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Some retailers offering online rebates

Retailers are trying to repair the reputation of rebates by offering paperless, online electronic options for customers.
/ Source: The Associated Press

The rebate check is no longer a reward reserved for penny-pinchers with an abundance of paperwork skills and patience.  Paperless, online rebates are finally gaining momentum in retail, an industry that has long offered customers electronic options for virtually every other type of transaction, from simple purchases to coupons.

Retailers are trying to repair the reputation of rebates, which offer savings only after forcing the customer to collect labels and numbers, mail a redemption form and hope a check arrives before the next total lunar eclipse, if at all.

Staples Inc. on Monday is launching an online rebate program, bringing the Framingham-based office products retailer into company that in the past few years has grown to include Costco Wholesale Corp., BJ's Wholesale Club Inc. and Rite Aid Corp.

"This is really bringing the power of technology into what historically has been a manual, backward process," said Jeffrey Roster, a retail analyst with the research firm Gartner Inc.

Retailers offering online rebates remain a small minority, because there's a risk in making rebates too easy for customers.  The economic calculations built into rebates assume many customers will be sufficiently enticed to buy, but either fail to follow the proper steps in submitting the rebate form or simply forget to submit one at all.

"If one in 20 customers actually claims the rebate, and then it's made easier and now two in 20 do it, that's going to affect the numbers," said Carol Baroudi, a retail technology analyst with the research firm Baroudi Bloor.

"I love this idea from a consumer standpoint," she said.  "Those pieces of paper are so easy to lose, and one less piece of paper to handle and re-handle is a good thing."

E-mail confirmation
Online rebate programs typically offer the customer the option of logging on to the rebate section of retailer's Web site and entering rebate offer and identification numbers as well as personal contact information.  There's no need to send in receipts or product labels.  E-mail notifications to the customer track the transaction.

Online rebates reduce paperwork and eliminate the need to mail in a rebate form, allowing the customer to receive the check in four to six weeks compared with the typical eight to 12 weeks, retailers say.

Rite Aid and BJ's say customers are rapidly embracing online rebate programs.

Since BJ's introduced its program in June 2003, the proportion of customers redeeming rebates online rather than through snail-mail has grown from 35 percent to 70 percent, said Annunziata Varela, a spokeswoman for the Natick-based company.

Rite Aid spokeswoman Jody Cook said the Camp Hill, Pa.-based pharmacy chain has seen a 17 percent increase over the past year in new visitors to the 4-year-old rebate section of its Web site, which handles about 225,000 rebates a month.

Before launching its online rebate program this week, Staples convinced most of its biggest product vendors to participate.  More than three-quarters of the rebates offered on items sold at Staples can be redeemed either online or through the mail, said Jim Sherlock, Staples' director of sales and merchandise.

"I have every confidence we will eventually be close to 100 percent," Sherlock said.  Vendors "want to see the technology solution to manage the integrity of this program, to see that it is in fact real and that it works."

Parago Inc., a Dallas-based transaction processor, worked with Staples to develop the program, which relies on transaction data feeds once every two hours between Staples and the system's back-end processors to ensure integrity.  The constant information exchange guards against fraud from consumers who redeem a rebate form but meanwhile return the product in hopes of also obtaining a refund.

Retail analysts Baroudi and Roster said such programs could go a long way toward boosting a retailer's customer loyalty.  But another industry analyst said faster rebates, while offering greater convenience, pale in importance compared with pricing and shopping ease.

"I would think online rebates would really be low on the list, maybe down there with how big the parking lot is," said Anthony Chukumba of Morningstar Inc.  "I just don't see it as a reason to shop at Staples versus Office Depot, or Costco versus Sam's Club."