Opinion: Would you dump cash-back offers?

The Sydney Morning Herald reported that Officeworks will stop running cash back offers in its stores following criticisms of the schemes by consumers and regulators.

Asher Moses wrote in the article: "The offers promise consumers an effective discount on sales of printers, TV sets, computers and other gadgets. Similar promotions offer free gifts instead of cash but these are also fraught with issues."

The decision isn't surprising, considering HP copped it over the knuckles recently because of customer confusion of its cash back and gift promotions over the past year.

The complaints lead to an investigation by the consumer watchdog, the Australian Competition and Consumer Commission, and was eventually resolved.

Getting rid of cash back and gift promotions might not be that big of a deal for a national retailer, but for the average computer shop on the corner it can mean a lot.

Vendor cash back and gift promotions are a way to differentiate and attract customers in the store, despite the confusion customers may have with the cashback process.

Resellers need these promotions in the same way parents need to have a little toy in their kid's McDonald's happy meal box.

How will parents placate their kids once they've come down from the sugar rush from the buns in cheeseburgers and soda/juice,? Imagine  no toy in the box to give!

It's not all bad news. Dumping special offers, like Officeworks, is just one way of doing things.

There are alternatives emerging in the market.

After five years at Dell, former employee Joel Montgomery saw a need for small to medium businesses  catch a break with their investment in IT.

He started an online site called PowerBuy four months ago as a way for SMBs to get discounts on IT gear, said Montgomery.

During his time at Dell he realised that vendors wanted to pass on discounts to small businesses but didn't know how to without undercutting retail prices for consumers.

Resellers are already working with the group, including Wireless 1, Digiworld, Scorpion Technology and Techbuy.

The resellers submit cash backs on the customer's behalf and pass on the discount while holding their own margin.

Do you think Officeworks made the right decision? Could it have sought an alternative way of doing things?