Best Buy Working Towards Ending Mail-in Rebates

chibbie writes "Best Buy is finally working towards ending mail-in rebates by 2007. Rebates will still be around, but you will be able to file them online, and receive your check much quicker. I guess this means Best Buy doesn't hate their customers after all."

Comments

It's Not Enough

[Al Mutasim]

Why not just deduct the rebate at the cash register? We all know that's doable. No, their dream is to extract from each customer the maximum personal price. Those willing to pay full price do, and those only willing to pay a lower price get it. Willingness to do senseless work determines who falls in what camp--it's just like coupon clipping.

Re:It's Not Enough

[Chosen Reject]

It's not just shopping clubs. I used to always buy corn flakes at a wal-mart for $1.17 per box. Did it for several months. One day I walk in and suddenly it's on sale...for $1.17. The sign said it was normally $1.33.

Re:It's Not Enough

[bigdavex]

My mother regularly saves 30%~50% on groceries because she clips coupons and uses her frequent shopper card. She saves the reciepts to show me and everytime, I ask her when the supermarkets will just start giving her food for free.

She's not saving more than I am by going to the Low Bill or the Aldi and buying generics. The receipts only prove that she would've been screwed if she bought brand names at full price.

Re:It's Not Enough

[91degrees]

It is senseless. You gave them $500 for them to give back to you to get it at the price it would have been if there were no rebates.

Re:It's Not Enough

[itsmekirby]

Yes, coupons, rebates, matinee movies, senior discounts are all examples of price discrimination.

Price discrimination only "works" on monopolistic situations because of the downward sloping demand curve (they face the entire buyer's market, unlike competitive markets which are price takers) When this happened, they increase their revenues by pushing their revenue area (Price X Quantity) higher up into what some consumers are willing to pay but otherwise keep because of standard prices (consumer surplus, aka "warm fuzzy feeling")

Abuse of monopoly power, I'm not so sure. I am definitely against rebates because for many of them you don't get to read their conditions until after you have bought your item. You know its there when you buy it but don't know how much of a pain in the ass it will be (depending on the conditions).

Personally, I buy things assuming I'm not going to get any money back.

Re:It's Not Enough

[SurgeonGeneral]

You are right, mail in rebates are definately a tactic that companies like Best Buy use to get people in the door, but there is another reason to use mail in rebates that most people probably dont realize.

When you deal with mass quantities of sales like Best Buy does, a lot of money flows in and out the doors. Keeping the money in the door for as long as possible before it has to flow back out allows for the corporation to maximize its use of the money while it has it.

If it takes a minimum of, say, 40 days to process a mail in rebate, thats about 30 days that Best Buy gets to hang on to your money. More correctly though, thats 30 days that it gets to USE your money. With the massive amounts of small purchases that come in, this really adds up, and the interest obtained from holding that money for those 30 days is a valuable source of income for Best Buy. Further to this, when you get a large cash float income for reinvestment like Best Buy can obtain through this process, the interest payments and investment returns go way, way up. I can gaurentee you that this is a revenue stream that Best Buy tries to maximize.

Re:It's Not Enough

[anthony_dipierro]

Why not just deduct the rebate at the cash register?

You mentioned one reason - it allows different people to pay different prices. Another reason is that it gives the company a short-term loan. But probably the most important reason for traditional rebates (complete with cutting and sending in the UPC code), is that it stops most resellers from coming in, buying the product at the low price, and then reselling it at a profit (some will just sell the item without packaging or without the UPC code, but there is a much smaller market for this).

To a lesser extent, and a situation which is still available with online rebates, it allows the store to enforce quantity limits more strictly. With an instant rebate, you can just pay cash and buy at least as many items as there are store clerks to sell them to you (and probably more considering that many clerks won't remember you or care). Considering the number of Best Buys within a few miles of my house, this could easily turn a quantity limit of 1 into a limit of 20. Combine that with reselling on ebay, and you've got a fairly useless discount system. In fact, this is already done quite a bit - take a look at the DVD sales at Best Buy each week and then look over the next week at what's getting sold on eBay.

Much of this could be accomplished through a store loyalty card, though.

Re:It's Not Enough

[Servants]

Exactly. It's a mistake to think of unredeemed rebates as "free money" for a company; the expected non-redemption rate gets factored into the price.

