Help me make sense of the REI Dividend system

[redseal]

Ok...I am very confused about the REI dividend system and feel that I got ripped off. Please help me see the truth. Here is a very simple scenario.

Let's say all I bought in 2009 was a $20 purchase. Therefore I got back $2 in dividends. However, REI kept that $2 for a year and gained interest on it. So when I got my dividend the numbers would be Myself $2 and REI $Interest. Now I return the $20 purchase because it is defective and want a new one. REI charges me $2 as I used my divident. So now the numbers are Myself $0.20 and REI $1.80 + 2 years of interest. Thus, because I returned a defective item I lost $1.80 and REI gained $2 + interest.

Why do they make out for a return of a defective product?

[Wise Old Owl]

Yup its clear you don't get it, that's OK, but if all you spent was $20 last year than why would you worry about it? Try to think of it as a rewards program and occasionally you will receive a free prize of your choosing, for shopping so much, or in your case so little.

My first year I walked away with a Pocket Rocket and good cookware for free.

The REI Member Dividend

The REI dividend is a unique benefit of membership in the REI co-op. It’s comprised of your member refund—typically 10% back on eligible purchase--and/or your REI Visa® card rebates.
Each March, active REI members and REI Visa cardholders who earned a rebate receive a refund in the form of an annual dividend notice.
Only active members receive annual dividend notices. To maintain your active status as an REI member, you need to make net merchandise or shipping purchases of at least $10 per year, unless you joined that year. Member numbers are issued in one name and only that person receives the member refund. Your number can be used by others in your family, but it cannot be transferred to someone else.

The eligible purchase here is items that are full price and not more than or equal to 20 percent off.

[Shutterbug]

Ok...I am very confused about the REI dividend system and feel that I got ripped off. Please help me see the truth. Here is a very simple scenario.

Let's say all I bought in 2009 was a $20 purchase. Therefore I got back $2 in dividends. However, REI kept that $2 for a year and gained interest on it. So when I got my dividend the numbers would be Myself $2 and REI $Interest. Now I return the $20 purchase because it is defective and want a new one. REI charges me $2 as I used my divident. So now the numbers are Myself $0.20 and REI $1.80 + 2 years of interest. Thus, because I returned a defective item I lost $1.80 and REI gained $2 + interest.

Why do they make out for a return of a defective product?

First of all, don't think of REI as "them." REI is "us." It is a cooperative, meaning that it is owned by the customers. To the extent RIE makes a profit the money is used to expand the cooperative, is returned to the customers in the form of dividends or is reflected in the future pricing of merchandise.

Part of the way REI returns profits to customers is by having a liberal return policy. When a customer returns an item, it costs all of us. Unlike some big chains, REI doesn't automatically recover from the manufacturer of the product. In many cases, it gets back only what it can recover by reselling the returned merchandise at the annual garage sale.

[bigcranky]

But the item didn't cost you $20 -- it cost you $18, so when you return it you'll only get $18 back.

Last year my dividend was about $450. Got a high-end hitch mount bike rack. All I had to do was use my Visa card just like I would anyway, and pay it off every month, like I would anyway. So yeah I'm pretty much okay with the dividend system.

[TheChop]

Do you expect them to give you your interest back on the 20 dollars you handed them? Do you expect retailers to give you interest on returns??

Personally I'm more of a moosejaw type.

[rickb]

But the item didn't cost you $20 -- it cost you $18, so when you return it you'll only get $18 back.

Last year my dividend was about $450. Got a high-end hitch mount bike rack. All I had to do was use my Visa card just like I would anyway, and pay it off every month, like I would anyway. So yeah I'm pretty much okay with the dividend system.

From what the OP was saying, if you returned the expensive hitch you would have been out all that dividend money you used to buy it.

Getting screwed out of $2 is one thing; getting screwed out of $450 is quite another.

Or I could have misunderstood totally.

[Rain Man]

Or I could have misunderstood totally.

If either was paid his dividend and used it to buy something else, how did either "get screwed" out of it?

Seems like a base case of "entitlement" fever to me. The dividend calculation takes all these scenarios into account. Any "interest" earned goes into the pot. Besides, no "interest" is earned by REI on "my" money, as it wasn't "my" money to start with.

REI is not a top-100 company for nothing. It's extremely fair.

RainMan

.

[ChinMusic]

From what the OP was saying, if you returned the expensive hitch you would have been out all that dividend money you used to buy it.

Getting screwed out of $2 is one thing; getting screwed out of $450 is quite another.

Or I could have misunderstood totally.

Not true. If you return the money is yours.

Been there, done that.

[Jester2000]

Hmmm. If REI got "2 years worth of interest" I take that to mean it took you two years to figure out that the product was defective. Any company that will take a product back two years after the purchase? Count yourself lucky.

[rickb]

I figured the 2 years was the period from when he was awarded the rebate credit, and the time he applied that credit towards a new item. Not how long he had the product before returning it.

In any case, sounds like others have been given back their rebate dollars after returning an item-- but that redseal was not.

Again, I could have misunderstood that. Seems to me that one should be entitled to get their rebate dollars back (as a credit, of course) if they return an item.

One important thing to remember about the rebates is that while your membership lasts forever, the REBATES EXPIRE the year after you get them.

