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Bad Day At Black Rock – The Axe Falls At CBS Flagship Radio Station WCBS 880 AM In New York City

…And we’re not referring to the 1955 John Sturges movie by the same name, starring Spencer Tracy.

We’ve written here recently that it seems to us that the vast majority of the advertising on radio stations lately is for products best described as snake oil, and services of questionable efficacy, almost always targeted at individuals in some sort of trouble. Advertising for legitimate, mainstream products and services seems to have all but disappeared. In our mind, this is direct evidence of the faltering economy in the United States, as well as a result of the impact the Internet has had on manufacturer’s and retailer’s advertising habits. We doubt that a radio station enjoys the same type of advertising revenue from a commercial for some brand of snake oil, as it would for an ad from an automobile manufacturer, airline, bank or any other “real” advertiser. And when you hear the same snake oil spot being broadcast every few minutes, day-in and day-out, we think it’s a good bet that they are buying the airtime dirt-cheap. Tough economic times always breed a bumper crop of hucksters, snake oil salesmen and get-rich-quick schemes. We guess P.T. Barnum was right.

It came as no surprise then, when we learned that there was a round of layoffs this week at CBS radio stations, including at WCBS-AM (880 kHz) in New York City. There are reports that nearly 200 CBS radio employees lost their jobs this week. According to this posting, it’s Crystal clear that the bloodletting included WCBS jettisoning their Program Director, Crys Quimby. You can still (at least at this writing) read about Crys on her page at WCBS880.com. She had been with CBS for more than 20 years! You know things are bad when people with that much service are shown the door. We guess that means there will be no gold watch.

The day after I blogged this story, this article appeared in the Newark Star-Ledger. A statement released by CBS Radio included the following explanation…

“With these actions, we continue to build on our strategy of deploying our assets to best grow our ratings and monetize the results”

Now, if that isn’t a piece of tortured doublespeak, penned by some corporate spinmaster, we don’t know what is. In fact, we’re not even sure it’s written in English. We parsed it using our Captain Midnight secret decoder ring. It translated into “The Internet has killed our audience. Between that and the failing economy, our advertising revenue has dried up like a lake bed in a drought. We’re running out of money”.

What’s next? Hooking WCBS 880’s traffic reporter Tom Kaminski up to a bunch of helium balloons instead of having him report from “Chopper 880”? Maybe they’ll have chopper pilot Christopher LaCasse manning the helium tank. We would love to have Tom take a few hits of helium just before he goes on the air. His traffic reports would sound like this (please don’t try this, since it could be dangerous, and there’s always the chance you could sound like one of the Munchkins permanently). The Wizard Of Oz has always been our favorite movie. As a child, we would cry every time we watched it, afraid that Dorothy and Toto wouldn’t get back to Kansas. By the way, here’s why helium does funny things to your voice.

…But we digress.

About the only advice we can offer to the employees at WCBS-AM and other CBS stations who are now unemployed, is to not bother applying for jobs at Macy’s. But WCBS could enter Tom Kaminski as the newest float in the Macy’s Thanksgiving Day Parade. Macy’s, one of America’s oldest and best known retailers, just announced they are cutting 2,300 jobs (read about it here). No big surprise here either, since retailers are really hurting in this economy. But hey, Wal-Mart is still hiring. As we have previously written, don’t expect the $600 income tax rebate checks Americans will be getting thanks to the U.S. Economic Stimulus Plan to be much help. In fact, we wouldn’t be surprised if Macy’s ends their more than 80 year sponsorship of the annual Thanksgiving day parade in New York City. In that case, you could say that the axe fell on the turkey, too. The Macy’s Fourth of July Fireworks show, which has dazzled New York City for over 30 years might also fizzle.

Of course, it’s not just CBS Radio or radio and TV broadcasters in general who are feeling the pinch. Newspapers are folding (pun intended) under the weight of a failing economy, coupled with the exodus of advertising dollars to the Internet, cellphones, and other electronic venues. Take The New York Times, one of America’s most venerable and respected newspapers, for example. The print edition of The New York Times is a shadow of it’s former self. Over the last year or so, entire sections of the Sunday New York Times have disappeared, while the newsstand price has climbed to $4.00. That alone, I am sure has contributed to much of the decrease in circulation that they have seen. For a long time, they didn’t even bother to renumber the remaining sections. For instance, when they killed section 10 (Help Wanted) and section 13 (Television), they simply sold the Sunday newspaper with those section numbers missing for about a year. I would imagine that prompted a lot of complaints from readers that their copy was missing some sections. Then recently, they decided to drop the section numbers altogether, simply using the remaining sections’ names only (Sports, Real Estate, etc.). I took this as an omnious sign that they expect to discontinue even more sections of their Sunday edition. We were particularly upset when the Technology section (formerly the Computers section) that appeared one (weekday) per week, shrunk and shrunk until all that remains today is one or two pages a week inside the Times’ Business section. Even the physical size of their pages has been reduced. We guess that means the Times is shrinking literally AND figuratively.

We’re not the only ones thinking that The New York Times is in big trouble. Internet pioneer Marc Andreessen, the co-founder of Netscape, has begun his “New York Times deathwatch” (see this CNN article).

