Computer Rebates Not As Sinister As You Think 468
Lam1969 writes "Robert Mitchell dug up some details about rebates after getting up at 5 a.m. to get a free (with rebates) computer bundle at Circuit City. He had to deal with five separate mail-in rebates to get his money back, and decided to ask an expert about whether rebate come-ons are some sort of attempt to trick consumers. The reply: 'The big lie that the media and attorneys general want you to believe is that all the retailers and manufacturers are crooked and the reason [they] do rebates is breakage, which is people not turning them in.' Furthermore, Mitchell reports that retailers are making the process easier, by printing rebate forms and receipt copies at the register, and letting people track rebates online. His conclusion: The trade-off of having to do a few hours of copying and envelope-stuffing is worth the price of a new computer, so stop whining -- 'suck it up and accept your rebate check like a man.'"
If they really wanted to make it easy... (Score:3, Interesting)
don't count your chickens before they hatch (Score:5, Interesting)
from my experience... (Score:2, Interesting)
Rebates ARE worth every penny! (Score:4, Interesting)
As long as I know exactly what I want when I walk in there I usually end up with a nice deal.
Quite a few people complain about Best Buy not honoring rebates for a myriad of reasons but again, I follow the instructions on the rebate form they give me at the time of purchase, send them in and usually have a rebate check within 3 weeks.
Ka - Ching
Re:Duh (Score:5, Interesting)
When you get right down to it, FOUR rebates to mail in is ridiculous. The all went to the same building, as I recall, just to different PO boxes. There's no reason for that as far as I can see. Even if there is, I propose that the retailers ought to tell you when you'll be having to send in more than one rebate form (and how many, in that case).
Deliberately complicated (Score:2, Interesting)
Rebate Department 4913
City, State, 12345-4931
Rebate Department 4931
City, State,12345-4913
Those rebate departments and zip codes MUST have been chosen to make it complicated for the consumer filling in both rebates.
Re:Why? Tell us WHY? (Score:5, Interesting)
Just off the top of my head
Re:Why? Tell us WHY? (Score:5, Interesting)
"We're WallyWorld, and we control 99.867% of the retail market for your product. If you don't offer a rebate, we won't advertise your product, we'll advertise your competitor's product. In fact, we won't even carry your product."
Retailers want rebates because it lets them hold (and advertise the hell out of) a sale without actually having to put anything on sale. The retailer benefits from increased revenue from more selling product at full price to the marks, er, consumers, who think they're getting a deal.
The failure rate for rebates - the percentage never actually paid, even though they're sent in, is also quite high, because manufacturers don't like rebates much at all.
The Joy of Buy.com Wireless Rebates (Score:5, Interesting)
Naturally, I wasn't going to slack when it came to filling out a $200 rebate. Within a couple days of getting the phone I took an hour off to fill out the rebate form. Only one problem. The box they sent me didn't have the required UPC code. But whatever, I'm sure I could call them to straighten that out.
So I filled out the rest of the sheet and had almost everything together, and then I noticed: You had to wait six months before sending in your rebate. And at the six month period, you had to include your most recent cellphone bill.
What absolute stupidity. I mean, why couldn't they accept the rebate right away and say that you won't get paid for six months, when they do a check to make sure your cellphone account is in good standing? And it gets better. At the end of that six month period, you only have a thirty day window to get your rebate in!
How many consumers are this organized to send in a rebate not earlier than six months after purchase, and not later than seven months? Well, lucky for me, I am. I've made a note on iCal. I've also made a mental note: never purchase anything from Buy.com again.
This is how they make their money (Score:2, Interesting)
1) Breakage. Folks forget to mail it in. They win.
2) Bendage. Folks mail it in, then forgot that they mailed it in. Slight problem and,
3) Bondage. You didn't follow fine print item #12. Rebate rejected. They win.
4) Recharacterization. You comply, get rebate. They keep extra markup from sales tax they don't have to report. They win.
