Why price comparison sites are evil
From Unfocusgroup.org
Originated by Brendan Fernandes
It may seem like a good thing to want to save money. It's a commonly-held belief that "big business" is out to rip us off, and that price wars are a good thing for the consumer.
Though value for money is important, I feel that since the industrial revolution, there has been an increasing trend towards commoditisation and that this has compromised the quality of goods and services. Consumers would rather pay a low price for the bare minimum than a reasonable price for something good.
Increasingly, consumers are treated like numbers and goods are treated as interchangeable commodities. We want to pay low prices for things yet we moan about Indian call centres and sub-standard fruit. I do think that there needs to be a better way. Key to all of this should be the recognition that things really do differ in quality. Foodstuffs do differ in nutritional content and taste, and there are marked differences in the quality of service for different companies, even for "utility" things such as energy and insurance. Without wishing to sound like a hand-wringing leftie, I do also feel that consumers need to make more conscious choices with regards to ethics, and that unscrupulous traders need to be rooted out.
Price comparison engines promote the idea that it's good to compare things on price alone. Sure, they also have customer reviews of things, but beware because a lot of reviews are fake.
In the olden days, consumers used to read Which? magazine and the likes to get a reasonably balanced, informed view of the overall value of goods and services, taking the subjective qualities into account. Such reviews were not infallible of course, but they did serve a useful purpose. This sort of thing has died a death, because most people get their information on the net. The trouble is that the net is an unregulated free-for-all, where anybody can say anything. There is no accountability for truth whatsoever. It's also possible for companies to make weasel-claims about products and services, disguised as customer reviews, that they wouldn't be able to claim themselves due to trades description laws.
Not many people know that there is no regulation or policing about this whatsoever. Yes there are laws, but the trading standards authorities themselves just lack the know-how to actually do anything about this. I know this because I have asked (and I have really asked, and I am a pain in the ass).
People wonder why, when they buy from the lowest bidder, they often get stung, even when the company concerned has a "five star" rating on the comparison website and a logo to say that they are part of a "secure site" scheme. Or when they buy the cheapest household appliance and it goes kaput after a year, despite seemingly glowing customer reviews.
I do think that there is a market for a comparison site where other dimensions are evaluated, and also where there is some accountability with regards to the veracity of reviews. With regards to the scrupulousness of traders, it's commonly assumed that trading standards always sort these sort of things out, but in my experience this is not the case, and we do need a private-sector solution to sort some of this stuff out. Again, proper comparison sites should follow up customer complaints and publish their own findings. Naturally, there is still scope for corruption, but if there were more than one such comparison site, they would keep tabs on each other and hence help root this out.
I think that the key is that proper human intervention is vital to all of this. Only a proper site with proper reviews will work. It would take some doing, as it's hard to see how such a private-sector scheme would actually make money. Price-comparison sites tend to work on an "affiliate" model which is intrinsically corrupt because it is funded by the commissions on sales. Magazines such as Which? magazine are funded by the consumer and this is always going to lead to better results. Yet, consumers are unwilling to pay for good consumer advice.
I'm not completely against commoditisation. For the poorest, commoditisation significantly reduces the cost of living and improves quality of life. But for those who can afford better, commoditisation actually reduces the quality of the goods and services that are widely available. Quality goods and services are considered "luxuries", and are rare and unduly costly. The forces of commoditisation create a culture whereby the suppliers who do well are the ones who cater for the mass market and who care about price rather than quality.
One then wonders why the mass market is skewed towards the tatty, low-price end rather than settling on somewhere on the middle of the spectrum, i.e. more value-for-money proposition. This is either because too many people are poor, or too many people are stingy.
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