Purchasing Computer Components

Until the early 1990s, most computer products were purchased in specialized computer stores. Retail sales still represent a significant portion of computer product sales, although the focus has shifted from specialized computer stores to local retailers like LDLC, Materiel.net, Grosbill, or Rue Montgallet, but online retailers now account for a large percentage of PC component sales.

Should you buy from a local brick-and-mortar retailer or an online reseller? We do both, because each has advantages and disadvantages.

Local retailers offer the invaluable advantage of instant gratification. Unless you are more patient than we are, when you want something, you want it now. Buying from a local retailer puts the product in your hands instantly, instead of making you wait for FedEx or LaPoste. You can also examine the product in person before purchasing, something that is not possible if you buy from an online reseller. Local retailers also offer a great advantage if you need to return or exchange a product. If something does not work well, or if you simply change your mind, you can just return to the store rather than dealing with the hassle and cost of returning a product to an online reseller.

Online resellers have the advantage in the breadth and depth of product selection. If you want the cheaper OEM (generic equivalent) version of a product, for example, it is likely that you will not find it at local retailers, most of which only stock retail-packaged products. If an online reseller stocks a particular manufacturer's products, they tend to stock the entire product range, whereas local retailers often choose only the most popular items in a product line. Of course, popular products are generally popular for good reasons. Online resellers are also more likely to stock niche products and products from smaller manufacturers. Sometimes, if you must have a particular product, the only option is to buy it online.

Online resellers usually advertise lower prices than local retailers, but it is a mistake to compare only the nominal prices. When you buy from a local retailer, you pay only the advertised price plus any applicable sales tax. When you buy from an online retailer, you pay the advertised price plus shipping, which could end up costing you more than buying locally.

YOU CANNOT ESCAPE TAXES AND DEATH

Ah, but you do not have to pay sales tax when you buy online, right? Well, maybe. In most jurisdictions, you are required by law to pay a "use tax" in lieu of sales tax for out-of-state purchases. Most people avoid use taxes, of course, but that free ride is coming to an end. States facing growing budget problems are starting to crack down on buyers from online resellers who do not pay use tax. States are using data mining techniques to coordinate with each other and with credit card companies and online retailers to discover fraud regarding unpaid taxes. If you do not pay use taxes, one day soon you are likely to hear from the audit division of your department of revenue, asking what those credit card charges were for and why you did not report the use taxes due on them. Count on it.

Although online resellers may have a lower overall price on a given component, it is a mistake to assume that is always the case. Local retailers frequently run sales promotions and rebates that reduce the price of a component below the lowest price online. For example, we bought a 100-pack of CD-R discs on sale from a local retailer for $19.95 with a $10 instant rebate and a $20 mail-in rebate. After the cost of the stamp to send in the rebate form, they paid us $9.68 to haul away those 100 discs, which is a pretty hard deal for an online reseller to match. Similarly, we bought an 80 GB hard drive for $79.95 with a $15 instant rebate and a $30 mail-in rebate. Net cost? About $35 for an 80 GB retail-packaged hard drive, which no online vendor offers.

Whether you buy your PC components from a local brick-and-mortar store or a web-based retailer, here are some guidelines to keep in mind:

• Make sure you know exactly what you are buying. For example, a hard drive may be available in two versions, each with an identical or similar model number, but with a letter or number added to designate different amounts of cache. Or a hard drive manufacturer might produce two models of the same size that differ in price and performance. Always compare using the manufacturer's exact model number. Before buying a product, look it up on the manufacturer's website and on the many independent sites devoted to reviews. We generally search Google with the product name and "datasheet" in the search string.
• Vendors vary considerably. We trust some implicitly, and others we would not advise even on a bet. Some are always reliable, others always unreliable, and still others seem to vary with the phases of the moon. We check http://www.resellerratings.com, which maintains a database of customer-reported experiences with hundreds of vendors.
• The list price or "Manufacturer's Suggested Retail Price" ("MSRP") is meaningless. Most computer products sell for a fraction of MSRP; others sell for near MSRP; and for still others the manufacturer has no MSRP, but rather publishes an "Estimated Selling Price" ("ESP"). To make meaningful comparisons, you need to know what different vendors are charging for the product. Fortunately, there are many services that list what different vendors are charging. We use http://www.pricescan.com, http://www.pricewatch.com, and http://www.pricegrabber.com. These services sometimes list 20 or more different vendors, and the prices for a particular item can vary considerably. We eliminate the top 25% and the bottom 25% and focus on the middle 50% to decide on a reasonable price for the item.

