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We have written many times before about how markups across various industries just cause people to spend way more money than they should. From interior designers to travel agencies, Singaporeans are slowly starting to find out just how much they’ve been overpaying for goods and services. What many people don’t realise is that the home furnishings industry is no stranger to this as well, with crazy markups of around 200% to 400%. Yup, that bed linen set you bought for $400 could actually just cost $100.
What does this really mean, apart from the fact that you are paying way more? Well, for starters, when big stores run sales and advertise “crazy discounts” of 50% off the Manufacturer’s Suggested Retail Price (MSRP), they could still be doubling how much they are making in sales revenue.
Some stores might advertise that their sale prices are 50% off the MSRP, but if you were to dig a little deeper, you might find that those pieces were not set at the MSRP to begin with. In reality, this means that they are really dropping their price perhaps by about 5-10% instead.
What is the difference between MSRP and MAP and why is this important?
Home furniture manufacturers will often set their MSRP, which is essentially the price they would recommend stores sell their goods at. But what consumers might not realise is that they also have an agreement between with the stores that sell their goods to set a different price, known as the Minimum Advertised Price (MAP).
This MAP price is the baseline selling price allowed by the manufacturer. One mattress store manager we spoke to even showed us the MAP price on all his mattresses. His sales people get 15 to 20% commission for selling at MSRP, and they only get 7-10% if they sell at MAP.
Naturally you’ll find a lot of resistance from salespeople to sell at MAP.
We tried going into a mattress store and simply stated which model of mattress we wanted, and talked the sales person down to the MAP price. We asked them “what is the MAP price for this mattress?” and got a few startled looks from the salespeople, who are obviously not accustomed to walk-in customers actually knowing what “MAP” even is. The challenge is, more often than not, it involves going to a few stores to learn what the real MAP price is.
Unfortunately there is no book or website for us to lookup home furnishing prices or the “dealer cost” of home goods so you cannot determine how much the MAP really is. The best you can do is shop around and try to get a consensus, based on what salespeople are willing to tell you. Please don’t email me asking where you can look it up, because it’s nonexistent. They are not obliged to tell you the MAP. But you are also not obliged to open your wallet.
If all these home furnishing stores are marking up their prices, what’s the solution then?
In case you haven’t already read our previous article about IUIGA, there is a way to avoid paying these markups because of a new way of doing business. IUIGA has been making waves online since their launch one year ago, achieving revenue of half a million within their first 100 days.
At first impression, you may notice a close resemblance between IUIGA’s minimalist home goods and Muji’s “brandless” inventory. Out of all the brand mixtures, pricing sends out the most important signal in selecting target customers. And here’s how IUIGA has priced their products differently from Muji. We have picked several of their best sellers in different categories to make it more representative of the differences in price:
How does IUIGA keep their prices so low?
When you buy an item from a traditional retailer like Muji, you’re paying a lot more than it costs to make it.
Other than manufacturing costs, you’re also paying a whole bunch of hidden costs, which is essentially related to the different middlemen layers an item goes through, such as distributors, suppliers and retailers. Needless to say, in this scenario, by the time you see the price tag on an item that has gone through all this, it is not going to be anywhere near its original price.
IUIGA’s business operations are a lot leaner than big brands. Crucially, they partner directly with top manufacturers and operate largely online. In doing so, they are able to bypass distributors and retailers to remove the traditional middlemen markups that consumers typically pay. These savings get passed on to you, the customer. If something costs less to manufacture, you pay less for it. No need to worry about prices getting marked up for mysterious reasons.
Build your home with luxury-quality furnishings without burning a hole in your pocket
IUIGA works with over 200 manufacturers currently, and if you think that Muji is the only brand with similar products, here are some items from manufacturers behind household brands like Uchino, WMF, Zwilling and Le Creuset that caught our eye as well:
German Stainless Steel Knife Set ($84.90, U.P. $508 – Same manufacturer as Zwilling)
French Casserole Pan ($56.00 – 63.00, U.P. $359 – Same manufacturer as WMF)
Non-stick Wok with Ergo Handles ($93.90, U.P. $239 – Same manufacturer as WMF)
Is this legit?
Now, how can IUIGA get away with selling the exact same products as Muji, WMF, Uchino, Thermos, etc. you might ask?
Well perhaps it’s time we reframe our thinking around the traditional retail model. And why not? If it’s not already obvious by now, you are literally getting the same product for a fraction of the price. Because it’s from the same manufacturer, this isn’t a case of “oh wow these look like the real thing”. These are the real thing, just without the unnecessary markups.
Just let that sink in for a while.
What these products are known for are design and great quality… neither of which is compromised by buying from IUIGA at a fraction of the price. So instead of worrying about how much you need to spend to furnish your home, you can now stress out more about how to make your home look as good as possible, and to your liking, without leaving you sad and broke at the end of it all.
Not only that, but they also carry a wide range of other products, from personal care, stuff for moms and babies, all the way to electronics and apparel. If you’re tired of paying an inflated price for no real good reason, hop on over to their site to check out what they have.
What do you think of products purchased directly from the manufacturers of big brands? Would you buy them? Share your views in the comments!
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