Suppose Best Buy sells a drive for $100, with a $50 rebate that half their customers send in. Then they take in $75 per sale, on average.

Alternatively, they could sell it to everybody for $75 in the first place, with no rebates.

Or, they could implement an online rebate system. If this leads 3/4 of their customers to get the rebate, the offered rebate could only be $33 instead of $50 to get the same average revenue per system.

It's an empirical question for the company which setup will allow them to make the most sales. (Note that this is somewhat independent from the base amount of profit they make per unit; if they decided a drive only needed to sell for $60 on average, they'd still be faced with the same set of choices.) It's a separate question which system an individual buyer prefers. If you're allergic to rebate checks, or if your time is extremely valuable, you'd prefer #2. If you just want the best price, it's in your interest to have a system like #1 where few other people bother to obtain the rebate, allowing the company to make the discount quite large.

One conclusion you could draw from this plan, then, is that Best Buy has decided to cater more toward relatively well-off customers who value their time highly, and less toward customers who shop on price.

onrebate

[Anonymous Coward]

Why assume that Best Buy is trying to help out the customer? Maybe they're trying to make it more efficient for themselves to eat your money.

Has anyone else had any experience with the online rebate firm onrebate.com? They ate my rebate claiming insufficient documentation (which I know is wrong...), but the worst part is they will not even allow me to resubmit anything to them. After waiting on hold for 30 minutes, the nice customer service representative explained how their decision was final, with no option for recourse whatsoever. Then she even transferred me to her manager, a filled-up voicemail box. Emails have gone unanswered for a month. Apparently they're affiliated with tigerdirect.com, which I understand has equally craptastic customer service. At this point, I'm gonna go to Fry's and try to get them to fulfill the rebate they promised me, as the rebate firm is effectively impossible to contact.

Personally, I think it's safe to assume that Best Buy is no different, and unless they prove otherwise, I'll assume that they "hate their customers after all."

i don't believe they don't hate their customers

[macadamia_harold]

Best Buy is finally working towards ending mail-in rebates by 2007. Rebates will still be around, but you will be able to file them online, and receive your check much quicker.

My guess is, the vast majority of Best Buy customers aren't really the net-savvy types (i.e., everyone I know buys computer equipment at Newegg, not best buy or the like). So this is merely an effort to combat the increasing amounts of people redeeming these rebates by mail.

This is the cynic in me talking, yes.

They still hate us...

[Fallen Kell]

They just want our email addresses now so they can sell to every spam company in existance, that is all. I mean, its a great plan. They know for a fact that everyone has access to mail, but not everyone has access to the web. I think the only real good thing about this now is that we will no longer need to send in the UPC code which may get "lost" and deny you the rebate.

opt-in

[TubeSteak]

guess this means Best Buy doesn't hate their customers after all.

Sure they do.

Best-Buy is computerizing their "Who to Hate" process.

The best part is that it's opt-in.

When you file a rebate, you opt-in!

Still good business sense

[satcomdaddy1]

Companies offering (presumably manufacturers') rebates are not looking to decrease their bottom line by offering them at the point of sale. They shouldn't even consider it!
We all know that rebates are a 'bait-and-wait' scam where the manufacturers lure customers to products with big dollar rebates, and then bet on the fact that only a small percentage will ever claim them.
As far as the ones that get their boxtops but never pay up, there should be a special level of hell for.

This is great for accountability.

[WoTG]

For me, the biggest "risk" with rebates was that the company handling the rebate could claim that they never received the rebate forms -- there is no way to prove that they aren't lying.

So, web based filing would be great. Staples and their "EasyRebate" works online now. I've used it once. The way they prevent cheating is that they link their sales database to the rebates database, thereby making sure that a rebate on a single sale is never claimed more than once -- which really was the whole point of the UPC code clipping portion of a rebate.

Rebates mean you pay extra taxes

[iplayfast]

Think about it. You buy a $1000 item for $800, but you are taxed on $1000. I hate rebates and will pay extra to avoid them. The only rebates are the ones on stuff thats being thrown out for next to nothing. Sometimes you can actually make money on those :0

I have an easier way

[davmoo]

There is a way to get your rebates from Best Buy even faster...shop somewhere else.