Re:Who is this, Joe Isuzu? (Score:5, Interesting)
As any first-year MBA knows (and has been mentioned on in a few previous posts here on Slashdot) there are basically three reasons why rebates exist:
1) Breakage. But this reason has been in steady decline and is increasingly unjustifiable. While it used to be that only 40% of rebates were turned in, that number has been steadily climbing for the past ten years -- yet rebates are more popular than ever. Furthermore, quite a few retailers have streamlined the rebate process with the explicit goal of making rebates easier to file. Also -- and this is particularly interesting -- recent studies by marketing academics have shown that there is a practical ceiling on the percentage of sales that can be counted in rebate breakage. Specifically, rebate rules (tear out the UPC) basically prevent people who are buying gifts from filing rebates. It is estimated that 20-30% of all retail sales are gift items; so if only 40% of rebates are turned in (the number nowadays is closer to 60%), that's more than half of the people who could file rebates.
2) Accounting. This has been mentioned on Slashdot before, and it's now probably the #1 reason why retailers -- particularly during the holidays -- have rebates. A regular sale eats into margin AND sales. A rebate "sale" only eats into sales. CEOs look better on paper when all of their "sales" are rebate and not direct-price based. This is actually discussed in some accounting textbooks!
3) Marketing/positioning. For example: Circuit City buys a bunch of Western Digital hard drives. They don't sell well; in fact, they just sit in inventory. WD is concerned that CC won't buy from WD anymore, because their product isn't selling (probably because it is more expensive). So WD issues the rebate (or has CC issue the rebate). In effect, its letting CC put existing inventory "on sale" at no cost to CC -- and CC now has an incentive to put the rebate in its weekly flyer, etc. This reason is why so many rebates are store and not product-specific -- even if they are manufacturers rebates.
Anyway, like I said -- the poster doesn't know what he's talking about. When rebates were first concieved in the 80s, his analysis would be correct. But it isn't, not anymore.
-Shylock
From the article re: prepaid gift cards (Score:4, Interesting)
Even in California, where it is illegal for a gift card/certificate to expire, these cards are good money makers and in some way take advantage of the customers.
Jack In The Box sees so much revenue potential in the card that they are giving customers 2 free tacos for getting a gift card with $10 or more.
Mickey D's is giving free $1 gift cards with certain purchases, to show off their new gift card system.
Although gift cards are not as bad as rebates, retailers honestly don't have them for our benefit. They have them because market research shows some certain amount of money is never used, meaning easy profit for the store.
Even if more gift cards were redeemed, if you've ever had a business class, you know everything revolves around cash flow, and gift cards are the epitome of cash flow.
Re:Rebates Suck (Score:5, Interesting)
Re:Easier still? (Score:3, Interesting)
Tax deductibility is better though (Score:1, Interesting)
Re:Rebates are a tool for manufacturers. (Score:2, Interesting)
Then why don't electronics manufactures do stuff like food manufacturers and give out coupons. They work exactly like rebates except they don't get the opurtunity to screw you over.
Re:From the article re: prepaid gift cards (Score:1, Interesting)
Re:Easier still? (Score:4, Interesting)
Re:Easier still? (Score:5, Interesting)
I call shenanigans.
Time was, a manufacturer could put a sale discount on a product, and retailers would get a refund (or future discount) on items sold during the sale period. The retailer was in the position of claiming the refunds, sort of like the AMD vs Intel lawsuit thing going on, but usually without the pressure of screwing over competitors.
I don't know if rebates come out of pressure from the stores, whom obviously would benefit from getting out of this task while still being able to advertise a "sale" price. Or perhaps strategy from the manufacturers, where many claims are not filed, and many others can be denied/delayed/ignored. Perhaps collusion of the two. But it puts the effort of claiming the refunds on the shoulders of the consumer -- with as I mentioned lots of tricks to deny or ignore claims. It is certainly not the only way to put existing items on discount, just "better" for both the vendor and the maker.
