The High Cost of Low Prices.

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Who hasn’t wondered why things appear to be so much cheaper online compared with the Mom and Pop stores downtown? I am going to bet a lot of folks have called retailers wanting to know if they price match. And in a lot of cases they simply can’t. What’s up with that?

1.      They are not the same products: Some companies manufacture items just for specific retailers. Often they look the same, but are made of lower-quality materials and have different warranty conditions. You feel like you are getting a deal, but what you are unknowingly buying is the very low-end of their product range.

2.      The Authenticity Hoax: Online retailers like Wish and Amazon allow producers to sell directly to consumers, meaning there is nobody in-between to ensure that the products you are buying are real. Best-case-scenario: You purchase a handbag, shoes or purse that is poorly made. Worst-case-scenario: You purchase electronics that are a fire hazard or counterfeit pharmaceuticals that could seriously hurt you. Think fake drugs are an outlier? Think again… they are the 5th most commonly forged item in the world according to USA Today.

3.      Paying A Living Wage: When you support local businesses, you know they are paying (at least) minimum wage. This means that folks can raise their family, have a minimum standard of living and contribute to our society. This is not a “value add.” It’s a moral value. So why can’t some Mom and Pop shops compete with online retailers based out of places like China? Because in Alberta we pay a living wage of at least $13.60 per hour while Chinese workers earn fourteen times less, about 87 cents per hour.  While there is no joy in being ripped off, there is certainly nothing to be proud about if you are exploiting people, either.

4.      Taxes: Okay, this isn’t the sexiest topic, but its important. When you buy from established businesses you know they are paying the municipality for things like business licenses, downtown revitalization fees and property tax. You know that the GST they collect is going to pay for government services like hockey arenas, healthcare and national defense. The online retailer pays no taxes to local governments, and depending on how reputable they are, they may or may not remit the GST they charged you to the Federal Government.

5.      Shipping and Shopping Green: Don’t forget to calculate in the cost of shipping and the time it will take to get your item. And of course, the greenest item is the one that is closest to you because it doesn’t need to be shipped thousands of kms to your door.

6.      Security: Have you ever come home to see an expensive online purchase abandoned on your front doorstep? If you have, your one of the lucky folks who’s package arrived. There have been numerous media reports of packages being stolen this time of year… and ultimately in Amazon’s Terms and Conditions it is the responsibility of the consumer, not the retailer or the shipper, to make sure that the package isn’t stolen when left outside.

So what are you willing to risk in order to save a little money? Given the issues above, are the “savings” really worth it? Only you can answer this question, and your answer will depend on your priorities, values and worldview.

Posted on:
Monday, December 18, 2017