I have a simple policy. If I'm going to buy something from your store, you're going to give me your best price right there. If I have to deal with a rebate, that removes the incentive to shop locally, and I'll just go mail order. 99 times out of a hundred the mail order price, thanks to sites like pricewatch, is going to be less than the Best Buy price even less the rebate...and that takes in to account the shipping charges.

Best Buy and places like that use rebates for one simple reason...us stupid consumers put up with it and still buy their products. If everyone would simply quit doing that, rebate crap would disappear next week.

Optimism

[Guppy06]

"I guess this means Best Buy doesn't hate their customers after all."

No, it means they can harvest (and sell) your address and contact info without having to pay for the envelope opener and data-entry team. That, and the cookies (oh, the cookies).

Re:I don't think so.

[Achoi77]

They just makes it easier to keep track of people who flub up their rebate submissions. Mix up a rebate tracker number (or whatever it's called), or make a typo in your receipt number- and your rebate is invalid. BAM - there goes $60 you're never going to see. Perhaps you caught your mistake, and you want to resubmit it with the correct number; the computer will catch you resubmitting, and will consider you trying to dupe your rebate submission (you know, to 'catch' all those evil-doers that are trying to cheat the system by submitting over and over again *yeah right*) and will void your rebate. By having it all computerized, you remove the human element (i.e. the people that are paid to process your rebate forms via mail, and have them verify that the rebate is not void), and they save money by not having to hire people to process the mail-in rebates, AND accurately keep statistical analysis of the percentage of failed submissions to notify the accountants how much Best Buy has *saved* by not having to honor your rebate. Most of the time people won't care, since they will be able to do it right the first time, but if you mess up - poor internet connection, or cat jumped on keyboard and pressed enter or even just a typo or mixup- it just gives bestbuy a reason not to honor that rebate check.

Best Buy doesn't hate customers, they just hate customers that are trying to nickle and dime them - and that includes everybody that shops with rebates in mind.

Second Link

[evilviper]

From the second link:

"the customer is always right"

Why do people say that so often? It's obvious that nobody understands what it means.

It doesn't mean the customer can do no wrong, or that they should get whatever they want. It means you don't make an issue out of something that really doesn't matter. When they say they want a better pair of speakers for their Panasony stereo surround-sound system, you don't tell them the speakers that came with it are as good at it gets, you don't tell them that they've confused the brand name, and you don't tell them that stereo isn't surround-sound. You just let them go right along being right, and sell them the fancy looking expensive speakers. THAT is what "the customer is always right" really means.

They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts. They load up on "loss leaders," severely discounted merchandise designed to boost store traffic, then flip the goods at a profit on eBay. They slap down rock-bottom price quotes from Web sites and demand that Best Buy make good on its lowest-price pledge.

It really pisses me off that he groups those together, like people who bought a discounted computer are just as bad as those who are getting rebate checks from items they've already returned to the store. It also pisses me off that they are angry that some customers are forcing them to really honor the terms THEY MADE UP about price matching... if you don't like it, change your policy. Either way, accept the consequences of your own terms and shut up. Hell, the customers are forced to accept the terms even if they don't want to, why shouldn't Best Buy?

Re:Second Link

[loraksus]

It really pisses me off that he groups those together, like people who bought a discounted computer are just as bad as those who are getting rebate checks from items they've already returned to the store.

Absolutely. The head of Best Buy has an "interesting viewpoint" on the people who support his stores.
I won't mince words, he goes on batshit insane rants about his customers pretty often, and seems to think that he is entitled to make profit (and as such, anyone who costs him profit by using a coupon, pricematching, etc is stealing directly from him), but that really isn't the issue.
I have no problem with them validating rebates and punishing people who submit rebates and then return a product. Shit, if it becomes a pattern, take them to court or even have the DA file charges, but as you said, there is a difference between someone who engages in fraud and someone who wants to get a good deal and uses a pricematch and a coupon on an item that also has a rebate.

Speaking of which - they already have a computerized validation system for rebates that apparently takes data from their POS system, if you return something, your rebate submission will be rejected. The 2 year timeline is completely unrealistic and is, quite frankly bullshit (many others have pointed this out)

It also pisses me off that they are angry that some customers are forcing them to really honor the terms THEY MADE UP about price matching...