MIR

If you like getting good deals (and who doesn't?), check out the deal news sites (http://www.dealnews.com) and SlickDeals (http://www.slickdeals.net), which are great for finding rebates and flash sales. With careful shopping, your "MIR" price ("After Manufacturer and Instant Rebates") can actually be equal to zero or less.

• Many components are sold in retail boxes and OEM formats. The basic component is likely to be similar or identical in both cases, but the important details could vary. For example, Intel processors are available in retail versions that include a CPU cooler and a three-year warranty. They are also available as OEM components (also called "tray packaging" or "white box") that do not include the cooler for the CPU and have only a 90-day warranty. OEM items are not intended for retail distribution, so some manufacturers do not provide any warranty to individual buyers. OEM components are just fine, as long as you understand the differences and do not attempt to compare prices between retail point-of-sale and OEM.
• The market for PCs and components is incredibly competitive and margins are thin. If a vendor advertises a component for much less than other vendors, it may be a "loss leader." More likely, however, especially if its prices on other items are also low, this vendor is cutting corners, either by using your money to float stock, by shipping returned products as new, by charging excessive shipping fees, or by taking your money and not shipping the product. If you always buy from the vendor with the low prices, you will waste a lot of time foolishly dealing with returns of defective, used items and dealing with your banker when the vendor fails to deliver at all. In the end, you are also likely to spend more money than you would have by buying from a reputable vendor in the first place.
• The actual price you pay can vary considerably from the advertised price. When you compare prices, include all fees, especially shipping costs. Reputable vendors tell you exactly how much the total fees will be. Less reputable vendors might "forget" to mention shipping fees, which can be very high. Some vendors separate the manufacturer's complete pack into individual items. For example, if a retail-packaged hard drive includes mounting hardware, some vendors will list a price for the bare drive without clearly stating that they have removed the mounting hardware and charged for it separately. Also be careful when buying products that include a manufacturer's rebate. Some vendors quote the net price after rebate without specifying that they are doing so.[/quote]

WHEN EVERYONE LISTS A PRODUCT AT THE SAME PRICE

Some component manufacturers establish a "Minimum Advertised Price" ("MAP") for some or all of their products. Although manufacturers cannot legally set a minimum selling price, they can set minimum prices at which their dealers can advertise their products. If a product is covered by MAP, online sellers all advertise it at the same price, tell you to "call for price" rather than listing a price, or force you to add the product to your shopping cart before displaying a price. Many discount resellers will actually sell you a MAP product for less (sometimes much less) than the advertised price, but you might have to ask yourself why.

• Some vendors charge more for an item ordered via their 800 number than for the same item ordered directly from their website. Others add fixed processing fees to phone orders. These fees reflect the fact that ordering on the web is much cheaper than doing it by phone, so this practice has become common. In fact, some of our favorite vendors, such as NewEgg.com, do not provide phone order lines.
• It can be very expensive to ship heavy items such as monitors, uninterruptible power supplies (UPS), and printers individually. This is a situation in which large local stores like Best Buy have a huge advantage over online vendors. The online vendor must charge you the shipping cost, directly or indirectly, and that cost can be 50€ or more for a heavy item you need quickly. Conversely, big-box stores receive inventory items via trucking or even rail car deliveries, so the cost for them to have a single item delivered is quite low. They can pass that reduced cost on to buyers. If you are buying a heavy item, do not assume it will be cheaper online. Check your local Best Buy or other big-box stores and you may find that it costs less, even after you pay sales tax. And you can carry it with you instead of waiting for FedEx to show up with it.
• Most direct resellers who take phone orders are willing to sell for less than the price they advertise. All you need to do is tell your chosen vendor that you would really rather buy from them, but not at the price they are quoting. Use lower prices that you find with price comparison services as a way to get a better price. But remember that reputable vendors must charge more than fly-by-night operations if they intend to make a profit and stay in business. If we are ordering by phone, we generally try to haggle a bit on the price of our chosen vendor, but we do not expect them to match the low-end prices that appear on web searches. Of course, if you order from a web-only vendor, haggling is not an option, which is one of the reasons why web-only vendors generally have better prices.
• Some vendors add a surcharge, usually 3%, to their advertised prices if you pay by credit card. Surcharges violate credit card company contracts, so some vendors instead offer a similar discount for paying cash, which amounts to the same thing. Processing credit card transactions costs money, and we are sure some of these vendors are very reputable, but our own experience with vendors with this surcharge has not been good. We always suspect their business practices lead to a high percentage of chargeback requests, and therefore they discourage the use of credit cards.[/quote]

A cunning plan

Almost all retailers refuse to refund your money on opened software, DVDs, etc., but will exchange the opened product only for a new, sealed copy of the same title. One of our readers tells us how he gets around this common policy. He returns the opened software in exchange for a new, sealed copy of the same product, while keeping his original receipt. He then returns the new, sealed copy for a refund. This is probably unethical and could even be illegal for all we know, but it works.

