When cutting out the middleman costs you more

I like to consider myself a savvy shopper. Most of the time I'm convinced I got a good deal on anything I buy without spending hundreds of hours to save the last 2c.

Regular readers will remember the first great wall of ZMan well 2 years later I finally laid down the first row of bricks for the second, and even greater wall.

Great Wall #2

Last time I found and ordered the bricks from my local Home Depot at a very reasonable $1.33 each plus $50 shipping. After they arrived I noticed that they had actually shipped from a local dealer called Mutual Materials. So this time I figured I would save some money and cut out the middleman. I had bought a few from Home Depot over the weekend to finish the first course at $1.66 so surely they are cheaper if you buy from the local distributor. NO! They are $1.87 each. So after I explained this to the sales guy I kind of expected him to offer to beat or at least match that price but no he simply offered to cancel my order. So I took a trip to home depot and ordered 180 more bricks to finish the wall. While I was there I used one of my super powers - "the ability to read upside down faster than store assistants can read the right way up" - to see that Home Depot pay $1.09 for each brick.

So lets examine this:

Home Depot (HD) pay $1.09 so it must cost Mutual Materials (MM) less than that to make - these don't seem like a loss leader to me. Lets assume a pretty small profit because HD buy 2 gazillion bricks per year and guess that MM make them for $1 each.

My 180 bricks at HD makes HD a profit of $102.60 and MM sees $16.20 profit.

So why when I call MM directly would they not sell directly to me for $1.40 saving me $47, saving themselves paper work and increasing their profit from $16.20 to $72.

I suppose MM could have some no compete agreement with HD since they share the same area but selling the same product for 12% more seems to be a little crazy there.

In other news I bought an office AC unit on sale at Home Depot too which means I may be able to work in the stifling heat that my new computer insists on pumping out. No more grunge AC for me.



Published 04 September 2007 01:23 PM by zman
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