Oh. My. FSM.
Pricematching at Best Buy is like dealing with a schizophrenic. You never know what is allowed and what isn't. Sometimes you can use a coupon with a pricematch, sometimes you can't, sometimes the coupon price is subtracted from the pricematch, sometimes the after rebate price is used - it goes on and on and is really annoying.
Even the stuff on the "pricematching sign" can be completely ignored by the managers. Managers will just shrug their shoulders when you read the sign to them and say something like "Well, that's how it is" as if you are in an episode of the Sopranos.

To their credit, they have been cementing their position on several issues, although virtually every single policy change that they have set in stone has been hostile to their customers. Many of their rebates now specifically state that the rebate is not valid if a pricematch is performed on the item (terms like this were on the WD HDD rebate I filed about 6 months ago) and there are other examples.
I really don't care, their prices aren't competitive on the items that I purchase (techie stuff) and the hassle isn't worth it either. To say nothing of the fact that a lot of items that they have good prices on are on perpetual backorder or are cancelled with no explanation given (During the black friday weekend, they cancelled several of my orders - a laptop, a Radeon X700 and something else, but they charged my card as soon as I placed the order, and didn't refund it until several days later)

Re:For what it's worth...

[noidentity]

Wow, maybe they can streamline it more in the future. I'm thinking of a system like this (just an idea; don't attack me if I've oversimplified it):

1. Cashier scans item
2. Terminal looks up price
3. Customer pays that amount

Re:I don't think so.

[keraneuology]

Many (most?) Costco rebates are done over the web. If you flub up a number then it says "Sorry, you flubbed up a number - care to try again?" and has you repeatedly try until you get it right.

Re:I don't think so.

[Professor_UNIX]

Mix up a rebate tracker number (or whatever it's called), or make a typo in your receipt number- and your rebate is invalid.

I think you're being just a little bit unfair to Best Buy here. Staples has had "Easy Rebates" for awhile now and they really are a hell of a lot easier. Go to their website, type in the number on your receipt, and receive your rebate check two weeks later. Simple. If you can't type in a stupid number on a receipt then something is really wrong with you. I'd rather check a number a few times on a receipt than home some minimum wage monkey can read my chicken scratch when I hand-write a rebate onto those little receipt rebate forms.

Hate their customers because of this?

[TheSkepticalOptimist]

Do you know why people get rebates? Its because your allowing your home address, phone number, and/or email address to be sold to mass marketing mailing lists which increases the amoung of telemarketing, jumk mail, and spam you will receive.

Don't be deluded into believing mail-in rebates are beneficial. Even if you get 50% or 80% of the original item cost back in a rebate, this just means that the company your buying from is able to sell your information and make 10 times more profit with that information as opposed to selling the merchandise alone. The manufacturer is BUYING your contact information from you, but choosing to receive the money, you are authorizing your contact information to be sold.

Think of it. If a manfuacturer was truely benign and wanted to sell you a product at a reduced cost, then why not simply drop the MSRP by whatever the rebate amount is. This doesn't benefit the manufacturer. By collecting VALID contact information (i.e. you need to offer your correct mailing address to receive the rebate cheque), they are ensuring they get top dollar for their compiled mailing lists.

ALL REBATE OFFERS are a scam. Sometimes you will notice they say they can use the collected information and pass it to 3rd parties. Even if there is a check box saying you don't want to receive information from the manufacturer or 3rd parties, this isn't the case. Your just saying you don't want information about the product your buying, not in general.

If a manufacturer is offering a substantial rebate on a product, either wait a few months when they actually reduce the MSRP, or go to another store that is offering it for cheaper, but don't buy into mail in rebates unless you love junk mail and telemarketing calls at suppertime.

I actually thought Best Buy WAS thinking in the best interests of their customers by stopping the rebate process altogether, but was dissapointed when they only intend to facilitate quicker and easier collection of contact data using the internet. They will probably require you to provide a valid email address, thus increasing your incoming spam.

Look, at one time I was getting publishers clearing house junk mail every week, along with credit card applications and all kinds of junk mail. The ratio of real mail to junk mail was about 20 to 1. I stopped participating in rebate offers and was more careful about where my contact information is used, and I don't receive even ONE addressed junk mail item in a week.

Dumb people

[ylikone]

I have always gotten my rebate cheques also. I will have to assume that people that don't get them are just not following the instructions on the rebate carefully enough, meaning they don't include all the required bits or then they waited too long after purchasing and missed the rebate deadline.