Rebates...best and worst case (Score:3, Interesting)
On the flip side, against my better judgement my brother bought a stack of CD-Rs on a Boxing Day sale with a $20 rebate (or around there). Months later he still did not receive his rebate so he called and called and went to store and called again. After a months of this and several "told you it would happen" from me I joking mentioned he should take the company to small claims court. Long story short he filed a claim, paid the $100 filing fee and had the company (which luckily was based in the province we lived in otherwise he would not have been able to file a claim to begin with) served with the statement of claim (or whatever they call it in small claims terms). He received a call a few days later from the company which was all apologetic and a cheque for the rebate and the $100 filing fee. All this for $20, but I guess he made his point.
So it can go both ways.
Re:The Office Supply Depot... (Score:3, Interesting)
The system you are talking about, where people are attracted to a sale because the price is low, and then the store makes it tempting to add on extras with a higher profit margin, can be done with old-fashioned, honest-to-goodness low prices. Rebates need not be involved. And if that were truly the only reason the rebates were there (to offer lower prices) then the stores would be losing lots of money on the people they pay to process rebates and mail checks.
No, my friend, rebates are just a way of "cooking the books." A store is obviously not going to offer a product for a loss*, so they price the product right where they want it, then mark it up an extra $X and offer an $(X-Y) rebate, where Y is the cost of processing the rebate. That way, if every single person mails in and receives their rebate check, the company breaks exactly even. However, even if a SINGLE customer out of millions doesn't send in the form, or is disqualified for not following instructions, then the company just made some money for essentially doing nothing. And even if only 1% of the customers don't mail it in, the company is rolling in it. The same thing is true of gift cards, for mostly the same reasons: they are pure profit.
What disturbs me is not that I am very slightly inconvenienced by the rebate form, it's that the companies would have the gall to do this sort of thing in the first place. I would like to know what happened to plain old customer service. How about offering a quality product at a reasonable price with knowledgeable staff and no strings attached? Is this something that major retailers cannot grasp? Is the drive for another 0.00001% profit margin so strong that you are willing to alienate, frustrate, and anger your customer base? This, simply put, is not good business, yet it's rampant. And just because some group who works in the interest of the large retailers comes forward and gives the rebate situation a positive spin does not justify the practice.
By the way, I also get as upset at grocery store SuperSaver cards. If they don't know who you are, you pay more, and that's unfair. Make the benefits of club membership something OTHER than the prices in the store. Give out frequent flyer miles or free teddy bears or something. Don't punish those of us who wish not to be spammed.
OK, rant over. We now return to your regularly scheduled lives.
*Certain extenuating circumstances do exist where a company will offer a product at a loss, such as inventory reduction, going-out-of-business, or lock-in, where other business units make up the cost (like the X-Box, or cell phones with plans). However, these are *exceedingly* rare in the major national retailers, and usually only happen in furniture stores.
Re:Is this just a US phenomenon? (Score:3, Interesting)
I was wondering why I never saw something like that here at Brazil (and how do you manage to be robbed like that). Well, here it is illegal to anounce a lower price than the selling one (even if you plan to make a rebate).
If a consumer comes to a shop that announced something by R$19.99 with the note "R$119.99 with a R$100 rebate" on small letters, he can pay only the R$19.99 for the item.
Brasilian consumer protection law was based on some european countries, so expect the same from there.
Re:Tax deductibility is better though (Score:3, Interesting)
Welfare is less than 1% of the federal budget.
Though I assume you were just trolling, or you'd post with a username.
Re:BS or as the french say leBullshit (Score:3, Interesting)
AFAIK, In most countries, they do count as illegal. This topic, without mentioning it, pretty much only applies to the US.
The put them out full well knowing that something like only 40% of rebates are returned.
You forgot to mention the 90% of those rebates that customers do file for, which the company conveniently ignores (aka "rejects without notification"). Okay, I made that number up, but back when I still naively believed "Oh golly gee, lookit that, I can get this $200 hard drive for a penny after the rebate!", I batted a perfect zero on at least half a dozen tries.
