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May 5th, 2007, 10:21 PM #1DOwnfall for creating a rebate site?
Does anyone run a rebate site? and what are the downfalls with running this kind of program. I am thinking about starting my own. Do merchants Like it? What about taxes, how does the irs view this. Also if you pay out more than $600, do you have to report the customer to the IRS? (1099 the customer)
ANy comments would be appreciated
May 5th, 2007, 10:51 PM #2Originally Posted by netnow22
May 5th, 2007, 11:02 PM #3
I am talking about a legimate rebate site. I hate ebates and ipromise because they are scumware/spyware. I am talking about something like morerebates which is a reputable company
Just because it is a rebate site doesn't mean its scumware, you should know this mack? or maybe not as your still a newbie
May 5th, 2007, 11:50 PM #4
Originally Posted by netnow22
- Join Date
- November 14th, 2005
- Chapel Hill, NC
Originally Posted by netnow22
Instant rebates are considered same as a price discount. Money does not change hands.You must climb this mountain. There is no elevator. ---- Don't stick your finger in the liquid nitrogen.
May 6th, 2007, 12:08 AM #5
interesting thought on the IRS angle.... lets say you make 1000 in commissions and pay out 500 in rebates. You would be holding the tax liability for the full 1k cool ;-)
May 6th, 2007, 12:11 AM #6
Yes there are legitimate rebate sites. But it's really up to the merchant whether they'll allow you to do this or not. It's a case-by-case basis, but from what I've seen most merchants allow it. As far as the downfalls to running such a site, it's very high maintenance and you'll need to provide a lot more support than a normal affiliate site.
- ScottHatred stirs up strife, But love covers all transgressions.
May 6th, 2007, 12:42 AM #7
From the merchant side I've gotten to see a few of these...things.
I'll admit I don't like this business model. The idea that anyone would feel they needed a rebate to shop at my site (either merchant or affiliate) is a putdown. I sniff and put up my nose at the very idea; Hmph!
But, I've seen enough of them that I can offer some clues anyhow.
You WILL NOT get any traffic boost AT ALL just by being a "rebate" site!!! (+ 10000000 more exclamation points!) You will still need to promote the heck out of the site! I see so many sites whose owners seem to think the word "rebate" (or synonyms therefor) is some kind of magic word, and therefore don't do a thing to promote their sites, that it's sad. Even sites with lots of coolness sit unseen, sending 0 hits, due to their owners apparently thinking that traffic will find them by osmosis. No SE rank, no press releases, no PPC, no other promotion = no hits. YOU MUST PROMOTE IT SOMEHOW!
DON'T leave your design sense at the door. Another common thing is that these sites tend to be ugly! Like, 1st-site ugly! Again, "rebate" IS NOT a magic word. Newbish-looking is newbish-looking, no matter what premise you base your site on. DON'T just list a bunch of stores in a row (link farm style)!! Also, avoid Tripod-refugee color schemes and layouts!
You WILL be looked at suspiciously, by merchants as well as affs. Many merchants don't accept "incentive" sites of any kind. One reason is surely that the toolbar types tend to concentrate in that field. (And, incentivizers can also lead to mega amounts of reversals!)
Easiest way to for merchants to get rid of lots of hash and bad publicity at the same time? Ban 'em all!! The overall awful performance of rebate sites as a category doesn't do anything to suggest that an overall ban would be bad, either (HMMMM....). So you won't always get the breezy approval you would with a "regular" affiliate site. In fact, some doors will shut right in your face.
You will be competing head-to-head against the parasites. Parasites who market their theft-bars as a "convenience" to consumers who don't know any better. And, who have branding. With a regular aff site, the brand-loyalty thing doesn't really matter so much. You get seen, and if your site and merchants don't suck badly, you can win. But with a rebate site, you need to convince people to sign up with you, not just click a link as a one-time event. This could be difficult...what's going to be the hook? You'll need to come up with something to offset all that marketing that eBates and their ilk do.