• Good vendors allow you to return a defective product for a replacement or a full refund (often minus shipping costs) within a stated period, usually 30 days. Buy only from such vendors. Almost all vendors exclude certain categories of products, such as laptops, monitors, printers, and opened software, whether because their contracts with the manufacturer require them to do so or because some buyers habitually abuse the return periods for these items by treating them as "30-day free rentals." Beware of the phrase "all sales are final." That means exactly what it says.
• Check carefully for any mentions of restocking fees. Many sellers that trumpet a "no-questions-asked money-back guarantee" only mention in the fine print that they will not refund all of your money. They charge restocking fees on returns, and we have seen fees as high as 30% of the purchase price. These sellers love returns, because they make much more money if you return the product than if you keep it. Do not buy from a vendor that charges a restocking fee on exchanges (as opposed to refunds). For refunds, do not accept any restocking fee greater than 10% to 15%, depending on the price of the item.

THE CUSTOMER IS NOT ALWAYS RIGHT

Even some of our favorite vendors have started charging restocking fees in response to abuse by customers. (See the "Another cunning plan" sidebar.) Yes, there are sleazy customers as well as sleazy resellers. For example, we heard about a guy who was desperate to get his hands on the latest high-end video card as soon as possible. No reseller had the video card in stock, and everyone had a waiting list. This friend ordered the same card from three or four different resellers, hoping to maximize his chances of getting it quickly.

He installed the first one that arrived, and returned the others, claiming they were defective. He demanded a full refund, including shipping in both directions! He even opened the boxes to "prove" that he had tried to use them. If he had asked for replacements, there would have been no problem, but he wanted a refund. Naturally, the victimized resellers refused to refund the shipping costs and charged him a restocking fee. He was outraged, and sent an email to Robert suggesting he warn his readers not to buy from these resellers. He seemed surprised that Robert had no sympathy for him. Nowadays, he probably would have bid on eBay and made a killing.

Most of the best resellers who charge restocking fees do so to protect themselves against such abuse, and most are willing to make exceptions on a case-by-case basis. Before you buy from a reseller, check their restocking fees and policies and determine under what conditions they are willing to make exceptions.

• If you order by phone, do not accept verbal promises. Insist that the reseller confirm your order in writing, including special conditions, before they charge your credit card or ship your product. If a reseller refuses to provide written confirmation of their policies, terms, and conditions, find another vendor. Most are happy to do so. If you order from a vendor that uses Internet ordering exclusively, use a screen capture program or your browser's save function to capture copies of every screen as you complete the order. Most vendors send a confirmation by email, which we file in our "Never delete" folder.
• File everything related to an order, including a copy of the original advertisement; by email, fax, or written confirmations provided by the reseller; copies of your credit card receipt; a copy of the packing list and invoice; etc. We also enter notes in our PIM regarding phone conversations, including the date, time, phone number and extension, the name of the person spoken to, the purpose of the call, etc. We print a copy of those to add to the file for that order.
• State clearly to the reseller that you expect them to ship the exact item you ordered, not what they consider an "equivalent substitute." Require that they confirm the exact items they are going to ship, including manufacturer part numbers. For example, if you order an ATI Radeon X800 XT Platinum Edition PCIe graphics card, ensure the order confirmation specifies this item by name, complete description, and ATI product number. Do not accept a less detailed description such as "graphics card," "ATI graphics card," or even "ATI RADEON X800 graphics card." Otherwise, you will almost certainly not get what you paid for. You may get an X800 Pro AGP model rather than the X800 XT Platinum Edition PCIe you ordered, an X800 XT rather than the X800 XT Platinum Edition, an OEM card with a slower processor or less memory, or even "Built by ATI" rather than what is a card with an ATI processor manufactured by another manufacturer rather than a card "Manufactured by ATI." Count on it.

