It’s December, which means that Christmas is fast approaching. Children all over the world are realizing that they have to start being nice to stay off Santa’s naughty list.
Unfortunately it also means that there are those in society who are starting to dread the costs associated with the festive season.
Then, there are the more unscrupulous in society who are willing to take advantage of this situation for their own nefarious purposes.
What Is Castle Hampers?
I was watching TV today during breakfast and noticed a new Christmas Hamper advertisement come on for ‘Castle Hampers’. It was similar in style to the more common Chrisco concept. Which helps them break down a large single cost like Christmas over an entire year. They do this by charging a a small weekly amount making it much more easy for consumers to budget around.
So when Christmas rolls around you have a sizable savings account that you can use to buy hampers and gifts from the site.
Of course, this ‘convenience’ comes at a price. As the sites charges a hefty mark up on goods compared to what you could buy just by walking down to the nearest store.
How Castle Hampers Market Themselves
Most of their ‘Christmas Hamper’ style marketing is based around helping the poor mum’s and dad’s who are living on struggle street. Providing them an easy way to pay for large yearly expenses.
After Xmas or similar event is finished, the cycle starts again, and you spend the entire of next year saving for the following Xmas.
Castle Hampers provides the perfect solution to a stress free, affordable way to ensure you and your family have the best Christmas ever. Tens of thousands of customers can’t be wrong and have been enjoying the benefits of Castle Hampers for almost 10 years.
The hampers themselves range from food to basic gifts to entire entertainment systems.
Although Christmas Hampers are their main audience and selling point. They also have a ‘Savings Club’ allowing you to buy normal every day goods for the bathroom, kitchen or outdoors.
How much can Castle Inc make in a year?
I remember looking at a Chrisco pamphlet when I was a child. Even then, I realized how much of a bad deal it was. So with those per-conceived notions about Hamper services I was expecting a 50% markup on products.
I jumped onto the Castle Hampers website and clicked on two different options on their front page. The ‘Chicken & Chips’ and the ‘Samsung Full HD 3D Smart 40in LED TV’. I chose these ones mainly as they are quite easy to evaluate against alternative sources.
Price Check #1 – Chicken & Chips
The Chicken & Chips option is an entirely unhealthy option of… you guessed it, chicken and chips. Eating habits aside, I cross referenced these against both the Woolworths and Coles online shopping carts to compare the difference.
The first thing I noticed was their pricing mechanism is wrong. $3.31 for 48 weeks is 158.88 not 158.60. But in the scheme of things that’s not much. Lets’ look at how the comparison turned out:
Neither Coles nor Woolworths had all of the items available, with Coles supplying a larger range. In the end I took the best offering from both to determine my total. (Coles is in blue, woolies in green). I was also able to upgrade the Crinkle Cut chips from 1.5kg to 2kg for a cheaper price as it was on special.
Castle Hampers: $158.88
Best Of Coles & Woolworths: $111.62
That is a 30% price saving by avoiding Castle Hampers
Price Check #2 – Samsung Full HD 3D Smart 40in LED TV
For those who are facing financial difficulty, and are forced to use savings schemes like this just to be able to afford food and gifts at Christmas time. Obviously purchasing a large expensive 3D TV set is the perfect solution to your problems!
This time I compared the product against Harvey Norman and JB Hi Fi which are two of the larger electronic retailers in Australia. Harvey Norman is known to be quite expensive, while JB Hi-fi is considered to be good value. So I thought it would be an interesting and fair comparison.
Once again their payment total was marginally incorrect when multiplying it by the number of weeks.
The TV and keyboard were easy matches, but I just went for the cheapest 3d glasses that I could find. As expected Harvey Norman was the more expensive of the two.
Castle Hampers: $1505.76
JB Hi-Fi : $915.56
That is a 40% price saving by avoiding Castle Hampers.
Castle Hampers Highway Robbery
Castle Hampers may pretend they are helping you to save for Christmas. But what they are really doing is stealing 30% of your money every year. Even credit card companies aren’t that evil.