As with class action suits I find myself having "won", I've learned not to even bother. I now completely disregard the rebate price when making purchases. I assume it costs full retail, and unless that still beats all competitors of comparable quality, I move on to the next item in the "sort[ed] by price" list.
I'll take the bait (Score:3, Interesting)
Re:Easier still? (Score:3, Interesting)
Is there money in being an 'address broker' for rebates? That'd be classic...
to screw the share holders, that figures. (Score:3, Interesting)
So you lie to your shareholders about your earnings. Why not? The whole deal is a big FU to the customer and the employee.
I know someone who actually worked at a CompUSA and they hated it. They told me the whole place was all about sucking the maximum amount of money from the customer and that it was a miserable place to work. The work was monotonous and management was as abusive to them as they were told to be to the consumers. If you think rebate coupons are rotten on your end, think about the peon on the other side of the register.
This person was amazed when I told them that I had worked at places that actually cared about their customers and tried to get them what they needed instead of what earned the most money in order to build customer loyalty and trust. It was like a culture shock after so many months of abuse.
The whole Wintel group is a kind of anti-company. A company exists for the benefit of three groups: the shareholders, the employees and the customers. No one group should be screwed for the others and any company that does will get around to screwing them all. Microsoft, CompUSA and ComputerWorld all collude to screw people. Microsoft has the upgrade train to move their software and other people's hardware. CompUSA tells you how smart you are to buy into it all, when they are not telling you to suck it up for a "rebate" you may or may not ever receive. When someone tell you to "suck it up", you are in bad company and it's time to go somewhere else.
The whole thing is a huge fraud. Not sending the rebate checks at all is not beneath companies that have paid PR firms to write letters from dead people to congress critters, sued public school systems, operated close to 20 years before paying a dividend and think spyware and popups are part of business as usual. I'd rather spend a few hours making a computer from the garbage work than I would filling out rebate forms with what some dumb slob thinks is valuable marketing data.
THIS is why they do rebates... (Score:2, Interesting)
Re:Differential pricing (Score:1, Interesting)
Plus, as several people have mentioned, companies have recently responded to the criticism and made rebates easier by printing them at the register and providing online tracking. Ultimately they will put up just as much effort on their end of the haggle as the market allows. If they're too tough, then a lot people get pissed off and stop doing business with them. If they're too easy, they don't make as much as they could. So they're trying to find a middle ground that maximizes long-term profits.
Re:Rebates Suck (Score:3, Interesting)
That UPC "send it in" stuff really sucks. I've purchased a bunch of those routers and in the documentation it says that I must have the original UPC for the warrantee to be valid, but on the other hand, I need to give it away (and the warrantee) to get the Best Buy rebate.
It's completely unfair. My Best Buy receipt should be enough for a warrantee. After all, it's not like they can't look up in their database and notice that if I've tried to submit the same receipt for multiple routers.
I don't often purchase those routers from Best Buy. But, sometimes the situation arises where I can't avoid it without delay. And, in those cases, I'm worried about eating the cost of a router because I wanted to get the $10 rebate, so I don't send it in.
And there is the reall dirty secret... (Score:3, Interesting)
Yes, the stores and manufactures rely on people not submitting the rebates. Yes the stores and manufacturers rely on "loosing" or denying rebates for added profit, but in the end, even in a best case scenerio, you loose the right to return the product. So, when the product does not meet the specs on the box. Too bad. If the product dies three days after you bought it, you have to go through the expense and hassle of returning the product to the manufacturer. This is something that they know many people won't do.
Re:The other thing to consider.. (Score:3, Interesting)
I was at the bank the other day. I walk up to the teller to take care of my transactions and, after she accesses my account, she says,"Oh. You live at such-and-such address? I used to live in that building as well."
WAIT.
How much do I want unprivileged people (bank tellers, rebate processors, anyone) to know where I live? I don't know where they live. Lord only knows who works in those institutions.