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Cashbacks criticised

In last week’s PhotoCounter newsletter editorial I noted that four camera companies – Canon, Nikon, Son and Fujifilm were running cashback promotions on cameras simultaneously, and questioned whether they were ‘retailer-friendly’.

When it comes to cashbacks, the Canon online store delivers a point-of-purchase discount to consumers – giving it a competitive edge against Canon’s retailer customers.

This prompted Francis Guidici, manager of Walch Optics, Hobart, to respond with his thoughts on the value of cashbacks:

‘The advantage for us with cashbacks,’ wrote Franics, ‘is that if a supplier was to drop their wholesale price we have to go to a bit of effort and paperwork to try and claim credit for stock at hand. Sometimes we have models we purchased months before a wholesale price reduction and the general hassle in trying to get credit varies with suppliers.

‘The disadvantage for us with cashbacks is it irritates our customers. They usually question why the discount is not up front, and if it is a Canon camera of course they point out that buying directly from Canon gives them an ‘instant cashback’. The other suppliers have easy or hard hoops to jump through. If we sell to a government department it is difficult for their accounts department to cope. Some customers are reluctant to give out information and fear a barrage of junk marketing mail. We fear losing customers to suppliers that want to sell directly.’

We then emailed a few other retailers to seek their opinions on cashbacks, asking what they liked about them, what they didn’t like, and whether they worked. Just one of those retailers – at short notice, admittedly – came back with a response, opting to remain anonymous as ‘some of the big suppliers are somewhat jumpy about criticisms’:

‘Although I understand the logic of cashback from the supplier’s viewpoint, I dislike the practice intensely and today, most of the clients dislike it almost as much. Its’ an archaic form of marketing when people of low imagination don’t know what else to do to create a demand for the product.

‘The pros: it is designed to maintain the “retail” price of the product ostensibly in the best interest of the retailer. The cons (literally):
– There is no evidence that it achieves that aim;
– It adds a layer of complexity to a sale;
– The people with no computer or no great knowledge of computers, waste the retailers’ time finding out how to do it all (sometimes with lengthy phone calls);
– There are complaints about long delays in receiving the cashback;
– Any ‘hiccups’ in the system inevitably reflect on the retailer;
– The supplier uses the scam to harvest the personal details of the client so they (the suppliers) can bombard the client with direct offers, bypassing the hapless retailer and in many cases undercutting them (providing a rich source for a major court case one day);
– The supplier knows that around 15 percent of consumers never receive the cashback – can’t be bothered, forget, dumb, all too hard etc, etc. Suppliers pocket this bonus – they certainly don’t donate it to cancer research.

Why not just put the product in question on a special promotion for a limited period and give the long-suffering retailer a bit more margin for backing the promotion? That way all parties have a win. By sharing some of that money with the retailer, sales would increase by a greater degree – the retailer would make sure of it.

There are some fairly simple ways of increasing sales, but the big Japanese companies just don’t get it – they make the whole process so complex, sometimes it is simply not worth the trouble and workload.

Government intervention is required here, but also put simply, cashback promotions should be made illegal as a way of promoting products.

Readers are encouraged to contribute their opinions on cashbacks via Readers Comments and our ‘Burning Questions’ poll…

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