Black Friday Rebate Question

[Bella the Ball 360]

I went to Wal Mart first on Friday because last year the prices at Best Buy were the worst buy. I did not even look that closely at the ad. Anyway when I did go to both Circuit City and Best Buy (we are lucky they are next door to each other in Nashua NH and I mean less than 20 ft and almost share a parking lot)at about 7 am and realized that the rebate stuff was painless most if it was gone. Both BB and CC had great free stuff. A Lava Lamp, mouse, walkie talkies, soft ware and lots of other stuff that was gone when we got there. Using a cell phone my son went to one and I went to the other and we were able to get at least a few things for free (not to mention the rest of the stuff I got for a total of about 450.00)
Anyway, here is the question: What do they get out of giving this stuff free with a rebate to customers? I just cannot figure the angle. Who pays? Does the retailer pay? Does the manufacturer pay? What is the point of making us put out our money just to get it back again? I THINK that it is to boost the sales of the day but then that is kind of deceptive for stock holders. I do not know why they do it.

 

[Hulabaloo]

Most of the Rebates in the BBY ad were (90%) vendor supported rebates, meaning you send in the rebates to the vendor (not BBY) and they pay them.

Some nifty info, BBY is the best in the retailing industry at rebate redemption at over 90% of the rebates issued are redeemed, not fulfilled but redeemed. All of those are fulfilled obviously.


hulabaloo

 

[Bella the Ball 360]

What is BBY? Also, it still does not speak to WHY they do it. It is a business and if they are giving things away free then they do not make money. I do not get it.

 

[Cindy B]

BBY Best Buy (I'm thinking)

Well, here is my take on it.

The rebates gets you in the store, once you get the happy feelies that you got stuff for free... you are more apt to spend more once you are in the store.

Also, think of all the rebates that were printed out.. So many people don't send it in... they either forget or get busy. Maybe the item is a gift and you can't get the UPC's or something like that.

 

[debster812]

Originally posted by Cindy B
BBY Best Buy (I'm thinking)
Also, think of all the rebates that were printed out.. So many people don't send it in... they either forget or get busy. Maybe the item is a gift and you can't get the UPC's or something like that.

Nail on the head goes to Cindy B. It's called breakage, and retailers and manufacturers count on a certain percentage of people NEVER sending in their rebate stuff.

 

[Hulabaloo]

BBY is Best Buy's stock ticker, I've worked in CSE (consumer electronics retailing) for my entire career, with that being said:

It does make money, all of those prices are after rebates, so if you buy a computer or a software package or a phone and get it free, the retailer takes in the monies for payment, so if a piece of software was $100 and you get it free after rebates, bby gets the $100, the vendors then pay for the rebates,

now back to my original tidbit, bby is the industries best rebate redemption retailer, meaning that currently 90% of the customers do actually fill out their slips correctly and send them in and recieve their money back, 10% get busy and forget, misplace, whatever.

All large corp retailers sell placement space for MDF dollars, placement space in the ads, and in the stores, endcaps, in,-line eye level placement etc.

So what usually happens is that a retailer will guarantee an order of so many pieces for the year or "give" some priority ad placement away or instore placement away for those rebates.

Everyone wins, software is usually tied into an upgrade rebate, which means you have owned that product as a different version before you've already paid for it, or it can also include a competotors version ie turbo tax switching to kiplinger.

Cdr's were a free item, which are incredibly cheap to manufacture, the vendor might take a $2 loss (cost to manufacture) + shipping to get future orders.

So in the end everyone, especially the retailer in deed makes money on these deals!

Think of it like coupons, 50cents off, read the back for the retailer portion, they always get a premium 50 cents + 25 cents credited back to them, + they bought at cost + they move extra units!

Does this help????????

Hulabaloo

 

[mbb]

...it's all about volume...!!!

 

[elfbo]

And dont forget, even if they give you the money back, they have been earning interest on it for at least the 6-8 weeks for rebate redemptions!

 

[Bella the Ball 360]

Thanks my husband has a grad degree in marketing and mentioned many of those things you guys did but I was looking for a different take on it. In the supermarket industry there is somthing called "slotting". Manufactuers must pay "slotting fees to gurantee themselves a slot in the warehouse. What it actually amounts to is the manufacturer is paying the retailer to bring the product into the store. That is one of the reasons little guys never get a real chance in the large chain stores. I was just wondering if it were the same in tech and dept stores and from what you have all said it is the same tune but different words. Give us x number of free units and we will give you premier placement, ends and lots of footage on the shelves and best placement in the ad. I guess the consumer wins in some respects but it kills the little guy. Thanks for the info.

 

[Hulabaloo]

Originally posted by Bella the Ball 360
Thanks my husband has a grad degree in marketing and mentioned many of those things you guys did but I was looking for a different take on it. In the supermarket industry there is somthing called "slotting". Manufactuers must pay "slotting fees to gurantee themselves a slot in the warehouse. What it actually amounts to is the manufacturer is paying the retailer to bring the product into the store. That is one of the reasons little guys never get a real chance in the large chain stores. I was just wondering if it were the same in tech and dept stores and from what you have all said it is the same tune but different words. Give us x number of free units and we will give you premier placement, ends and lots of footage on the shelves and best placement in the ad. I guess the consumer wins in some respects but it kills the little guy. Thanks for the info.

Bella,

if you read my reply, that essentially is what MDF is, marketing development funds.

hulabaloo