So I guess we will be getting most of our news off of the Internet from now on. Too bad, because we were starting to find all those radio commercials for snake oil to be quite entertaining.

– RoutingByRumor

P.S. – Ever wonder why WCBS-AM, which used to go by the moniker “Newsradio 88” adopted the “880” identity? They’re still at the same spot on the AM dial, 880 kHz (or 0.880 mHz). When radios, especially car radios, had analog tuning dials, it was the norm to drop the last digit of frequencies below 1 megahertz. Hence, 530 kHz was shown as “53” or “53“, and 880 kHz was shown as “88” or “88” (to avoid clutter, only a few frequencies would usually be shown on the tuning dial. You would have to guesstimate the position of the other stations). Some listeners would scratch a mark into the face of the radio to mark the position of their favorite stations. We would put little dots of “white-out” on the face of the dial. With the move to digital displays on modern radios, 880 kHz is usually shown as “880”. WCBS, as well as other AM stations, simply wanted to keep things in sync, and have what you see displayed match their announced frequency.

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Filed under Business, CBS Radio, Employment, Jobs, Journalism, Labor, News, Retailers, Routing by Rumor, Shrinking Products, Technology, The Economy, WCBS-AM

Need Proof That The U.S. Economy Is In Trouble?

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Great Depression era soup kitchen in Chicago

Call it what you will

Whether you want to call it an economic slump, a downturn, a correction or a recession, the American economy is in trouble. If you want proof that the economy is in trouble, just take off your rose-colored glasses, and turn on the radio or open your local newspaper.

Advertising

I’ve noticed this trend for the last few years… Very few of the advertisements on radio are for what I consider legitimate products or services. It seems that the vast majority of radio ads are aimed at people in some sort of trouble, be it financial, legal, criminal, medical or personal. Advertising for real, honest-to-goodness consumer products are few and far between.

Every type of snake oil imaginable is being hawked on the radio. Whatever medical condition you have, there’s some miracle pill or device being advertised, and they’re all free! FREE! FREE! FREE! …that is, if you don’t count the “shipping and handling charge”. Give me a break.

Are you in debt? No problem. There are radio advertisements offering a solution to every possible financial problem. Have you ruined your credit rating? Owe money to the IRS? Have to declare bankruptcy? Creditors calling and harrasing you? Owe child support? Can’t get a credit card? Home being foreclosed? Car being repossessed? Charged with DWI? Want to sue your doctor? Want to “name a star after someone“, and waste more than $50 on absolute nonsense? No problem. Just call the 800 number, and a friendly and curteous professional is there to help. 24 hours a day. Operators are standing by. No obligation …and it’s FREE !!! …but you have to call within the next 30 minutes. Quantities are limited. Only one per household. You need to call now! Oh… and have your credit card ready.

Have your credit card ready? I thought it was free.

Regardless of the particular brand of snake oil that these commercials are offering, here’s RoutingByRumor’s Rule Of Thumb #1… The more often they repeat their toll-free phone number during the commercial, the more of a scam, or more worthless of a product it is. Another telltale sign that you’d be better off turning the dial to a different station is what I like to refer to as the “speedtalker”. The announcer, usually at the end of the commercial, that reads the fine print at about 1,000 words per minute. Some of this fine print, especially the ones done electronically, are truly hysterical. You couldn’t comprehend most of what they are saying if your life depended on it. But that’s probably their intent. So RoutingByRumor’s Rule Of Thumb #2… If they have to resort to speed-talking to give you all the legal disclaimers and other crap, turn off the radio. A legitimate advertiser will never have to resort to this nonsense. The undecipherable gibberish they attach to these ads make their entire message suspect, at least in my mind. I find it hard to believe that any advertising agency would recommend this tactic to an advertiser.

Tired of your job? Want to quit the rat race? Had it with your boss? Want to make “real” money? Only want to work part-time? Looking for financial freedom? Tired of the commute? No problem. This is a once-in-a-lifetime opportunity. You’ll make $10,000 in the first week. Then they give you the testimonials. Every one of these people are raking in the bucks. Some of them are only working a few hours a week. They can’t count all the money. They’re making money while they sleep. It’s insane how much cash you’ll make. All without investing a penny. All from the comfort of your home. While you’re in your pajamas! All without a college degree. As one of their success stories tells you, “I was skeptical, but I called the 800 number. Now, I’m earning a six-figure income”. The sky’s the limit. But you have to call now. Oh, did I mention… Operators are standing by. Then they repeat the 800 number another half-dozen times.

Just one small problem. They never actually tell you what it is they’re selling. Visit their website, and you still don’t have a clue. Call to request more info? They will send you a packet of material that doesn’t tell you what it is that will allow you to earn all that money. Chances are, these get-rich-quick offers are some form of multi-level-marketing (MLM) scam. Routing-By-Rumor’s Rule Of Thumb #3… If they don’t tell you what they’re selling, run, don’t walk, in the opposite direction.

