Friday 11 April 2014

Go on, confess

Confession is good for the soul. So I’m told.

It’s certainly good for consumers. Sometimes it’s even good for business.

I know of a chain of furniture stores that gets a lot of complaints, not because they’re any worse than the rest, just because they’re one of the biggest. However the thing that interests me is that the MD of this company insists that we send every complaint we receive directly to him. He doesn’t want to hear about problems later via his enormous network of staff, he wants to be the one who hears about them first. He’s the one that can then shout down the phone at his people telling them to fix things as soon as possible. Or preferably sooner.

Even better is that when he gets to the bottom of the problem and discovers that his stores have been a fault he’s the first to confess and say, “Whoops, we got that one wrong, didn’t we?” He then is reliable enough to make sure the problem is fixed as soon as possible. He’s smart and grown-up enough to confess when he or his staff have made a mistake.

Of course this honesty and maturity please customers with problems and probably also make them more loyal customers. He also wins our support on those occasions when he comes back to us and tells us that, on this occasion, the customer is either mistaken, naïve, profoundly stupid or lying. I’m prepared to believe him on these occasions because I’ve learned to trust him because of his previous confessions.

It’s exactly the same with a particular cellphone store. Again they have their fair share of complaints but again the MD is mature enough to say when things have gone wrong. And then to fix them wherever possible. All because he’s smart enough to confess when his company is at fault.

A few weeks ago we reported on South African chain stores who appeared to be marking up the prices of goods for sale in Botswana by anything between 25% and 97% compared to the prices identical items they were selling for in their home country.

One store, part of a huge South African group with several outlets in Botswana, was selling a range of cosmetics on specially made shelves that display the prices in Rand for their South African customers but they then manually label each item here with the Pula price. We saw a lipstick for sale for R69.95 but labeled for sale here for P79.95. If you adjust for our lower VAT rate and the current exchange rate and you find that the price should really be just under P53, not just under P80. The markup is 52%.

Another store, part of a South African cosmetics chain, does exactly the same thing, but worse. They were selling mascara that in South Africa is sold for R79.95 but which here in Botswana they’d priced at exactly P100. Get your calculator out and you can work it out for yourself. The price here should really have been just over P60, not P100. That’s a massive markup of 66%, one of the highest we’ve seen so far.

We contacted the head offices of each of these stores in South Africa and asked them if they could justify these enormous markups. I expected them to make excuses.

However, to my amazement they came clean. One assured me that they would contact their local store in Botswana “to address the matter regarding the pricing of items.” The other told me that they had “alerted our regional and store managers to the incident and have asked them to check their stock carefully for the discrepancy you highlighted. We’ve also requested that store managers, as well as our suppliers, be more vigilant in checking all product and pricing before displaying in stores going forward.”

All of that sounds a bit like companies getting caught and then confessing to me.

Then there’s the other type of confession. The inadvertent one. The one that slipped out all by itself.

You might recall World Ventures, one of the longer-lasting pyramid schemes brought to Botswana. They base their “business” on the sale of holiday discount vouchers. As we've said endless times before, a discount is not a product, it's just a reduction in price of a product. Because there is no real, tangible product offered by World Ventures it's fair to call it a pyramid scheme.

I’m not the only one who thinks this. The Gaming Board in Norway recently announced that following a lengthy investigation they are certain that World Ventures is a pyramid scheme. Their main criteria for deciding this was simple. 95% of all the money paid out to recruits in Norway was for the recruitment of other people, not from actually selling things.

So what do their local representatives say about the scheme they are selling?

I texted a local representative and asked how much it was to join. P3,600, I was told. I then asked if “I can make money just by recruiting other people” (which you’ll remember is the definition of a pyramid scheme) and her answer was very simple.


So, by this representative’s own confession World Ventures is a pyramid scheme. I suspect WorldVentures are feeling a little threatened if even their own representatives are being so honest. Honesty isn’t a virtue often found among the people running such scams.

We need more confessions. We certainly need more stores and suppliers who are prepared to be honest when they’ve screwed things up. The goods news is that more and more of them are doing so.

The bad news is that you’ll only get confessions from people running scams like World Ventures either by accident or when they’re behind bars.

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