But keep in mind that reputable vendors must charge more than fly-by-night operations if they are to make a profit and stay in business. If we’re ordering by phone, we generally try to beat down our chosen vendor a bit on price, but we don’t expect them to match the rock-bottom prices that turn up on web searches. Of course, if you’re ordering from a web-only vendor, dickering is not an option, which is one reason why web-only vendors generally have better prices.
Using a credit card puts the credit card company on your side if there is a problem with your order. If the vendor ships the wrong product, a defective product, or no product at all, you can invoke charge-back procedures to have the credit card company refund your money. Vendors who live and die on credit card orders cannot afford to annoy credit card companies, and so tend to resolve such problems quickly. Even your threat to request a charge-back may cause a recalcitrant vendor to see reason.
Some vendors add a surcharge, typically 3%, to their advertised prices if you pay by credit card. Surcharges violate credit card company contracts, so some vendors instead offer a similar discount for paying cash, which amounts to the same thing. Processing credit card transactions does cost money, and we’re sure that some such vendors are quite reputable, but our own experience with vendors that surcharge has not been good. We always suspect that their business practices result in a high percentage of charge-back requests, and so they discourage using credit cards.
Good vendors allow you to return a defective product for replacement or a full refund (often less shipping charges) within a stated period, typically 30 days. Buy only from such vendors. Nearly all vendors exclude some product categories, such as notebook computers, monitors, printers, and opened software, either because their contracts with the manufacturer require them to do so or because some buyers commonly abuse return periods for these items, treating them as “30-day free rentals.” Beware of the phrase “All sales are final.” That means exactly what it says.
Nearly all retailers refuse to refund your money on opened software, DVDs, etc., but will only exchange the open product for a new, sealed copy of the same title. One of our readers tells us how he gets around that common policy. He returns the open software in exchange for a new, sealed copy of the same product, keeping his original receipt. He then returns the new, sealed copy for a refund. That’s probably unethical and may be illegal for all we know, but it does work.
Check carefully for any mention of restocking fees. Many vendors who trumpet a “no-questions-asked money-back guarantee” mention only in the fine print that they won’t refund all your money. They charge a restocking fee on returns, and we’ve seen fees as high as 30% of the purchase price. These vendors love returns because they make a lot more money if you return the product than if you keep it. Do not buy from a vendor that charges restocking fees on exchanges (as opposed to refunds). For refunds, accept no restocking fee higher than 10% to 15%, depending on the price of the item.
If you order by phone, don’t accept verbal promises. Insist that the reseller confirm your order in writing, including any special terms or conditions, before charging your credit card or shipping the product. If a reseller balks at providing written confirmation of their policies, terms, and conditions, find another vendor. Most are happy to provide written confirmation. If you’re ordering from a vendor that uses web-based ordering exclusively, use a screen capture program or your browser’s save function to grab copies of each screen as you complete the order. Most vendors send a confirming email, which we file in our “Never Delete” folder.
File everything related to an order, including a copy of the original advertisement; email, faxed, or written confirmations provided by the reseller; copies of your credit card receipt; a copy of the packing list and invoice; and so on. We also jot down notes in our PIM regarding telephone conversations, including the date, time, telephone number and extension, person spoken to, purpose of the call, and so on. We print a copy of those to add to the folder for that order.
Make it clear to the reseller that you expect them to ship the exact item you have ordered, not what they consider to be an “equivalent substitute.” Require they confirm the exact items they will ship, including manufacturer part numbers. For example, if you order an ATi RADEON 9800 XT graphics card with 256 MB of RAM, make sure the order confirmation specifies that item by name, full description, and ATi product number. Don’t accept a less detailed description such as “graphics card,” “ATi graphics card,” or even “ATi RADEON graphics card.” Otherwise, you’ll get less than you paid for—a lesser RADEON card, an OEM card with a slower processor or less memory, or even a “Powered by ATI” card (which is to say a card with an ATI processor made by another manufacturer) rather than a “Built by ATI” card. Count on it.
Verify warranty terms. Some manufacturers warrant only items purchased from authorized dealers in full retail packaging. For some items, the warranty begins when the manufacturer ships the product to the distributor, which may be long before you receive it. OEM products typically have much shorter warranties than retail-boxed prod-ucts—sometimes as short as 90 days—and may be warranted only to the original distributor rather than to the final buyer. Better resellers may endorse the manufacturer warranty for some period on some products, often 30 to 90 days. That means that if the product fails, you can return the item to the reseller, who will ship you a replacement and take care of dealing with the manufacturer. Some resellers disclaim the manufacturer warranty, claiming that once they ship the item, dealing with warranty claims is your problem, even if the product arrives DOA. We’ve encountered that problem a couple of times. Usually, dropping phrases like “merchantability and fitness for a particular purpose” and “revocation of acceptance” leads them to see reason quickly. We usually demand that the reseller ship us a new replacement product immediately and include a prepaid return shipping label if they want the dead item back. We don’t accept or pay for dead merchandise under any circumstances, and neither should you.
Direct resellers are required by law to ship products within the time period they promise. But that time period may be precise (e.g., “ships within 24 hours”) or vague (e.g., “ships within three to six weeks”). If the vendor cannot ship by the originally promised date, they must notify you in writing and specify another date by which the item will ship. If that occurs, you have the right to cancel your order without penalty. Be sure to make clear to the reseller that you expect the item to be delivered in a timely manner. Reputable vendors ship what they say they’re going to ship when they say they’re going to ship it. Unfortunately, some vendors have a nasty habit of taking your money and shipping whenever they get around to it. In a practice that borders on fraud, some vendors routinely report items as “in stock” when in fact they are not. Make it clear to the vendor that you do not authorize them to charge your credit card until the item actually ships, and that if you do not receive the item when promised you will cancel the order.
Of course, even if you follow all of these guidelines, you may still run into problems. Even the best resellers sometimes drop the ball. If that happens, don’t expect the problem to go away by itself. If you encounter a problem, remain calm and notify the reseller first. A good reseller will be anxious to resolve it. Find out how the reseller wants to proceed and follow their procedures, particularly for labeling returned merchandise with an RMA number. If things seem not be going as they should, explain to the vendor why you are dissatisfied and tell them that you plan to request a charge-back from your credit card company. Finally, if the reseller is entirely recalcitrant and if any aspect of the transaction (including, for example, a confirmation letter you wrote) took place via the U.S. Postal Service, contact your postmaster about filing charges of mail fraud. That really gets a reseller’s attention, but use it as a last resort.
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