Mail in Rebates (MIR) and Gift cards are more or less like guaranteed revenue into retailers account book. Till date i was of the feeling that atleast gift cards arent as slimy as MIRs, but was shocked to see this news
"You know that Sharper Image gift card you got for Christmas? Right now, it's worthless. And other gift cards in your wallet could lose their value, too. As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year."
So is it like free money for these retailers or where did this money go? did it get lost in costs incurred in running the business? I fail to understand this. of late these gift cards had become an headache with so many hidden costs and constraints on how soon you must use to get the value out. First time I came across the concept of MIR in the US, i couldnt understand the plot behind it. I was wondering what is the idea behind such a concept where you give away the product free after n-months or n-days by refunding the costs you incurred. Then there was a dot com site known as cyberrebate which used to list all the products and would offer you MIRs after 3 months or so. I resisted the move to fall for that, the logic was "there was nothing which comes for free" and i have already come across this fact after i lost some money on stupid things. One more thing is that what you pay is what you get, go for deals or cheap priced products and such ones will come for a very short duration. Now coming back to cyberrebate thing, many of my friends were paying for products and they got it too and got back the money too after 3 months, but what happened was that many people started pouring their money in the hope that they can get back the money and get to keep the product too...this phenomena triggered some of those companies listed on cyberrebate to go bankrupt as they were giving away products for free and give back their money too...in short they couldnt survive thus taking away people's money. One fine day, my friends discovered that cyberrebate itself filed for bankrupcy and closed down the site.
Then i figured out the secret behind offering MIRs
"You know that Sharper Image gift card you got for Christmas? Right now, it's worthless. And other gift cards in your wallet could lose their value, too. As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year."
So is it like free money for these retailers or where did this money go? did it get lost in costs incurred in running the business? I fail to understand this. of late these gift cards had become an headache with so many hidden costs and constraints on how soon you must use to get the value out. First time I came across the concept of MIR in the US, i couldnt understand the plot behind it. I was wondering what is the idea behind such a concept where you give away the product free after n-months or n-days by refunding the costs you incurred. Then there was a dot com site known as cyberrebate which used to list all the products and would offer you MIRs after 3 months or so. I resisted the move to fall for that, the logic was "there was nothing which comes for free" and i have already come across this fact after i lost some money on stupid things. One more thing is that what you pay is what you get, go for deals or cheap priced products and such ones will come for a very short duration. Now coming back to cyberrebate thing, many of my friends were paying for products and they got it too and got back the money too after 3 months, but what happened was that many people started pouring their money in the hope that they can get back the money and get to keep the product too...this phenomena triggered some of those companies listed on cyberrebate to go bankrupt as they were giving away products for free and give back their money too...in short they couldnt survive thus taking away people's money. One fine day, my friends discovered that cyberrebate itself filed for bankrupcy and closed down the site.
Then i figured out the secret behind offering MIRs
- Most of well established companies give away MIRs for short periods either to take away market share from its competitors or to empty their inventory containing old stocks and get cash for the junk.
- 99% of companies giving out MIRs are those which arent well established and they use it as a vehicle to get the word of mouth out. They cut down on advertisements and employ this marketing ploy with a hope that the consumer using these items may refer them to their friends or give good reviews.
- MIRs also act as credit or free money available at 0% APR for 3 to 6 months, this way fledgling get the required capital to produce their wares.
- MIRs also have so many constraints that you must send it within this date and also send it after 1 month of purchase or send it with UPC barcode etc etc, these are tactics employed to loot people. When someone forgets to send or doesnt send it according to the requirements, the payout is null or void. Thus allowing free money to the companies.
On the other hand, gift card is like you put in some amount in a plastic card and give out to dear and near ones so that the recipient has full freedom to buy whatever he/she likes in contrast to a stupid worthless gift. This gives a guaranteed buy of something to the retailers and if someone doesnt use that card then the retailer has a great kill...got free money and has an unsold product which he can sell and make money. Usually its better to give away cash to the recipient as cash is worth more than a plastic card and they can use it for anything and wont be tied to shop at a particular retailer. But in the existing state of economy, when you pay all the salary you get as credit card balances, rent or on gasoline, there is hardly anything left to give as gifts. So the concept works well when you pay via credit card and put money into gift cards. So gift cards may thrive as long as plastic credit cards are around and so many people are living under the debt line. No doubt why gift cards used to be popular in india as atleast we can touch and see the cash and people do hoard money in banks :D
No comments:
Post a Comment