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Will any AV retailer consider the following business model?
Create a coupon system. For example, a customer buys a new model
of DVD-player at $10000 in cash. He can return the player in good
condition, without any reason, to the shop within 6 months and get back
coupons at a linearly depreciated value (i.e. if he returns after one
month and he can get back coupons in value of $8333 (10000 x 5 / 6)
which can be used to buy any other goods in that shop (or other alliance
shops) within, say, 5 years. He can spend the coupons on more than
one item and can use together with top-up cash for any other items. He
can also redeem the coupons and receive cash any time but at a
discounted price. Coupons are transferable and the holders of which
are entitled to other benefits. Certain amount of coupons can also be
advanced by instalment method (like hire purchase), which can be used
together with cash.
A bank guarantor will be required to guarantee the redemption of issued
coupons.
There are a lot of marketing gimmicks which can be blended into the
coupons system. The most important thing is to fight for non-protective
prices from all participating brand wholesalers and distributors, and then
offer the most competitive prices to the coupon holders.
A large premises of over 10,000 sqft (not necessarily in busy area) with
good transportation support (like IKEA) may help in order to create the
confidence in potential customers. Goods should be up-to-date and
services (before and after) should be excellent. Consultants (not
salesmen) should be present to provide professional services and
establish reliable image. |
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Wish that we could have this type of AV shop in HK as lots of us are sick
of Yau X Building's service attitude. |
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Audio House's no-questions-asked money-back policy is a turf few electronic goods retailers dare venture
TO STAY ahead of the competition, Mr Alvin Lee, 37, is venturing where few Singapore retailers dare to go: He offers a 'no questions asked' money-back guarantee on electronic and electrical goods.
Audio House owner Alvin Lee, 37, said studies show less than 5 percent of customers exploit such a money-back guarantee. In the past two years, fewer than 20 customers have returned goods to his store for no apparent reason, he said. -- HOW HWEE YOUNG
This means he will give you a full refund if you find another shop selling the same digital camera, TV set or microwave oven for less, if it is faulty, or even if his employee does not install and explain the product properly.
Mr Lee will also take back his item and refund the money, even after he has had it delivered, if the buyer realises it does not match his home decor. However, the item must be returned within seven days.
According to Mr Lee, such a policy has been widespread in the United States and Europe for more than 30 years, and for all types of goods, including clothes.
The managing director of Audio House, which he set up in 1990, introduced the scheme two years ago because he 'wanted to do something different'.
He can offer prices he said that are typically 10 to 20 per cent lower than elsewhere because he keeps overheads low by buying in bulk.
None of the three major retailers of electronic and electrical goods The Straits Times checked with will give the customer his money back, unless he is very dissatisfied.
Courts allows goods to be exchanged for other items within seven days.
If the item costs more, the buyer has to top up what he originally paid. If it costs less, the difference is returned in store vouchers.
However, if the buyer finds the item costs less elsewhere, Courts will refund the difference plus 10 per cent of the price - in cash.
Its managing director, Mr Terry O'Connor, said: 'Since customers need the product and are able to get the lowest prices from us, it's very rare they ask for their money back.
'If they do, we don't refuse.'
Harvey Norman and Best Denki said the same thing. They will give a full refund only if a customer is 'very unhappy'.
Otherwise, they will only replace a defective item with a new one.
Although all the stores admitted Mr Lee's scheme benefits the consumer, they said their customers get service and satisfaction in other ways.
Mr O'Connor claimed what sets his store apart is 'giving people confidence in our prices', while a spokesman for Harvey Norman said it gives extended warranties and freebies.
Best Denki's general manager of operations and promotions, Mr C.J. Raj, claimed his store has good after-sales service.
Although research overseas has shown there are some who exploit the money-back scheme, they usually make up less than 5 per cent of all customers, said Mr Lee.
In the past two years, fewer than 20 customers have returned goods to Audio House for no apparent reason, such as the fellow who wanted a refund for an obviously used camera because 'he didn't like it'.
'Even though I knew it had been used, I still gave him his money back because, who knows, it might bring him back to me the next time he really needs something,' said Mr Lee, who started as an audio equipment salesman 20 years ago.
More importantly, he added, the policy helps build customer relationships.
He claimed the money-back policy was the reason his company's turnover reached $11 million last year.
According to him, it was more than 10 per cent lower before the scheme was introduced.
There were at least 100 people shopping at his 11,000 sq ft showroom in Sims Avenue on a weekday in the middle of its 10-day sale last month.
Madam Susan Tan, 30, a housewife, was looking for a television set for her new home.
'It's easier for me to compare different brands of TV sets because they are put side by side at the shop,' she said.
'I've been coming here for the past three years because I know the things are cheaper.'
The executive director of the Consumers Association of Singapore, Mr Seah Seng Choon, was full of praise for Audio House's refund policy.
'It's a good practice and one that more retailers should consider to generate confidence among their customers,' he said.
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