Another cunning plan

If you buy from a local retailer, open the box from the bottom rather than the top. If you need to return a non-defective item, this makes it easier for the retailer to repackage the product with the manufacturer's seals intact, which can help avoid restocking fees.

• Check warranty conditions. Some manufacturers only guarantee items purchased from authorized resellers in complete packaging. For some items, the warranty begins when the manufacturer ships the product to the distributor, which can happen long before you receive it. OEM products generally have much shorter warranties than retail-packaged products, sometimes as short as 90 days, and may only be guaranteed to the original distributor rather than the final buyer. Better resellers may "back the manufacturer's warranty" for a certain period on some products, often 30 to 90 days. This means that if the product fails, you can return the item to the reseller, who will ship you a replacement and take care of dealing with the manufacturer. Some resellers refuse to back the manufacturer's warranty, claiming that once they ship the item, dealing with warranty claims is your problem, even if the product arrives dead. We have encountered this problem a few times. Usually, mentioning phrases like "merchantability and fitness for a particular purpose" and "revocation of acceptance" gets them to see reason quickly. We usually demand that the reseller send us a new replacement product immediately and include a prepaid return shipping label to pick up the defective item. We neither accept nor pay for dead goods under any circumstances, and neither should you.
• Direct resellers are required by law to ship products within the time they promise. But this period can be precise ("shipped within 24 hours") or vague ("shipped within three to six weeks"). If the vendor cannot ship by the date originally promised, they must inform you in writing and specify another date by which the item will be shipped. If this happens, you have the right to cancel your order without penalty. Make sure to state clearly to the reseller that you expect the item to be delivered in a timely manner. Reputable sellers ship what they say they are going to ship when they say they are going to ship it.

Unfortunately, some sellers have a bad habit of taking your money and shipping whenever they get around to it. In a practice that borders on fraud, some sellers systematically list items as "in stock" when in reality they are not. State clearly to the seller that you do not authorize them to charge your credit card until the item has been shipped and that if you do not receive the item when promised, you will cancel the order.

Recommended Sources

The question we hear most often is none other than: "Which company should I buy from?" When someone asks us that question, we run away, screaming in terror. Well, not really, but we would like to. Answering that question is a non-profit proposition, if you see. If we recommend a vendor and that vendor treats the buyer correctly, it would be no more than what was expected. And that is the best that can happen.

Still, we realize that many of our readers would like to know where we buy our stuff. Over the years, we have bought from dozens of online vendors, and our favorites have changed. For the last few years, our favorite has been NewEgg.com (http://www.newegg.com). NewEgg offers an extraordinary combination of good price, wide product selection, support, shipping, and return or replacement policies. We do not know of any other direct vendor that even comes close.

NewEgg's prices are not always low, but they generally match any other vendor we are willing to deal with. NewEgg runs daily special offers that are often real deals, so if you are prepared to consider alternatives and accumulate components over the course of a few weeks, you can save a good amount of money. (Of course, if you do that, your warranty and return privileges on earlier orders are expiring while you wait.) NewEgg ships what they say they are going to ship, when they say they are going to ship it, and at the price they agreed to ship it. If there is a problem, they make it right. It is hard to do better than that.

That said, if you buy from NewEgg and subsequently your goldfish dies and all your teeth fall out, do not blame us. All we can say is that NewEgg treats us well. Things can change overnight in this industry, and while we do not expect NewEgg to take a sudden turn for the worse, it could happen.

As for local retailers, we buy from Best Buy, CompUSA, Target, Office Depot, OfficeMax, and our local specialized computer stores in no particular order, depending on what we need and who has advertised the best prices and rebates in the Sunday Ad supplements. Wal-Mart only used to sell pre-assembled computers. It has recently started stocking PC components, such as video adapters, so we will add Wal-Mart to our list.

Even if you follow all these guidelines, you might have a problem. Even the best resellers sometimes drop the ball. If that happens, do not expect the problem to disappear on its own. If you encounter a problem, keep your cool and inform the reseller first. Good resellers are eager to solve problems. Find out how the reseller wants to proceed and follow their procedures, especially for labeling returned goods with an RMA (Return Materials Authorization) number. If things do not seem to be going as they should, explain to the seller why you are dissatisfied, and tell them that you plan to request a refund from your credit card company. Finally, if the reseller is completely recalcitrant and any aspect of the transaction (including, for example, a confirmation letter you wrote) took place via the United States Postal Service, contact your postmaster about filing mail fraud charges. That really gets a reseller's attention, but use it as a last resort.

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