Web buyer beware: Our undercover shopping expedition revealed doubtful deals, padded prices, and pushy salespeople. Here's how to avoid getting burned.
Daniel Tynan and Tom Spring
From the February 2003 issue of PC World magazine
We're outside a shabby storefront in the Flatbush section of Brooklyn, New York. There's no name on the weather-beaten awning. The glass door is covered on the inside with cardboard and bears only a number: 2922. A guy in a leather jacket stands on the sidewalk talking into a cell phone. We tell him we want to buy a camera. He leaves and goes in the store. Then a stocky fellow wearing a Yankees cap and a blue parka comes out and introduces himself as Jason. "Whatever you need, we got," he says. "Any digital camera you like. What are you looking for?"
We say we want something good but inexpensive. He rings the buzzer. A pair of eyes peers through a peephole cut into the cardboard; the door opens. Jason leads us to a dingy room where another young man sits in front of a computer, eating Reddi Wip straight from the can. "Trying to quit smoking," he explains.
Phones ring constantly. People in the room smoke and talk on their cells. Jason disappears behind a heavy wooden door in the back of the room and returns with two cameras, a Nikon Coolpix 5000 and a Canon PowerShot S45. He says he'll sell us the Canon for $525 and the Nikon for $690 ($300 below list price).
"This PowerShot is so new it's not even available in the U.S. yet," he says. (As we went to press, the Canon S45 just became available in the United States.) The writing on the box is in Japanese, and the camera manual is a photocopy and stapled together. We tell Jason we're interested, but first we need to get some cash. "Cash is always best," he says.
This is the headquarters of Broadway Photo, which sells millions of dollars' worth of electronics each year. It's one of dozens of online shops--many of which are within a few miles of Broadway's warehouse--that advertise great deals on digital cameras.
Are these deals for real? To find out, we went undercover, shopping online and by phone at Broadway and at six other dealers in the New York area that sell over the Web. Our findings: While prices are tempting, the hassles can be incredible. Most stores gave us an aggressive sales pitch for pricey accessories, charged excessive shipping-and-handling fees, and in some cases took weeks to issue refunds for stuff we returned.
Visit any shopping search engine (such as DealTime, MySimon, PriceGrabber, or PCWorld.com's Product Finder, which is powered by PriceGrabber), type in the name of a camera, and sort the results by price. You'll find dealers offering cameras at hundreds of dollars below retail prices. But when you buy one from the heaviest discounters, you may encounter tactics designed to get you to spend more than you intended--or to walk away with less than you had in mind.
In our investigation, we bought from seven dealers that advertise cameras, printers, and other devices at extremely low prices: 1 Stop Camera & Electronics, Bilibi, Broadway Photo, Cambridge Camera, CCI Camera City, IbuyDigital.com, and RegencyCamera.com.
We had two shoppers attempt to purchase a camera at each dealer--one through the dealer's Web site, the other over the phone. One shopper played the part of a naive consumer who would be easily swayed by a sales pitch; the other was a hard-nosed buyer who insisted on getting a camera and nothing else, at the advertised price. We also visited the physical locations of three stores and talked to the salespeople. At every store, the naive shopper was persuaded to buy expensive accessories (such as lens filters and memory cards), while in several cases the hard-nosed buyer walked away with nothing but grief.
Cheap--But at a Cost
The news was not all bad. IbuyDigital gave us a deal on a Fujifilm camera without a heavy sales push, and Bilibi took our returns without a fight. But our experience at the other stores was far from positive. At 1 Stop Camera, Broadway Photo, and CCI Camera City, we encountered aggressive sales pitches, steep shipping charges, and difficult returns. CCI made us wait six weeks before refunding $1075 for one of our purchases, and RegencyCamera abruptly disappeared without issuing a $900 refund. (At press time, RegencyCamera's phones and Web site were out of service.) At Cambridge Camera, we found an Olympus Camedia C-4040 priced at $430 (nearly $300 less than street price) that was out of stock when we tried to order it and was still unavailable more than eight weeks later as we went to press.
Here are the more egregious sales practices that we ran into, although not at every merchant:
Bait and stuff: Sure, a dealer will sell you that Nikon Coolpix for hundreds of dollars under list price, provided you let the salesperson stuff your basket with overpriced accessories. (See "Real Deals or Raw Deals?") And even if you place an order on the Web, the sales reps still get you on the phone, ostensibly either to confirm your purchase or to check your shipping address. If you refuse the extras, the camera you wanted may suddenly be out of stock.
