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DESIGNING AND MANAGING THE SUPPLY CHAIN

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E ~\C)I\ The Great Rebate Runaround

Ah, the holiday shopping season: Santa Claus, reindeer-and rebate hell. Those annoying mail-in offers are everywhere these days. Shoppers hate col­ lecting all the paperwork, filling out the forms, and mailing it all in to claim their $10 or $100. But no matter how annoying rebates are for consumers, the country's retailers and manufacturers love them. From PC powerhouse Dell to national chains Circuit City and OfficeMax to the Listerine mouth­ wash sold at Rite Aid drugstores, rebates are prolifer­ ating. Nearly one-third of all computer gear is now sold with some form of rebate, along with more than 20% of digital cameras, camcorders, and LCD TVs, says market researcher NPD Group. Hal Stinchfield, a 30-year veteran of the rebate business, calculates that some 400 million rebates are offered each year. Their total face value: $6 billion, he estimates. Office-products retailer Staples says it and its vendors alone pay $3.5 million in rebates each week.
TAX ON THE DISORGANIZED

sees lower redemption rates during the Christmas shopping season, when consumers may be too dis­ tracted to file for rebates on time. Credit this bonanza for retailers and suppliers partly to human nature. Many consumers are just too lazy, forgetful, or busy to apply for rebates: Call it a tax on the disorganized. Others think the 50 cents, $50-or even $200---is just not worth the hassle of collecting.
"I WAS FROSTED"

Why the rage for rebates? The industry's open secret is that fully 40% of all rebates never get redeemed because consumers fail to apply for them or their applications are rejected, estimates Peter S. Kastner, a director of consulting firm Vericours. That trans­ lates into more than $2 billion of extra revenue for retailers and their suppliers each year. What