[earlyriser26]

Wow, I thought I was cheap. REI doesn't pay "interest". If they did, and did not pay it to you, then you would have been "ripped off" for your massive 20 cents. Since they don't, you got what you should have gotten. You seem to be in grave financial trouble. If you PM me with your adress, I will send you 20 cents to make up for your loss. Just spreading the love.

[George]

redseal - to complete the cycle you need to go back and rebuy the item at the garage sale for real cheap, and beat them down shamelessly on the already low price as I have seen people do

[bigcranky]

From what the OP was saying, if you returned the expensive hitch you would have been out all that dividend money you used to buy it.

Getting screwed out of $2 is one thing; getting screwed out of $450 is quite another.

Or I could have misunderstood totally.

I think you misunderstood. Not sure. But if I return the hitch rack I'll get the full purchase price back. (But I like the rack, so I think I'll keep it.)

[dcmidnight]

First of all, don't think of REI as "them." REI is "us." It is a cooperative, meaning that it is owned by the customers. To the extent RIE makes a profit the money is used to expand the cooperative, is returned to the customers in the form of dividends or is reflected in the future pricing of merchandise.

Part of the way REI returns profits to customers is by having a liberal return policy. When a customer returns an item, it costs all of us. Unlike some big chains, REI doesn't automatically recover from the manufacturer of the product. In many cases, it gets back only what it can recover by reselling the returned merchandise at the annual garage sale.

Agreed. At the last attic sale I was talking to one of the managers and she said that most times if they want to make a customer happy and an item is out of warranty they may take it back anyway and stuff it in the back until they can sell it at the attic sale. She said they are given pretty much total freedom to correct a bad situation if a customer is unhappy.

REI is one of the few companies I can think of that I've never had an unresolved issue with. I think the one or two times I've brought something in they have bent over backwards to make it right. The $20 I paid however many years ago I consider a bargain and I would happily pay to support them if it was $20 a year.

[double d]

As an REI member, all I can add is that it is a wonderful company and the co-op system of divided returns (anywhere between 1%-15% back on most items) is wonderful. Interest on your money? Its all of our money, why worry about it? REI is a very pro-consumer corporation and the more REI expands, the more jobs created as well. Just visited the REI in Bend, OR can't say enough of what a wonderful company it is (for example: look at their return policy).

[redseal]

Rickb has the thought the closest. I used $20 as an easy example. But if you return a defective expensive purchase then you lose out way more than $2. No wander why REI likes to get returns. They get money back from the manufacturer and make money on you through the dividend system.

But to let people know. I did contact REI about this last night. They called me back within minutes and agreed this is not the way the dividend system should work. They did not say however if the local store messed up the exchange or if it is really how the system works. But they did give me lots of free stuff to make me feel better and also assured me this should not happen again.

So mainly others keep an eye out for this tactic. REI will stand by the logical side of reasoning and honor what is right if it happens to you too.

[redseal]

Moderator - as this issue has been resolved, you may remove this thread.

[SMSP]

“To maintain your active status as an REI member, you need to make net merchandise or shipping purchases of at least $10 per year”

I did not know that was a requirement when I joined REI’s membership. I guess I need to make sure and buy something once a year, which shouldn’t be a problem. I have been satisfied with my REI membership thus far. When I joined, I purchased an REI Flash 65 pack, a Thermarest mat and spent well over $200 bucks on the day I joined. This was done strategically in order to get my $20 bucks back in dividends the following year. So, in essence, the membership cost was a washout. The following year (which was this past Spring), I used my dividend and the 20% coupon and bought a Big Agnes Encampment bag, which I saved around $50 on by combining the two. At this point, I am a happy camper. I do not have an REI in my area, but I visit family in the Nashville area, therefore when I am in Nashville, I plan at least a half day to shop at REI. My next trip is this Christmas and I have already started making a list of things to check out when I go to REI. The only complaint I have is that all their stuff is at retail. There have been times that I purchased elsewhere because of a sale or end of the season clearance. Like anything else, one has to compare prices. Sounds like REI takes care of their customers in regards to returns, which I have not had to do at this point. I am looking forward to shopping at REI this December!

SMSP

[scope]

...if you return a defective expensive purchase then you lose out way more than (dividend$$). No wander why REI likes to get returns. They get money back from the manufacturer and make money on you through the dividend system.

So mainly others keep an eye out for this tactic. REI will stand by the logical side of reasoning and honor what is right if it happens to you too.

Seems to me that your thought process is defective... first, you don't buy something with the thought you're going to get back 1% over a period of time, just doesn't make financial sense really. However, it is a perk that might make you continue to patronize the store, and helps REI not get so beaten down on price by competitors. Secondly, while I'm sure the 1% over the footprint adds up to significant interest over the course of the year, its hardly making money off "you"... rather, its a business expense that is employed after-the-fact as opposed to up front with reduced prices. You actually benefit by getting a greater discount after the fact compared to what it actually cost REI to make the discount.

[redseal]

Why is everyone stressing over the interest which is negligible? I did not put emphasis on it. Let's leave interest out and look at it another way...buy something for $20, get a $2 dividend, return the item because it is defective, you pay back the dividend of $2 and then get a dividend on the $2 purchase so you get $0.20. You lost $1.80. Now multiply the original purchase to a $2000 purchase...you lost $180.

Like I said, REI corrected my situation. No more discussion...moderator please close.