By EconMatters
It has been a while
since I last wrote something regarding my personal shopping experiences. Today,
I am going to share with you a recent odyssey I went through in replacing two
cell phones and the respective carrier services.
I had two Samsung Galaxy S7s that I purchased new from Verizon in 2016. As you can imagine, with the speed of technological advancement, in four years' time, the latest model from the Galaxy line is now the S20. I am a firm believer that everyone needs to incorporate new technology into their daily life as a part of continuous learning and self-improvement. In addition, I wanted a bigger mobile screen for more enjoyable reading and entertainment.
After some research, I decided on the Galaxy Note 20. Naturally, since I have been with Verizon even before getting the two S7s, Verizon was my first stop. I reckoned I had some leverage: being a long-time customer and the current weakening economic environment, i.e., depressed corporate earnings and reduced consumer spending due to the ongoing pandemic.
I am not a high data user; my existing two lines were sharing a 2GB data plan and my monthly bill is around $80 (more on that later). My goal was to keep a similar shared data rate plan, but upgrade to two new Note 20s.
I headed to Verizon, and as expected, the parking lot and the store were almost empty. The "deal" quoted to me was $400 off on one phone, but there's a catch: one of my phones has to have a new number, and both lines need sign up for the Unlimited Plan for 24 months at $140/month for two lines, which would more than double my monthly bill. If I would like to keep my cheaper shared plan, I need to pay full price for both phones, or about $2,200 for two Note 20s.
Obviously, Verizon's "promotion" is to get people sign up for new lines (to boost company's performance metrics
for the sake of shareholders) and its higher-priced unlimited plan (a total waste
of money for many mobile users). I quickly did the math in my head, and concluded it was an
unbelievably bad deal for any consumers.
I questioned the Verizon
person how his company could come up with such an awful marketing campaign in
today's economic environment. The response was the most uninformed I have ever
encountered in the business and professional world. I was told there were
plenty of Verizon customers lapping up their "deals" as many were receiving unemployment and government stimulus payments. I totally disagreed with
this short-sighted view, but it did sound like the thought process of an
average American consumer. Bottom line is for me to take it or leave it. I left.
Xfinity Mobile, Who
Knew?
Then, I thought I should
pay T-Mobile a visit. After all, T-Mobile is Verizon's biggest competitor after
acquiring Sprint. I drove past a Xfinity center on the way, when I remembered a Xfinity Mobile commercial. I have Comcast/Xfinity for cable and Wi-fi. There was a short waiting line, but I
was quickly greeted by a specialist.
The Xfinity offer: Two Notes 20 Ultra 5Gs, $400 discount PER line. I get to keep my numbers with a 3GB shared plan at $30/month for two lines. It is a 24-month commitment, the same as Verizon. My monthly bill will be $105, only $25 more than my Verizon bill.
So, for an extra $25 a month for the next 24 months, I get to enjoy two brand new
latest mobile technology phones with 1GB more data. The most ironic part is
that Xfinity rents its mobile network/towers from Verizon. Then the specialist also reviewed my existing account yielding
further savings on my monthly cable/Wi-Fi bill.
Very Different Rate Plan
Talks
It is often confusing when comparing mobile rate plans and carriers. Here is something I
picked up by talking to the two carriers back to back. Verizon quotes its rate
plan on a per line basis (even with shared plans), excluding a per line
"base fee". That is why Verizon mobile bills usually end up a lot
higher than what was advertised or quoted. Xfinity is on an
all-inclusive basis. That is, in my case, for example, when Xfinity quoted me 3GB
shared plan at $30/month, it is all inclusive for two lines, and there is no
"base fee". Now you see just by comparing the two rate plans I'm interested in, Verizon
charges more than twice than Xfinity Mobile.