"They suck you in with a really low price, then pile on the accessories," says a New York camera retailer (not involved in our investigation) who prefers to remain anonymous. "The sales guys work on commission and have a minimum price they have to meet. Half of what they make above that minimum is theirs to keep. So if they don't screw you, they don't get paid."
John Silver, manager of 1 Stop Camera & Electronics, defends his company's aggressive sales practices as a normal part of doing business. "What's wrong with making money?" Silver asks. "Everybody's in this business to make money. You have to do your best to sell stuff."
Broadway's site advertised a Minolta Dimage 7i for just $599--$400 below list. When our naive buyer called, he was also sold a steeply priced "starter kit" with a wide-angle lens, filters, an extended warranty, a battery charger case, and an extra memory card. The camera (a U.S. model) and the accessories arrived in three days. Total price: $1550, including shipping and handling.
When our hard-nosed buyer attempted to buy the same camera at Broadway Photo for $599 without any accessories, he was told that that price was for an "international" (code word for gray-market) version that was out of stock, and that he'd have to wait from 5 to 14 weeks for it. (See "Anatomy of a Hard Sell.") As we went to press, 10 weeks later, we still had not received the camera or been charged for it.
Broadway's explanation: Our naive buyer probably was "upgraded to the domestic version" after getting the accessory kit, says company spokesperson Albert Cohen. He says many cameras on Broadway's site are imports (though we could find no indications of this on the site), and that the company may wait for enough orders for an imported camera before ordering it.
On average, our naive buyer was sold $463 of mostly overpriced accessories per transaction. On top of that, some of the vendors we shopped at charged steep shipping-and-handling fees. For example, next-day shipping for a 4-pound camera package costs $75 at CCI Camera City, $70 at Bilibi, and $60 at IbuyDigital, versus $12 at CDW, another online shop.
Gray-market goods: One reason these cameras are so cheap is that some are so-called gray-market goods, products that manufacturers intend to be sold cheaply in countries other than the United States where prices are lower (due to differences in exchange rates and in what the market will bear). But instead of heading to the destination country, the gray-market goods are rerouted to the United States. Selling gray-market cameras is legal, provided they're identified as such, but buying one is generally not a good idea. You may end up with manuals and on-screen menus in another language, incompatible video ports, or AC adapters set to the incorrect voltage. Worse, most camera manufacturers (including Canon, Nikon, Olympus, and Sony) won't honor a gray-market warranty in the United States. If the product breaks, you're stuck.
We encountered gray-market cameras at a few of the dealers we investigated. Some, like CCI Camera City, marked them on their site as "international" models. Others, like Broadway Photo, apparently did not. However, none of the cameras we purchased and ultimately received were gray-market models.
Follow-up calls: Think you can avoid this ugly process by ordering on the Web? Think again. When we attempted to buy cameras online from the seven stores, we usually received e-mail messages or phone calls asking us to "confirm" our order. When we got on the phone with a salesperson, nearly every one gave us a heavy sales pitch to buy accessories. The exceptions were IbuyDigital (which didn't pressure us into buying extras) and Cambridge Camera (where the cameras we shopped for were consistently out of stock). Steven Rablaux, manager of Cambridge Camera, says "products go in stock, they go out of stock. It doesn't mean we don't have it."
Even if you refuse the upsell, you may not be in the clear. Kevin Sowers, an operating engineer for Equity Office (a real estate investment trust) in California, thought he'd snagged a great deal for his company when he purchased a $300 Sony Mavica MVC-FD75 from CCI Camera City's Web site. CCI Camera City called back to confirm the order when Sowers was away from his office, and persuaded a coworker to buy an additional battery pack and carrying case--even though those items came standard with the camera--adding a quick $75 to the bill.
"I called Camera City and said, 'What's the deal here?'" recalls Sowers. "They played stupid and ignored me. Since then I discovered I could buy the same camera at Wal-Mart for $300 plus tax. Boy, do I feel stupid."
CCI Camera City's spokesperson Ronnie Shy says a salesperson called Sowers because his billing and shipping addresses were different. Shy also admits that reps often use the follow-up call as an opportunity to sell more accessories. "It's just salesmanship," he says. "I don't see any problem with it."
If you have problems with your purchase, you may find returning it can be even harder. Our camera-return experiences were a mixed bag. At 1 Stop Camera and Bilibi, we were bounced from one person to another, stranded on hold, or never connected to anyone who could authorize our returns. Broadway Photo and CCI Camera City tried very hard to keep us from returning the products. Even after we repeatedly said we wanted to return the stuff, CCI bargained with us for 20 minutes, offering to toss in free accessories, to swap the camera for a better one at the same price, and to slash the $1353 total price by as much as $365.
