Wednesday, September 16, 2015

Save money at all costs?

Without even knowing the full story, I am sure that the general audience that reads financial blogs will shout out "Save money!". However, hear out my story first.

In this hypothetical world, you want to buy some electronics. It could be anything these days, such as headphones, cables, keyboard, mouse, etc.... but for this example I'm just going to go with speakers.


While browsing the internet, you see an ad for these speakers. You've actually been wanting to get a new set of speakers and had read about the benefits of this particular brand and model!

You casually make your way to the usual online shopping websites and you even know how to use ShopBack to get some rebates, plus you are planning to charge it to your credit card which gives anywhere between 3-7% off from online spending.

Just the difference between the online price compared to a retail store is close to 30%.
Throwing in ShopBack rebates and credit card rebates, you can squeeze out an extra 10% of savings.

But.... here's the catch. You don't really want to spend that kind of money without first having a "hands-on" experience to see if you would really like it.

Now, you head to a shopping centre and look for the electronics store. It could be Challenger, Best, Harvey Norman, Gain City, etc. It doesn't matter. You zoom to the speakers section and start molesting the model of your dreams.

Within seconds, a salesman descends upon you. His supervisor is one row away watching his performance closely.

You shoot out all the questions about all the different technical specifications that you were too lazy to search for at home over the internet. You question certain features and how it works.

Your salesman calmly replies with the concise answers and confirms everything you wanted to know. He shows you a live demonstration how to engage and maximize utility from the unique features. For the 1 or 2 questions that he couldn't answer right away, he quickly asks his colleagues and comes back with the correct answer.

Check. Check. Check. Everything looks good. Everything feels good. You are amazeballs to pick out such a good model!

The salesman notices your contentment and gleams, "Is there anything else I can help you with?".

You look at the price tag one more time, sigh and eek out a weak smile and say, "Thank you for your help, but I need to think about it some more".

His smile slowly drops as he lowers his head. "Yes sir, I hope to see you again..."

You reach home, turn on your computer and with a few clicks, beeps and bops, your order is placed.

One week later, you're enjoying fantastic quality music from your swanky new speakers and everything feels great!

But then, you also feel something is a bit wrong. You shrug it off. 40% savings. Only an idiot wouldn't do it!



The same scenario as above, except when you reach the store, there isn't a salesman around. Very strange.

You fondle the speakers and read the information brochure beside it. You compare it to similar brands and models around it.

You are satisfied that the model is a good one and you leave the store without even saying a word or making eye contact with a human being.

You order the speakers online. You feel awesome. You're a money saving machine!


The same scenario as above, except when you decide to break your rules and just order it online without "trying" it.

You order the speakers online. It's exactly what you expected. You feel awesome. You're a money saving machine!


Even though the outcome for scenario #1, #2 and #3 are all the same, the process to arrive to that outcome is slightly different. In #1 you might feel a bit crummy, but in #3 you feel like you're a genius!

I think I would make use of the fact that the electronics store has other customers that just walk in and buy without comparing, and I am being a "free-rider" and benefiting from their service that they have to provide everyone. I am being subsidized by those customers and my subsidy is free information and a cheaper price compared to them.

Written out, it sounds quite wrong. But I still think I would exploit the system.

The last time I did something like that was in 2011 when I bought a digital camera. I saved about $400.

What would you do if you were in scenario #1?


  1. Hi GMGH,

    I really enjoyed this post of yours!

    Some people label Option 1 as "arbitrage" but somehow I feel it's "not right". Honestly, I prefer option 2.

    I don't feel so bad when I take advantage of a business. But if I take advantage of an individual, then hmmm....

    Sometimes, the Mrs and I will probe the salesman how much commission he gets. For eg, if he gets 5% and we are saving just 10% online, we might just get it on the spot and make 3 people's day!

    It's definitely not save money at all cost.

    1. Hi Mr 15HWW,

      Glad you enjoyed it!

      Actually I wanted to put up an even more extreme scenario of a person not having done any research at all and just absorbing all the info from the salesman and then walk out and get it online, but I felt that is a bit extreme and I don't really think that happens in the real world, haha!

      Mmm, yes, taking advantage of a business doesn't quite have the same effect as taking advantage of a person.

      Option 2 is also my preferred choice :P

  2. Call me an emotionless jerk. I can admit to doing what you mentioned in Scenario #1 so many times. If the price difference isn't so great, I would actually buy it on the spot.

    The value-add provided by the salesman can be really incredible - I have learnt a lot from them when I got my first apartment and had plenty of things to buy. Be skeptical, but don't disregard everything they say as sales talk.

    Just to add on, to my amazement many prices (in particular, for higher value items like appliances and furniture) are never what it is stated on the retail price tag. I would cheekily ask the salesman whether they can do something about the price tag. Never thought I can bargain at Best Denki or Harvey Norman!

    So yeah, I don't save money at all costs.

    1. Hi Kevin,

      I agree, if the price difference is not too big, there is also a nice happy premium of immediately being able to use the product on the same day!

      Ah yes, I know you can bargain at Harvey Norman! I did not know about Best Denki, thanks! It depends on the product and the salesman though. Some like to throw out discounts very quickly to seal the deal ;)

      I also think when it comes to electronics, listening to the salesmen can be very useful. Unless you are in a technophile, the technology changes so quickly that it is hard to keep up with that what's new!

  3. It's just behavioral economics at play. Consumers in this age have greater control in the market and it's rational to seek the lowest price. I think the retail sector in sg is screwed after the advent of e-commerce, especially since the cost of doing brick-and-mortar business is so high. Change is the only constant

    1. Hi Anon,

      I half agree to what you said! The advent of e-commerce is really a game changing that affects a lot of people under the age of 30 I would guess. However, for the older generation, it seems to me that e-commerce hasn't really caught on yet.

      I really do feel that there is seriously just way too many shopping centres in Singapore which all have the same shops. I think a lot of brick-and-mortar businesses are just not viable and e-commerce is another problem that they have to deal with.

  4. Thank you for sharing such great information. It has help me in finding out more detail about Savings Account!


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