The Gray Aftermarket of
Gazelle
After getting rid of
Verizon, I need to deal with the two Samsung S7s. The two units were in
excellent condition, four years old and I always took good care of them with
protective cases and shields. A quick Google found S7 in good condition could
fetch $26 at Verizon, but $47 at Gazelle, which also has contactless option. I
opted to go with Gazelle as I was (and am) trying to minimize trips to any
public places. I packed the two phones in the box Gazelle sent. To ensure safe
shipping, I left the two cases with both phones for added padding and
protection.
Gazelle paid the quoted price for one of my phones. Then Gazelle claimed "scratches" and "damages" beyond acceptable condition for the 2nd phone, and that the price is now reduced to $13. There is absolutely no possibility that any of my phones could be in such condition as described. When I pressed for proof from Gazelle, the alleged "scratches" and "damages" became "image burn" and "defective screen".
I believe either Gazelle damaged my phone during receiving or inventoried them incorrectly. And of course, I did not document or take pictures before sending my two phones. Since I just wanted to get this 'project' over with, I ended up taking $13 for my 2nd phone. (I will not bore you with the less than pleasant encounter with Gazelle Customer Service.)
In the end, Gazelle paid
an average of $30 for my two units in excellent condition, on a par with the Verizon quote. Most people will be initially lured by the much higher
trade-in quotes. After shipping your phones, with time and energy already invested,
you become part of a "captured audience" taking whatever they
say. I mean what else to do, in my case? Reject the offer and ask Gazelle to ship back a phone
they damaged, or worse yet, not even mine?
I know, one could say
what is the big deal? It is only $30 we are talking about. But it is a matter
of principle as I do not believe consumers should take the consequence of a poor business practice and process.
Strategy & Response
to the Current Environment
Granted, I may have
bumped into a one-time special promotion from Xfinity, and there could be
better options from other carriers. Xfinity is a unit of Comcast, and I have
had numerous customer service issues with Comcast cable in the past.
Nevertheless, in this instance, Xfinity Mobile at least is aware of its market
position and understands what's required for its marketing strategy and staff
training in response to the current COVID-driven economic downturn to gain new customers while leveraging existing scale of Comcast cable/Wi-Fi
business.
Remember how the Xfinity
person also re-configured my cable bill? That was a customer
retention move reflecting a proper customer-facing employees training program.
From that perspective, I am almost inclined to think Xfinity Mobile must have
an entirely different management team from that of Comcast's cable business.
Regarding Gazelle, it is an e-commerce LLC based in Boston, MA, much smaller and less established than Comcast and Verizon. Based on my experience, I believe the company is doing its best to adapt to and survive in the current environment. However, I do think its model and internal process/logistics is flawed thus doing disservice to its customers. Until that issue is addressed, I personally will not deal with them in the foreseeable future.
Delusions of
Grandeur?
In contrast, my Verizon experience indicates the company appears complacent about its market leading position.
Indeed, Verizon has been on a 20+ acquisition spree in recent years. The latest
acquisition came in last month with prepaid carrier Tracfone for $6.25 billion
giving the company an edge over rivals for low-cost phone service.
One high-profile
acquisition was AOL-Yahoo, which Verizon had to write down $4.6 billion in 2018. The growing
size and scale most likely give some delusions of grandeur, leading to a disconnect from customers and the business
environment, thus driving customers away. This is reflected in its current
marketing plans and poor (or lack of) customer-facing staff training. The store person also portrayed an arrogance on behalf of Verizon that it is the only game in town, which is far from the actual mobile market landscape.
Both Comcast and Verizon are deep-pocketed. However, just look at how Xfinity Mobile can offer me more data for less than half of what Verizon charges. That suggests margins in the mobile business are high enough for a lot of pricing flexibility by the carriers. And apparently Verizon is making a lot more from its customers than its competition and plans to continue doing so with one bad "promotion" after another.
Failure to respond to rapidly changing market conditions (which explains the AOL-Yahoo write-off), and
poor staff training means many troubles ahead. It will be too late to rectify when numbers do the talking.
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