Rate and Switch

Q. Can I get a salesman to teach me about a product and then buy it cheaper from a discount store or the internet?

A. This phenomenon, which NYT columnist David Pogue recently called "Rate and Switch" (rate the item in one store, switch to another) has been around for decades. In my home town there was a small, upscale, camera store. The owner was knowledgeable and patient, and would often spend twenty minutes explaining to a customer the arcane of light meters, coated-lenses, and single lens reflex, only to have the customer exploit that information and buy the item on the cheap in Manhattan.

There is an obvious injustice in getting a valuable education from one merchant which you then exploit to get a good deal from another merchant. But it's important not to jump to conclusions, because the phenomenon is more complex than it may first seem.

One problem is that there has to be some limit to customer loyalty. It's true that the full-service salesman may spend twenty dollars worth of his time explaining how the product works, but often he doesn't charge twenty dollars more than the discount store, but rather a hundred dollars more. Now it could be he has to charge five times more to recoup the four customers who defected, but the fact remain that it's hard to demand that the customer who receives a service from the retailer should be obligated to pay any amount.

Another complexity is that the relationship between specialty stores and discounters can sometimes be parasitic, but in other cases it is symbiotic (mutually beneficial). For one thing, stores are desperate to get customers inside; many customers, even if they don't have any particular loyalty, will buy from the store they're in if only to save the time and effort of shopping around.

Sometimes the websites create the interest that draw people into stores. Going back to my suburban experience, the Manhattan stores had huge ad spreads which informed customers about the variety of cameras they sold; many people probably learned about camera availability and prices from the Sunday paper and then bought locally.

And sometimes the effect can work backwards. Web sites may invest huge sums in instructional interfaces which are then exploited by stores. For example, my books are sold on Amazon.com. Amazon provides a wealth of useful features: if someone is examining a similar book they may refer them to one of mine; surfers can benefit from customer reviews; and so on. Probably some readers find out about the books on Amazon and afterwards buy them from a local bookseller to save on shipping!

Also, retailers are not always on their own. Very often manufacturers and distributors take steps to help them. After all, they recognize the benefits of having full-service retailers provide product information. Some companies don't sell on the internet at all, or they limit internet sales to certain products and reserve others for full-service stores.

Let's recap the situation.

Deliberately taking advantage of a salesperson to get price or product information with the primary intention of buying somewhere else is certainly wrong. In Jewish law, this transgresses the prohibition of onaat devarim, causing needless anguish -- in this case, taking advantage of the store's resources without really giving them a fair chance to compete.

Even when you have an open mind, the fairest policy is to be willing to pay a premium for good service. If the premium demanded by a full-service store is reasonable, then most customers will find that if they account sincerely for the time and trouble of going somewhere else for the item, as well as for the confidence they will have buying from a salesperson they trust, they would be better off buying from the salesperson. Remember that rewarding good service is in everybody's interest. Just as you willingly pay a fifteen percent tip to a waiter who provides decent service in a restaurant, you should willingly pay a reasonable premium for a salesperson who provides service in a retail store.

At the same time, the retailers will have to find their own solutions. Some full-service retailers will lower prices; others may charge for instruction but give a rebate for customers; some will stock only unique items, and some may go out of business. Salespeople will have to become expert in providing selective information which won't give an advantage to competitors. (We discussed this issue in a previous column.)

This issue really exemplifies a common theme in the Jewish Ethicist columns. Neither markets alone, nor ethics alone, can create a fair economic system. Markets can provide the basic engine, the "meat and potatoes", of commerce, but a little bit of ethical sensitivity provides just the seasoning necessary for truly fair and mutually beneficial dealing.