How to Make People Hate Your Business Today

slickguns_black_friday_screenshotToday is Black Friday, one of the two most prominent shopping days on the American mercantile calendar (the other? Cyber Monday, coming up in three days). It has become a tradition for merchants to offer their best prices on these days, to stand out from the crowd.

For example, almost everybody in the gun world is offering Black Friday deals, and every year Slick Guns.com collects them on a web page. Here’s 2014’s:

http://www.slickguns.com/black-friday-2014

There’s something over 60 vendors on that page. (It’s not complete by any means. We’ve received emails from Wilson Combat and X Products with Black Friday deals that are not represented. But they’re trying). We’re not using it ourselves, because this season is about buying for other people, and our other people don’t want guns and ammo, the benighted souls. But one of the vendors’ results there illustrates the perils of one common Black Friday promotional stunt.

How “Limited Supply Available” Really Works

It’s legal, but it’s a con. It’s a con because it depends on information asymmetry (the seller knows things the buyer doesn’t, in this case) to mislead customers into shopping; vendors with transparency as to stock status can’t pull this off.

Buds black friday loss leaders

 

Let’s look at it from the vendor’s point of view. Since everyone else in the crowd is doing the same thing, it gets harder and harder for any one shop to do so profitably. You can cut your prices as low as they can go — and then still be undercut by someone willing to use a loss leader to lure your customers into his store.

Loss leaders are one way some merchants attract business. Those are products that are sold for less than cost in the hope that customers who buy (1) buy other things in your store as well, while  they’re there, and (2) maybe even become habituated to buying from you. The merchant then gouges the customers who do (1) and (2) in order to make up for his losses on the loss leader.

If you’re not the guy who got the loss leader, you only get the gouge.

Since it’s getting harder and harder to attract business in the buy buy buy chaos of Black Friday, some merchants go for the definitely legal, arguably ethical, and maddeningly frustrating approach of offering only token loss leaders. This lets you attract business to your store (or website), but minimizes your loss. For example, you advertise a $400 pistol for $100, “While Supply Lasts,” and then you have one or two of that unit. (You also recover some of your $300 x #-of-loss-leaders “loss” by expensing it to promotion on your balance sheet, letting you offset profits on your taxes). It’s a bait and switch deal, but it is technically legal (unlike bait and switch where there was no product, which is criminal fraud) because some lucky schmo did get one or two examples of the $99 firearm.

And the dealer almost has to do this, or he’s not going to get diddly for traffic or sales on Black Friday. To some extent, when you’re a retailer, you have to conform to what other retailers are doing, and conform to customer expectations of retailers. So even if you hate loss leaders with a purple passion, you have to at least consider them. What do you say when you get an email from SlickGuns asking what your Black Friday deal is?

Now Let’s Look at the Customer Side of Things

buds_screenshotBut now that we’ve looked at the joy this brings to the merchant, let’s look at how it looks from the customer point of view, remembering that the average customer is not an MBA, not a quant, and not the kind of sharp-elbowed operator that stays alive as a low-margin, high-volume retailer of anything.

Bud’s Gun Shop, a one of those low-margin, high-volume sellers, offered several loss leaders for Black Friday, and they were duly sold out in minutes — before the sale actually began, which makes one suspect the deals went to insiders, perhaps.

Now, we’re going to reveal a great feature of SlickGuns’ black friday reportage: customer reviews. Here are some pull quotes from reviews by real customers:

  • I guses the REAL question is; Will ANYONE ever get one? Even if you somehow paid and think your getting a $49 or $99 dollar gun will it ever show up? How many weeks will you have to wait to get it?
  • Absolute bullcrap bait and switch
  • My list of gun sellers just got smaller again now that Dicks and Buds are forever on my do not buy from list.
  • Should not advertise this if you cant keep your website up?
  • I tried and tried for the last 2 hours and got repeated crash notices.
  • I am very, very disappointed in Buds.
  • This was my first dealing with them and I dont know if I will come back.
  • I guess I will go with my second option J & G Sales
  • finally got two items in my cart at the doorbuster price, but couldn’t check out because the server couldn’t handle the traffic.
  • What a load of crap! After many attempts I had the items in my cart but it would not let me checkout.
  • I have bought several guns from Buds in the past, but they just lost me as a customer after watching this.
  • Bud’s lost a lot of customers during the AR scare, I will have a tough time ever buying there again after this.
  • What a clusterf**k. The sight crashed just prior to 8:00 and is still messed up now at 9:00. I’m going to stay away from these morons.
  • I plan on purchasing many guns in the future but I am going to make it a point not to buy them from buds because of this.
  • If this server was working I wouldn’t be so pissed off. What a joke!
  • This was a bunch of BS, I could have slept in for an additional 1 1/2 hrs before getting ready for work.
  • Same here…I’m convinced we had no chance from the get-go.
  • Here is a good, “How to lose customers through fraudulent business practices.” Was a loyal BUDS customer….will no longer be. Nice work.
  • As fraudulent as they come..
  • Nice, not one of those items ever displayed the sale price.
  • Absolutely absurd! Fool me once…
  • 20 minutes before the sale “started” all the doorbusters were already sold out. i was hoping it said that because they were going to add them at 8 EST, but it never happened.
  • I made an account just for this response. Bud’s is a complete scam. Bait and switch is all they did. Never again will they see any of my money. The people that work there are a bunch of liars and they like screwing people over!
  • I’m usually not on board when I hear people say “bait and switch” after missing out on a deal… but this one was SUPER suspicious lol.. Nobody got one, and those of us who got them in the cart couldn’t check out….

The Facebook comments are similar, although you have to catch them before Bud’s deletes them. One favorites we saw:

  • David T Chamberlin
    Looks like someone attended United Airlines customer service school.

Snork!

Well, there you have it. The 2 or 5 or whatever of the discounted-beyond-belief guns were gone and the servers crashed, and 20 or 50 or whatever would-be deal-seekers are pissed off. Is that a win? We’re not sure. Bud’s might think it is. As a volume seller, they don’t need to care about developing relationships with their customers. They know that many of them are bottom-feeders, “loyal” only to the lowest advertised price. (That’s why you get vendors who sell something for $30 under all their competition, but charge $50 extra shipping and handling)

But it hasn’t been the end of the fury raging in the comments at SlickGuns. Because two commenters taunted that they got their guns, and they didn’t know why all the losers were complaining. Were they shills for Bud’s, or just trolling? Hold that thought for just a second.

A couple other commenters said they did get one of the guns, but other commenters noticed something interesting about the trolls: they had just registered minutes before, and the trolling post was their first and only. Trolls for Bud’s? Trolls just for the sake of being trolls? Either is possible, but some people will believe they were Bud’s all along anyway, and therefore, for better or worse, Bud’s owns them as part of the blowback from this Black Friday stunt.

Finally, we’d like to point out that the guns the Bud’s was discounting were, uh,  totally top-tier. Canik, Tisas, and some no-name shotgun? They normally sell in the $180-330 range to people that are buying styling rather than quality or reputation. “Saving” money on something you would not have bought, otherwise, is not “saving” money, it’s “spending” money.

Only the owners and managers of Bud’s know how their loss-leader scheme is working for them, but from what we’ve seen, loss-leader marketing does less damage to brick-and-mortar store reputation that it does to cyber merchandisers for several reasons.

  1. The Net is necessarily a lower-trust environment than even the most impersonal physical store.
  2. Transparency of inventory. In other words, you can see when the doorbuster specials are gone in a physical store (you also can do it in a well-run cyber storefront; we noticed this at Apex Gun Parts, and Luckygunner’s ammo inventory is usually good.
  3. The shared experience of doorbuster-chasing. If you wait in line all night at Best Buy, you get to know the other people waiting in line with you, at least a little. This builds a sort of social cohesions. Conversely, on the Internet every man is an island at the end of a causeway of internet protocol packets. He has no lateral contact with the other islands, no reason to be in good cheer.