There is A WHOLE LOT of newb competition in the rebate arena! If you have any illusion that there aren't 10 gazillion people trying this...dump it. There are. They just don't show up in the engines (due to missing Number One from this post). In fact, pretty much any idea that's been around for over a year has lots of people doing it. Not that competition should scare you away; it shouldn't. Just know that it exists...you're not just trying to wedge in between the few giants, but you also need to pass a horde of little ants.
Also, remember that people like to game a system, or at least, enough do that it could end up costing you a bundle if you're not careful. The "people" in this case being your visitors.
So: Make sure you have Terms. Especially, make sure your Terms leave a long enough gap time between order and payout, that you don't get stuck holding the reversals. If you pay faster, you'll end up with some (or maybe lots) of jerks who only "buy" something long enough to get the "rebate." And then they send the thing back and you're screwed out of whatever "rebate" you paid. Most rebate sites have some kind of Terms which prevent them from ending up holding the bag. Not all, though--and that's why I mentioned this. Don't be one of the naive n00bs with their butts uncovered.
If you get a decent amount of traffic, there will almost surely be some yumph who claims that your Tracking Was Affected and that you owe him/her a rebate, even though your system shows no such thing. Liars and crooks exist, who will make phony claims. Make sure your Terms have all dispute procedures spelled out.
Of course, you will need to make sure your tracking really ISN'T affected, and before you go live, too! Also, test it on occasion. As we know from the networks...sometimes tracking really IS affected.
What I'm talking about here isn't product-level updates, but the list of merchants rebate sites usually have.
These sites really need to be right on it when a merchant closes program, or boots them, or dies outright, etc. This is much more important for a rebate site, since such sites are supposed to pay for orders from all the merchants on their lists.
You obviously don't want to be paying rebates for orders at merchants who aren't paying you!! Yet I see several rebaters (especially the parasites, but it may be common to the whole genre) who leave merchants up even though they're not going to be paid themselves! Don't burn money--always keep your merchant list 100% current.
Good luck, from what I've seen...with a new rebate site, you'll need it.There is no knowledge that is not power. ~Hemingway
May 6th, 2007, 01:36 AM #8
Originally Posted by mrbshouse
- Join Date
- January 18th, 2005
May 6th, 2007, 01:46 AM #9
Thank you very much for your wll informed response. As far as rebates go I am taking a different path that have not seen taken. I plan to put to use many of pr's to get my point across. As I cant tell you what I m doing as soon as it is finish I will.
As you know i already own multiple coupon sites and plan to implement this on the central one. I believe my site looks good as I have been in the coupon business since 2001. The main reason to do this is so I can finally build a customer list and be able to market to them for years to come. ( Iam not selling anyones info)
I hope that the merchants will not look bad at this, I am just trying to get my users the best possible price.
May 6th, 2007, 06:32 AM #10
just using a figure of speach
i guess even on that schedule you'd still clear 300 at 20% tax rate, before expenses. just fast math nothing to take to serious in these numbers.
May 6th, 2007, 06:43 AM #11
The only affiliate site I know of who has done a cash back / loyalty site well is FatWallet.com. They're totally clean. They have good relationships with merchants. They have an extremely loyal customer base.
The only two upsides I can think of to a cash back site are:
1) You can gain more loyalty from your visitors.
2) You'll get a better picture of who is tracking and who isn't, based on user reports when their purchases don't show up.
The two biggest downsides I see are:
1) You'll have far more administration. You'll have to process checks. You'll have far more customer support. You'll spend a lot of time on tracking problems.
2) You'll have to deal with a large amount of fraud. Customers will place large orders, get their rebates, and return the items. Some merchants will reverse the commissions, leaving you out the money. Other merchants never reverse commissions, but will terminate you because of the large number of returns.
May 6th, 2007, 07:34 AM #12
As MichaelColey pointed out, there are some big headaches associated with this - it becomes something you must attend to regularly, almost as if you were a merchant site.
You would also take on the label "incentive site" which may get you denied by some merchants/networks since they know that you are just a download away from being a "parasite site".This World is Not My Home
We're gonna go inside, we're gonna go outside, inside and outside. . . And then we're gonna go go go and we're not gonna stop til we get across that goalline! Quotes from the movie Rudy, 1993
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