Cancerous Business Plan
Most business’s that are successful have some sort of protective moat that allows them continue to be successful over the long term. Whether its lowest prices, largest offering, brilliant marketing or essential products. They all seem to have some sort of special sauce that allows them to thrive.
Others take the low road, and prey on the financially illiterate. They take a fairly common and widely available product and wrap it up into a complex beasts then offer it at excessive markups.
Unfortunately the sheer numbers of dimwitted buffoons that our education system seems to produce means that there is an almost endless supply of willing participants. And like lambs to the slaughter they will buy anything that is placed in front of them, and will even go so far as to defend the company for all of the help that they were supposedly provided.
Christmas Hamper providers fall into this latter group.
Any business that can make people willingly hand over money to buy something for a higher price, than what they can get from the corner store is doing something right. Christmas hamper websites really are in the highway robbery business. With ’tens of thousands of customers’ they have obviously had success.
But there is more to this business case than just overcharging for readily available consumer goods.
As much as it first appears, the company isn’t selling goods. They are selling a savings scheme for the poor. Offering an easy pay by the week or month scheme so that a large bill doesn’t hit you once Christmas rolls around. The end product (in this case the Christmas Hampers) is just a smokescreen and the reward for their efforts.
They stop you from focussing on the price and make you worry about the large cost of hosting the best Christmas ever !
In that way, they can make you ignore the fact that it’s 30%+ overpriced, and make you ignore that there is no reason that you need to have the best Xmas ever.
Just worry about the scary bills!
The target audience are those who do not know how to budget for themselves and can’t do basic maths to realize this is a bad deal.
In other words, their target is the large majority of the general public.
These Hampers are being sold as a great savings mechanism to spread the cost burden over an entire year. Ensuring that ”you and your family have the best Christmas ever.” They then package up lots of goods into a single product making cost comparisons difficult to do without sitting down with a spreadsheet. Considering their target audience are the financially challenged, no one is actually going to do that.
Buy In Bulk – Sell In Portions
Considering my price comparisons were buying from other retailers as single items, you can image the pricing power and special deals that Hamper companies have by buying in bulk directly from the retailers. Yet even with this pricing power none of those savings come to the consumer.
Christmas Hamper style products take advantage of the short sighted simpletons in society. Those who live paycheck to paycheck and never have enough money when Christmas comes around.
Their position in the market is as a friendly savings tool. Castle Hampers allows you to not have to think about saving yourself and just enter the scheme. As such for a small 30% fee, all of these troubles can be taken away from you.
The Moral Lecture
If you are in so much financial strife that schemes like this make sense, then you have deeper issues that you need to deal with.
No one wants to spend the holidays worrying about finances. So if you are in trouble, start downsizing expectations now.
It’s probably best to have a small Christmas this year instead of splurging. After all, the Christmas period is about spending time with your family and being happy. It’s only when retail stores realized they could make a few bucks that it became about gift giving.
Budget and Savings Accounts – Christmas comes around once a year. It does not sneak up on you, it’s not an unlucky event that hits you out of the blue. It is very predictable, and rolls around once every 52 weeks. Determine how much you plan to spend and divide that by your pay schedule. The result, is how much you need to set aside. Doing this will give you a 30% better Christmas than one with Castle Hampers.
Credit Cards – As sad as it sounds, a credit card is a better alternative. Most credit cards come with 1 month interest free periods and only charge 20% interest rates, Which is still far cheaper than what Castle Hampers is offering.
LayBy – A lot of stores have savings schemes set up which allow people to pay off goods over time. Once it is fully paid, then they can take the goods home. This wouldn’t apply for food, but works for consumer goods.
Whenever someone is offering you a great alternative, just step back, and spend a few minutes to do the maths to see how ‘great’ it really is.
Castle Hampers is a terrible savings tool. In fact, its not a savings tool at all. It is just a company that offers you a readily available product at a 30% markup.