Best Buy to get rid of rebates...

Slashdot is linking to this article on how Best Buy plans to eliminte rebates in the next two years. The article says that it thinks other companies, like Circuit City and CompUSA, will do the same.

I have in the past discussed why I love rebates. If you are smart about filling out the forms correctly, contacting the rebate center when they screw up, and knowing what companies do a good job of fulfilling rebates, you can get much better deals with rebates than without. I've made hundreds of dollars reselling rebate items on eBay, and this is going to hurt me.

I'm not really surprised that Best Buy is doing this. They have said in the past that they want to focus on the most profitable customers and get rid of "devil" customers who they don't make money on. My guess is that their reasoning behind eliminating rebates has more to do with the fact that they want to discourage price-sensative rebate customers who they don't make much money on rather than because of customer complaints. Best Buy take a lot of heat for their hard-sell extended warranty Product Service Plans (PSP's) but don't plan on reforming them.

I've had good luck with Best Buy rebates - at least the company-run ones, which go to Calais, Maine. The ones run by manufacturers tend not to be as quick. But I rarely shop Best Buy, because they aren't really price-competitive.

I have had some rebates that I never get - these are usually the ones that go directly to the company instead of a 3-rd party rebate processor. This often means the company will be at best overwelmed and at worst has no plans to pay. But most of my rebates processed through major rebate houses like Parago (Miami, FL) have gone smoothly, although they occasionally take an email to fix an error. I've also noticed that CompUSA rebates, which have long had a bad reputation, have improved - I've gotten checks from their new processor, Global Fullfilliment (Mesa, AZ)in about a month.

I doubt all retailers will get rid of rebates - there are too many price-concious consumers who are used to them. Rebates offer a sloppy but effective form of price discrimination - it lets them sell to one group of people (those who take the time to fill out and send in rebates) at a lower price than another group of people (who don't send in the rebates). An economist (and I'm not one, nor did I stay at a Holiday Inn Express last night) would argue that getting rid of rebates may be bad for consumers - there will be a deadweight loss among consumers who lose money because they pay more, and among retailers who sell less.

I wouldn't be surprised, however, if the stores that continue to offer rebates use online systems like Staples Easy Rebates and Rite Aid Single Check Rebates, where everything is done online and nothing is mailed in. This requires some additional work - the customer has to fill in the info online - and thus discourages the laziest and least price concious - but is easy enough that it doesn't make people grumble about rebates too much.