CyberRebate is a company where you buy something and pay for it, they ship it to you (apparently free shipping), and then you print out a rebate form and send it in. You get various rebates up to and including a full 100% rebate.
Huh?
How the heck do they stay in business?
The only thing I can figure is that they work on the assumption that x% of the people will fail to submit their rebate forms, and just charge a high enough price to make up their profits that way. For example, they have some dinosaur 3-d puzzles that run maybe $15-20 in stores, but they price them at $99. I guess if one out of five people don’t return the rebate, they’ve made up their money.
But it seems to me that this is a rather flimsy basis on which to build a business. Anybody have any clues or insight into this company?
Well i was talkin to my parents about this so we came up with an idea,
What it is is they get free loans with no interest.
FIrst, a person gets something and pays really high prices/
Now cyberrebates has x money, they then will pay that back “10-14 weeks” later i think it was. They now have that x amount of money to spend for 3 or 4 months at no interest. They can then like invest the money or do something else with the money that they can make money from with that money, Then they give you the rebate, and keep whatever they made from the money that they got as a loan used in some investing or something.
I dunno the actuality of this but it sounds like tha would work, Also not all the rebates are for 100 percent so they might make money of the products, like if the prices are jacked up, and then a rebate is given, it makes the product seem cheap when its really not. I really doubt they try and make money from people that forget to send in the rebate. that i am sure.
Tons of info there but here is one new idea:
"You must print out the rebate forms and follow the instructions
explicitely! One tiny error will make your rebate invalid. This is
stated on the forms so I read and reread the instructions and
made sure I did it their way. Rechecking the forms, envelopes and
id numbers I was satisfied and mailed the forms in.
Eight weeks passed and no checks arrived. I went back to the
site to check the status of my rebate and the message read
"pending." Okay it was the Christmas season I thought and they
must be swamped with orders. Twelve weeks passed and I went
to check my status this time it said "Promotion expired." I was in
shock! I wrote a letter to the company and after a week of
waiting received an email stating that was an error! It also stated
if I correctly filled out the forms my checks would be arriving
soon.
Well on March 25 my checks finally arrived!"
So they might make their money by holding yours & collecting interest like at paypal.
I think this has been addressed in a few past threads. PayPal persumably has a merchant account with some bank somewhere. Money gets paid into that account from credit cards or electronic transfers when you pay someone else using PayPal. PayPal then alerts that person and they can request that PayPal send them a check for the balance on their account (what you paid to them plus any other payments). Even if the person requests that they have a check sent to them immediately upon being alerted that they have money in their PayPal account that money is still going to sit in PayPal’s bank account for three to four days. Not a very long time, to be sure, but when they’re dealing with lots of such transactions, it adds up.
And if people let the money sit in their account for awhile it gets even better for PayPal. Let’s say you’re a seller on Ebay who auctions off a lot, and most of your payments come through PayPal. Rather than getting fifty checks per week that you then have to cash, you might prefer to have a check sent to you at the end of each week. At that point, PayPal may be hanging on to some of the money for as long as thirteen to fourteen days. And some people may leave money in their account even longer, for whatever reason.
I think the way the company makes money is a combination of all the things already stated:
They DEFINITELY make money on the float of your money which they hold on to for upwards of three months. Even if they are just sticking all your money in a guaranteed certificate of deposit, they can still make 5-7% right there.
They DO mark up their prices, in some cases upwards of 100%. I looked at a book/ CD set of great sports calls called “And the Crowd Goes Wild”. Every mall store I went to is selling it for $39.99-$49.99 at the most. Cyberrebate has it for $99.
There is a good chance many of the rebates WON’T get sent in. The reason? Because you have to send in the UPC symbol from the item. That means usually mangling the box to get it off, making it unreturnable to a store, and of course, their company if it turns out to be crap.
And some of the stuff is crap. Ask me about the great power converter set we purchased. We went on vacation in the Caribbean a few months back, and yours truly tried to plug in an electric razor using the appropriate power converter. I managed to both electrocute myself and trip all the breakers on our bungalow instead. What fun THAT was. But of course, you can’t return it because you already sent in the rebate form (since you knew it was going to take 3 damn months to get the money back) and it’s not in it’s ‘original packaging’ since the UPC is missing.
Of course, to be fair, the ‘remove the UPC’ idea is pretty smart. Otherwise, people like me would buy the stupid book CD/ set for $99, send in the rebate, return it to a mall store, and ultimately pocket $50 in cash on the deal when my 100% rebate came back. The missing UPC prevents you from taking it back to the store.
Not that I would encourage people to do this if it’s not really a gift, but can’t you request some sort of gift letter or something so you don’t have to remove the UPC if you’re giving it as a present?
Handy, I’m not sure what you mean about local stores – I thought all the rebate forms go back to CyberRebates?
Also, just as an additional link (since we had an epinion from somebody who was dissatisfied), here is one from somebody who is definitely happy with the service:
I would be interested to know what their capital is and whether they have some external guarantee or insurance of product delivery. Aside from the cash-flow advantages of having your money for a time, this (from samclem’s first link)
makes me wonder whether they have to keep growing rapidly to cover outflows. If that were the case, the business model would be following a well-known shape.