Many shoppers find camera dealers through online pricing engines. In our tests, the Brooklyn-based dealers almost always had the lowest prices on the cameras we wanted. But how can you be certain that vendors are reputable? Search services investigate consumers' complaints, and in some cases evict sellers.
"We've removed merchants we felt were not suitable," says Kamran Pourzanjani, PriceGrabber's president. Some were removed for poor service and late shipments, but "we really focus on cases where the stores have been less than scrupulous, such as those that use bait-and-switch tactics."
PriceGrabber's site indicates that the company has removed 18 of the 615 merchants it has ever listed. All but one of those eliminated were New York-based electronics dealers, including 1 Stop Camera, Cameratopia, PriceIt4less (which operates from the same address as Bilibi), and RegencyCamera.
DealTime has removed merchants for violating its guidelines, says David Epstein, senior vice president. And CNet's MySimon has evicted stores as a result of shoppers' complaints, says senior VP Kevin McKenzie; he says most came from "a big community of merchants in the Brooklyn area that sell digital cameras."
Nearly all shopping engines provide merchant ratings from shoppers, but such ratings may not be gospel. When we bought from IbuyDigital on two separate occasions, the company's sales reps offered us a free shipping upgrade, from standard to overnight, if we gave the shop a five-star rating. The reps, however, did not provide details on where we had to post our glowing remarks. Despite our not posting any rating, one of our packages was still delivered overnight and the other a few days later.
IbuyDigital salesperson Randy Marks says "we're just asking customers, if everything is satisfactory, to remember us when they go online. It doesn't mean you have to do it, or that we're not going to upgrade your shipping if you don't."
DealTime and PriceGrabber analyze submissions to their sites to prevent stores from posting their own positive reviews. But even these precautions are easily circumvented. For example, if a merchant's rating gets too low--or if it's removed from a site--the owners can start up another store under a different name.
"A number of these Brooklyn store owners are related to each other," says Herbert Keppler, longtime publishing director of Popular Photography in New York. Keppler says his magazine tries to mediate complaints about dealers advertising in its pages, and has removed some dealers that would not abide by its code of ethics. But family connections make the stores nearly impossible to shut out for long. "Say we kick out a dealer," says Keppler. "The store reorganizes, changes its name, and puts a relative or unknown business associate in as president. How are you going to trace that? Even the bank can't trace it. When you go down to the store, you find the same people working there."
Our research turned up many connections among some of the New York camera dealers. For instance, IbuyDigital, DBuys, and CentralDigital all list the same address and the same fax number on their Web sites. PriceIt4Less's site says its gift certificates can be redeemed at Bilibi; CCI Camera City and Royal Camera's sites list the same address. And 1 Stop Camera and DigitalNetShop's sites list the same fax numbers.
Even the authorities seem frustrated. For example, the New York Department of Consumer Affairs has received more than 100 complaints about Cambridge Camera, most of them citing failure to deliver goods or to refund money in a timely fashion, says Assistant General Counsel Nancy Brown. But Cambridge, which has been in business for decades, has resolved every grievance that has been reported to the DCA, says Brown.
As we went to press, the DCA said it was preparing a notice of hearing that, if filed, would accuse Cambridge and AAA Camera (another New York dealer) of being "problem vendors." The DCA "is looking at revoking their licenses [to sell electronics at retail]," says spokesperson Dina Improta. Cambridge Camera's Rablaux declined to comment on the DCA's charges.
Lisa Polk, an accountant for PC maker Custom Fit in Virginia, has her own grievances against AAA. In September 2001, Polk says, Custom Fit paid AAA nearly $10,000 for nine Nikon Coolpix cameras, three other cameras, and flash attachments.
Two months later, only seven Coolpix cameras arrived at Custom Fit, she says. Polk was surprised to discover that the manuals and boxes were written in Japanese. Because the cameras were gray-market models, Nikon would neither honor the $100 manufacturer's rebate for each camera nor provide any support.
"I got livid and called AAA to complain, but its reps wouldn't do anything to make it right," Polk says. Around six months later the other two Nikons arrived, she says, but Custom Fit was still out nearly $4000 for the unclaimable rebates and for the other cameras and flash accessories, which had yet to arrive.
