Staples Automates Refunds with Eye on Holiday Sales

In its next phase, the $13 billion retail chain may offer an option of $60 in merchandise instead of a $50 rebate.

The time-honored tradition of retail rebates assumes that many customers wont bother. Staples Inc. this week challenges that approach with an online campaign aimed at making rebates point-and-click easy.

In the first phase of Staples Easy Rebates, Staples is partnering with Parago Inc. to provide an automated online approach to rebates. After making an in-store purchase, a customer will be issued a thermal receipt with the rebate URL. After typing in a unique product identifier, the system will wait 14 days and then issue a check.

Why wait 14 days? Thats not coincidentally the length of Staples return/exchange policy. A known but unquantifiable retail fact-of-life is that some customers buy products with a rebate, submit for the rebate and then return the product for cash or exchange, in effect profiting the amount of the rebate.

Few retailers have a system to prevent such efforts. By delaying 14 days, Staples is hoping to prevent or minimize such losses by checking against a returns database right before processing any rebate check.

From the Staples Web site, the process is essentially the same, although the site would be able to link directly to the returns site.

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Staples officials want to push the returns system as a way to recruit business holiday shoppers who want anything that will reduce paperwork.

"Rebates have been a problem for years, and were working to make it easier," said Jim Sherlock, Staples director of sales and merchandising. Sherlock said that he believes the new rebate program "will absolutely influence" customers to shop with Staples rather than a rival.

Staples has been considering several changes to its rebate program, but Sherlock said the company rushed to announce this Phase One of the program now to take advantage of holiday sales. The program was launched this week, only able to handle 75 percent to 80 percent of Staples rebates, Sherlock said. kiosks at Staples stores can also be used to submit an Easy Rebate.

In Phase Two—which Sherlock said is set to be launched "midyear 2005 or sooner"—customers will be given several additional options. If the rebate is for $50, customers could take it as a $50 check mailed to them or a $50 direct deposit to their bank account, or be given the ability to "use that $50 for their next purchase on," he said.

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One option that is being debated is allowing customers to either take their $50 as a $50 check or, Sherlock said, "would you prefer to have two ink-jet cartridges with a value of $60, delivered to you free from"

That is an interesting proposal because it potentially could benefit both the retailer and the customer. The retailer could pay $50 for that $50 check or could give away the $60 product, which would cost it far less than $50. If that customer was about to buy the cartridges anyway, he or she is saving $60 in exchange for giving up $50. It has the potential for a true win-win.

Another possibility is for Staples to let customers use the $60 offer on any Staples product, making it more likely customers would use it as a discount on something they were about to purchase anyway.

Next Page: Allowing customers to buy what they already want.