We suspect that some businesses will find that loss-leader doorbusters work, but others will find that they do not. The problem with discounting is that it’s like riding a tiger: once you’re onboard, how do you get off? And there’s always somebody who will trim his margins more by locating in a lower-tax jurisdiction or putting his kids to work instead of paid employees.

10 thoughts on “How to Make People Hate Your Business Today

  1. Bill K

    Hognose, either:
    A) You have your MBA and/or clinical psych training, and thus we are privileged that you are gracious to share your insights, or
    B) Your observations should occur to any reasonably intelligent non-MBA/psych type.

    Absent evidence to the contrary, I rather suspect that B is true. But OTOH, we know that folks such as Google & Walmart crunch a tremendous amount of shopping data, so this should not be mere speculation. If I were Gun-R-Us, my immediate strategy would be to see what the big boys are doing and sponge off of their tactics. And should they continue loss-leaders despite the increased hostility of internet reviews, I might conclude that the reviews merely support the Sword of Truth motto that “people are stupid”. I am continually amused that folks buy jewelry off the QVC channel, but they seem to keep going year after year. Why?

    1. Hognose Post author

      I’m innocent of any training in clinical psych. I have, however, suffered through an MBA. I’m not like all the others, though.

  2. alchemistgeorge

    I looked around the site but couldn’t find an email address for you, thought you’d be interested in this program on “This American Life’ which details the unfortunate but comprehensive incompetence of BATF with their ‘storefront’ operations to entrap illegal gun sellers.

    http://www.thisamericanlife.org/radio-archives/episode/540/a-front

    I enjoy reading your blog, admire your energy, and want a broader, more informed discussion on guns in our country.

  3. Joe in Reno

    I logged on about 7:45am est and stayed for about 1/2 hour just out of fascination. Never got past the front page. Their real time visitor counter fluctuated between 7,000 and 8,000 people. I don’t think this will help them at all. That is a lot of pissed off people and we are real good at punishing our “own”. Even if people wanted to buy something other than the specials, it was impossible to do. The site couldn’t handle the traffic. Cloudflare kept pooping in to tell me the site was overwhelmed & kicking me out.

  4. emdfl

    Last Turkey Day gun store sale I went to I ended up with a NIB New England Firearms rifle in .17HRM for 79.95+tax. That was such a deal I had to buy it – just ’cause I had about 1500 rds of .17HRM from a bulk buy years ago.

  5. robroysimmons

    Maybe a retailer could try a prize drawing type format. I think the software could be configured so as your sub-total increases more chances to win a prize could tallied up for the drawing. Advertise it and spread the traffic out thru the day. Now if Brownells would offer a LMT 18″ barrel for my CQB as the door prize for Cyber whateverday I would spend some money there.

  6. Dennis

    I recorded the “Bud’s” UPC of the shotgun that they offered at the price of $49 … when I finally got a connection at around 10am on Black Friday, it showed “Out of Stock.” The interesting part of browsing their online store later on in the day was that same shotgun was “in stock” under a different “Bud’s” UPC (identical product ID number). Hmmm … “a rose by any other name?” The term “Huckster” just gained a new entry. So long Bud’s, and good luck.

    1. Hognose Post author

      That’s a normal “doorbuster” stunt. You mark, say, a quantity of 4 of some product with a unique SKU (stock-keeping unit, a unique digital or alphanumeric indicator used by your inventory system) and advertise them as your doorbusters at your loss-leader price.

      Then, when the 4 sell out, that SKU is no longer available and shows up as SOLD OUT. Meanwhile the identical product was always in stock, marked with the regular SKU. This is what Bud’s seems to have done, although I have no idea what quantities they had at the loss-leader prices. It’s perfectly legal (it would be illegal if they advertised the SKU but never had any of them) but it does lead customers to feel gypped. As you well know.

      Others are saying it was sold out or out of stock even before H-hour.

      The shotgun does look like a piece of junk, actually. I wonder if Bud’s is actually making a few pennies, or breaking even, at $49.

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