Funeral business getting competitive online

/ Source: The Associated Press

Strapped for cash and in need of information about funeral planning, Betty Holleman turned to the Internet after her husband Victor died.

The couple, married for 17 years, hadn't really prepared for his death in November. So Betty Holleman, like a growing number of consumers, went online.

Even on the Web, funerals are a competitive business, and not one easily negotiated by grieving relatives. There are many Internet funeral resources, most of which are Web sites of individual funeral homes or casket makers who sell directly to the public. There are also sites that are primarily directories of funeral homes.

Holleman ended up with TributeDirect, a Houston company that sells discounted caskets, urns and monuments and also offers free funeral planning advice through a toll-free phone number.

"I was so devastated and they just took me by the hand," said Holleman, 63, of Freeport, Texas.

Offering counseling is a way for a company to differentiate itself in a business still dominated by traditional funeral homes.

"They (funeral homes) have a lock on it because consumers will pass on responsibility of making those initial choices to the funeral director or their priest," said William Burns, a Johnson Rice & Co. analyst who follows the funeral industry.

The average funeral cost is $6,500, which includes a vault and a casket, but not cemetery costs, according to the National Funeral Directors Association. Caskets can be the bulk of that expense. For example, a steel casket can cost up to $2,000 or more, depending on the thickness of the metal. The cost rises depending on the material — cherry and mahogany caskets can cost between $3,000 and $5,000, and bronze caskets can run up to $10,000, said TributeDirect CEO Michael Rybarski.

Web discounts
Online sellers generally offer a discount. TributeDirect buys its inventory from U.S. casket makers and displays models online. Prices range from $795 for a steel casket to $5,000 for bronze or mahogany.

Caskets can be shipped anywhere in the country, and many offer next-day delivery through overnight shipping. About half of TributeDirect's business comes from New York and California, Rybarski said.

Rybarski, former chief marketing officer for Houston-based Service Corporation International, North America's largest funeral services provider, started TributeDirect last summer after acquiring online casket maker and seller WhiteLight. He said he wanted to provide affordable funeral products, while offering budget-conscious funeral planning.

The company's hospice-trained workers help families make arrangements, from picking out a casket and finding a funeral home for the service, to selecting a burial site and a gravestone. They follow-up with a phone call to ensure customer satisfaction and offer advice on bereavement care.

Funeral homes have faced competition from online sellers and also casket stores since the Federal Trade Commission enacted the so-called funeral rule in 1984. The rule allows consumers to buy caskets, urns and grave monuments from sources other than funeral homes and cemeteries. It also requires funeral directors to provide written price lists of all in-house products and services from which customers can choose.

Joshua Slocum, executive director of the Funeral Consumers Alliance, a funeral industry watchdog group, said buying funeral products online is no less risky than buying anything else over the Internet. Consumers can compare prices and decide if they're comfortable buying something they can't touch until it arrives.

He said online sellers and funeral home price lists allow consumers to familiarize themselves with funeral costs and make financial preparations before a death.

"Most of us know more about shopping for a home stereo system than we do burying our dead," Slocum said. "How many people stop at the first car dealership and take the first price offered? Not many. But they don't do this with funerals, often to their financial detriment."

Bob Biggins, president-elect of the National Funeral Directors Association, who owns the Magoun-Biggins Funeral Home just outside Boston, said online funeral product sellers aggressively market to consumers comfortable with the Internet. But he stressed that established funeral homes provide services, not just products, and price comparisons may not show that difference. His funeral home sells caskets from $595 to $9,000.

"In 25 years, I've had two families bring in caskets they bought elsewhere," Biggins said.

However, Slocum noted funeral homes can charge basic services fees that cover overhead, arranging funerals, conferring with families and obituary preparation — non-optional fees separate from other funeral costs. The basic services fee at Biggins' funeral home is $1,195, according to the price list posted on the home's Web site.

If consumers buy from TributeDirect or other companies and still use a funeral home, they can't escape that fee, Slocum said.