Re:Dumb people

[Skater]

I'm not sure I buy that logic. Most people on Slashdot are probably IT or related, right? IT requires an attention to detail, so I find it hard to believe they wouldn't be filling those forms correctly. Maybe we've just been lucky... I view it as a small gamble, and I don't buy stuff based on the after-rebate price. I figure if I get the rebate, great, if I don't then I haven't lost much.

How Rebates Really Work...

[xoip]

The stores and manufacturers are betting that you don't take the time to fill in the forms.

Over time, Best Buy will ask third-party vendors to get on board with Best Buy's electronic rebate system. However, the ability of Best Buy to process rebates from third-party vendors will vary by vendor, as the retailer works to establish the program with each manufacturer over time

Follow the money...These guys are betting on the fact that a good percentage of consumers don't go to the trouble of mailing in the information.For those who complain that their information is lost by the processing company, make a copy of the documents to prove it was all together when you sent it.
I've never had a problem with the mail-ins but I'm sure that time will come.

Re:Cynical me.

[YrWrstNtmr]

Why negative on rebates? Because they are underhanded.

They can obviously afford to sell the item at the after rebate price. So why not just sell it at that price to begin with?

a) The percentage of people who do not get their rebates is free money to them.
- either the customer doesn't send it in, or
- the retailer doesn't send it out
b) The interest they gain on the loan of that money during the rebate period. I have no interest in loaning a billion dollar company money, so that THEY can gain 60 days of interest on it.I wouldn't have really made any interest on $30 for that period, but in aggregate, they do. Screw that. I am not a bank.

Just sell me the item at your best price. If it's a good price, I'll buy it.
Just leave off the "Loan us $30, and we'll (probably) give it back to you in a month or two."

Don't forget: sales tax, time, effort, postage

[walterbyrd]

And other annoyances, and expenses, etc.

- once you cut that UPC thing off the box, you can forget about bring it back for a refund.

- you paid sales tax on the $40 you never got, that's another $3, or so.

- Figure 30 minutes of your time filling out forms, cutting out UPCs, making photo copies, etc. If you earn $25 an hour, that $12.50 right there.

- postage, envelopes, photo-copies.

- even if you got your refund, that 10 weeks without your money.

Wonder how many customers Best Buy had to lose?

[HangingChad]

I quit shopping at Best Buy over a $30 rebate on a CDROM drive. That was years ago. Two letters to Best Buy customer service, a handful of phone calls, still no check. So I quit shopping there and haven't been back since.

How many customers does a company have to lose that way before they change behavior? That's one of the big reasons I do most of my shopping online now. It's not always cheaper than at the store and there's always shipping and handling, sometimes S&H and sales tax. But I can still comparison shop a lot faster than driving store to store. Even for clothes. It's so easy to send stuff back to Nordstroms if it doesn't fit. Takes less time than driving to the store and only costs $5 in postage. It's worth it.

Best Buy can kiss my ass.

Re:I don't do rebates

[Uncle Rummy]

Well, that's the point - they're not supposed to benefit you; they're supposed to benefit the retailer (or manufacturer, as the case may be). Most people will see an ad for gadgetX priced at $100 with a $50 mail-in rebate and calculate the cost of that product to be $50. Retailers like Best Buy have reinforced this belief with their advertising: GadgetX - $50!* (tiny print underneath: "* $100 - $50 mail in rebate").

However, because of all the things you mentioned (failure to submit the rebate before the deadline, improper submissions, interest-free loan to retailer from those who do submit everything properly), the true cost to the retailer of offering that $50 rebate is well below $50. This allows them to shift the demand curve for that product by creating an imbalance between the cost to the retailer of selling the product and the perceived cost to the consumer of purchasing it.

The question is whether the increased demand created by mail-in rebate pricing games creates more profit for the retailer than is lost by alienating consumers who dislike them. Apparently Best Buy has decided that they're pissing off too many people to justify this particular pricing game.

What pisses me off about this whole thing is this quote from Best Buy's press release: "Best Buy is taking a leadership position within the retail industry with our plans to eliminate mail-in rebates". Apparently they're hoping that we'd all forgotten about the leadership role Best Buy took in making the mail-in rebate pricing game such a ubiquitous part of modern consumer electronics retailing in the first place, and now they want us to get on our knees and suck their dicks for phasing out the very thing they inflicted upon us.