So Polk contacted the Better Business Bureau, the Federal Trade Commission, the U.S. Postal Inspector's Office, and the New York State Attorney General's office. In April 2002, AAA Camera refunded $2678. But Polk says AAA still owes $943.
Polk estimates she's called AAA over a hundred times in the past two years, without success. "We'll probably never get the rest of our money back from these people," she says.
AAA store manager Larry Watson says Custom Fit ordered nine gray-market Coolpix cameras. But AAA didn't have gray-market models in stock at the time, so the company sent U.S. models. He says the amount Custom Fit claims AAA owes is the difference between the gray-market and U.S. models.
The New York State Attorney General's office has received complaints about the dealers we investigated--except for Bilibi and IbuyDigital--but has forwarded most of them to the DCA, which has jurisdiction to follow up, says spokesperson Brad Maione. The DCA has no authority over stores that sell strictly via the Web or mail order; the U.S. Postal Inspector's office has that authority but declines to comment on its investigations.
Like the shopping engines, local licensing authorities have difficulty determining who really controls each store, or whether different stores are connected--which makes enforcement more difficult, the DCA's Brown says. "You really can run a business in America and hide under someone else's name."
Big Apple Blues
Consumers aren't the only ones hurt by aggressive sales tactics. Other vendors can get undercut by seemingly low prices or tarred with guilt by geographical association. For example, Adorama and B&H Photo, also located in New York, receive rave reviews from consumers but feel the pinch.
"We get calls from customers, [saying] 'How come you're selling this for such a price when I get it so much cheaper over there?'" says Henry Posner, director of sales and training for B&H Photo. "But those prices aren't real."
Posner emphasizes that consumers need to look at more than just the price. Always ask the seller if the camera comes with a U.S. warranty. Know what you're buying and what it includes. Check the bundled accessories at the manufacturer's Web site, or call the maker's product information line.
A dealer "may strip the box of included items, such as a memory card, battery, and cables, and sell them separately," says Olympus spokesperson Sally Smith Clemens. "Nothing is more important than becoming an educated shopper before you buy, so you can be sure you're really getting what you paid for."
Web shopper Sowers agrees. "You need to make sure you know exactly what you're getting before you buy it," he says. "And if anybody calls you back to sell you extras, just say no."
Daniel Tynan is a contributing editor and Tom Spring is a senior reporter for PC World. Senior Associate Editor Grace Aquino also contributed to this story.
Gotcha Watch: Five Sales Tactics to Look Out For
Following the Trail: How Gray-Market Goods End Up in U.S. Stores
Accessories Comparison: Real Deals or Raw Deals?
On the Phone: Anatomy of a Hard Sell
I called Broadway Photo about the Minolta Dimage 7i camera because the site advertised a great deal. The posted price was $599--hundreds less than the price at better-known Web sites. But instead of getting a bargain, I got sworn at--and no camera. Here's a summary of my 30-minute call:
The salesperson, who told me his name was Bahout, said the Dimage was in stock and would come with a 16MB memory card, USB and video cables, a manual, and a one-year U.S. warranty. He said that the camera would ship the next day, and I'd get it in about a week.
I asked about accessories. Bahout started trying to sell me extras: a rechargeable battery and charger, filters, memory cards, a card reader, and a case. Then the trouble began.
Tom Spring: That all sounds great, but all I want is the camera.
Bahout: Are you trying to pull some kind of bull**** with me? You led me to believe that you were going to purchase all these accessories, and now you are pulling this bull**** on me?
Bahout: I was kind enough to throw all of those extras in there because you were buying the U.S. version. For [$599] you will only get the international model.
TS: What extras are you talking about?
Bahout explains he was giving me the 16MB card, USB and video cables, instruction manual, and one-year U.S. warranty for free only becuase he thought I was going to buy a bunch of other accessories. (According to Minolta's site, all the items Bahout described as gifts come standard with the Dimage 7i.)
Bahout tells me that unless I spend $270 on accessories, I'll receive an imported model of the Dimage.
Bahout: You are not going to be able to use it.
TS: I must be able to use the international version.
Bahout: Yes. But you still need cables and software and batteries. [Annoyed] Why are you tricking me? You led me to believe one thing and now you're switching.
I tell Bahout I want to pay no more than $599 for the camera, even if that means getting an imported version. He takes my billing information, but when I ask how I can track the shipment, Bahout scoffs. It could take up to three and a half months for my camera to arrive, he says.
As I write this, ten weeks later, I still haven't received the camera--but Broadway hasn't charged me.