Executive Briefings

Rebates: What Irritated the Consumer Before Is Now Irritating the Retailer

A few years back a lot of manufacturers, especially in the consumer electronics industry, were getting into trouble with the Federal Trade Commission over lengthy delays in processing rebates. The public often blamed the retailers from whom they purchased the product and retailers in turn put pressure on their suppliers to clean up their act.

One result was that a lot of rebate offers turned into instant rebates - in effect, price reductions. The suppliers didn't necessarily like this, because they lost the slippage (unredeemed rebates) that had made rebates so attractive. But now it's the retailers who are complaining.

A unique feature of an instant rebate is that it is a price reduction that is fronted by the retailer (just as a regular rebate is fronted by the consumer). And it appears that many suppliers are no better at paying retailers for rebates than they were at paying consumers.

The situation is such that the demise of some retailers in the past year has been blamed on late rebate payments in this depressed economy.

Mike Decker, Nationwide Marketing Group's merchandising senior vice president of electronics, said: "The industry has to get control of rebates. This is a cash-flow issue for the independent retailers. The timing of rebates must be improved to two weeks to 30 days to get paid. [Rebate programs] need to be improved by all major manufacturers. It has been destructive to all independent retailers in the U.S., and it should be improved."

And here's a business opportunity for somebody. Decker added that "The vendor that comes up with a turnkey solution will be a real winner."

Source: TPMA Outlook

A few years back a lot of manufacturers, especially in the consumer electronics industry, were getting into trouble with the Federal Trade Commission over lengthy delays in processing rebates. The public often blamed the retailers from whom they purchased the product and retailers in turn put pressure on their suppliers to clean up their act.

One result was that a lot of rebate offers turned into instant rebates - in effect, price reductions. The suppliers didn't necessarily like this, because they lost the slippage (unredeemed rebates) that had made rebates so attractive. But now it's the retailers who are complaining.

A unique feature of an instant rebate is that it is a price reduction that is fronted by the retailer (just as a regular rebate is fronted by the consumer). And it appears that many suppliers are no better at paying retailers for rebates than they were at paying consumers.

The situation is such that the demise of some retailers in the past year has been blamed on late rebate payments in this depressed economy.

Mike Decker, Nationwide Marketing Group's merchandising senior vice president of electronics, said: "The industry has to get control of rebates. This is a cash-flow issue for the independent retailers. The timing of rebates must be improved to two weeks to 30 days to get paid. [Rebate programs] need to be improved by all major manufacturers. It has been destructive to all independent retailers in the U.S., and it should be improved."

And here's a business opportunity for somebody. Decker added that "The vendor that comes up with a turnkey solution will be a real winner."

Source: TPMA Outlook