Have an old car sitting in the driveway that you’re trying to get rid of? What’s that? It won’t start? No problemo. No keys? No title? No registration? No wheels? No engine? No problem. They will arrange a pick-up within the hour, and you’ll get a tax-deductible receipt for the full value of the vehicle. They’ll drag away that old heap regardless of the condition, running or not.

The full value of the vehicle? Exactly what does that mean? The IRS wants to know. They have been cracking down on these scams recently. Our guess is that few if any of the charities that stoop to this type of advertising are worth considering donating to. Many of the radio commercials or newspaper ads for these “charities” don’t actually tell you what type of work your “donation” will support. What we find amazing is that the word has only four letters, yet there seems to be an infinite number of ways to spell SCAM.

Now, we realize that ever since man has roamed the the planet, there have been hucksters, scammers, snake oil salesmen, crooks and get-rich-quick artists. What I’ve noticed in the last few years, particularly with radio advertising, is that ads for legitimate products and services has been largely replaced by ads for every conceivable scam and every type of snake oil imaginable. I guess broadcasters are desperate for ad revenue, so they aren’t too choosy about which ads they will accept. As long as the advertisers pay their bills, broadcasters will run the ads.

Yes, the Internet has a lot to do with it. Legitimate advertisers have many more places to spend their advertising bucks these days. However, I don’t think that accounts for most of whats going on. I think that the disappearance of what I consider legitimate advertising, as well as the proliferation of scams and snake oil, are good indicators of how much trouble the American economy is in. These types of ads, which appeal to desperate and gullible people, proliferate when the economy is in trouble. Guglielmo Marconi must be spinning in his grave.

A widening gap

We’re not economists at RoutingByRumor, but we will point out some of the indices we use when formulating our doom and gloom forecast. The gap between the wealthiest and poorest in America has never been greater (see NY Times article, MSNBC article, another NY Times article, yet another NY Times article). We doubt that the disparity between wage increases and cost-of-living increases has ever been greater. And we don’t trust the government’s unemployment figures as far as we could throw them. Spiraling energy prices are increasing the cost of goods and services across the board. If you’re lucky enough to be working, is your salary keeping pace with the cost of living? We doubt it.

Banks

The average bank savings account pays around 3.5% interest annually, interest-bearing checking accounts much, much less. Many credit card companies charge cardholders up to 36% interest on their outstanding balances, with fees that seem to continue rising without limit. Has the spread between the interest Americans earn on their bank accounts (or even Certificates of Deposit) and what they pay in credit card interest and fees ever been greater?

Investing

In RoutingByRumor’s opinion, Wall Street is a cesspool of insider trading, stock manipulation and corruption. It seems that jail time and public disgrace provide little deterrence. We think that few Americans still trust the stock market, yet Wall Street firms are earning record profits, and traders are earning record incomes. Corporations try to outdo one another when it comes to executive compensation. No compensation package, it seems, is too excessive. Even when salaries are capped, total compensation often reaches obscene levels.

Wages

Yet at the opposite end of the spectrum, many companies are paying little more to hourly workers today than they did 20 or 30 years ago, and many rely heavily on part-time workers who receive few, if any benefits. The current U.S. federal minimum wage of $5.85 an hour is a farce. The percentage gap between poverty-level income and minimum wage income is about four times greater today than it was in 1968 !!! (see statistics) Forty years ago, a single-income family of four, dependent on the minimum wage, was nearly at the poverty line. Today, that same family is nearly at half of poverty line income. Families at the low end of the economic ladder are in much worse shape today than ever. The gap between the poorest and wealthiest Americans has never been greater. The concentration of wealth has never been greater.

People are hurting

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Bread line, circa 1937

Read the newspapers. Food pantries and soup kitchens across America report a greater need than ever, even as the donations they need to operate are decreasing. At the same time, the demand for luxury goods by the wealthiest Americans has never been stronger.

Today, labor unions have little clout in America. Look no further than the American auto industry, once a bastion of labor unions. Look at how little we manufacture here anymore. Look at the trade deficit. Look at the illegal immigration problem. By the way, don’t believe them when they tell you that making it more difficult to get a driver’s license will solve the illegal immigration problem, or the terrorism threat. Don’t believe them when they tell you that making it harder to smuggle people or drugs, or anything else across the border will solve anything. Did it ever solve the drug problem in the United States? If you sent every single illegal Mexican home tomorrow, it would make little difference to our economy. Virtually everything sold in this country is being imported. That’s where all the jobs have gone. To China and every other low cost producer in the world. Not to Mexico. People feared NAFTA. I think it has had little impact on the American economy compared to the flood gates that have been opened to imports from Asia.

Wal-Mart advertised they were hiring workers for their new store Avondale Estates, Georgia. Walmart wages and benefits are widely considered among the worst in America, yet this week, 10,000 people showed up hoping to get one of the 400 jobs available at this Wal-Mart (see this Atlanta Journal-Constitution Article). Was it this bad during the great depression?

But don’t take our word for it

Think we’re all wrong about this stuff?

Just turn on the radio, and count the number of “real” products or services you hear commercials for.

Open the newspaper, and try to find a decent paying job (or any job at all).

Try to sell your home (or try buying a home). Good Luck !!!

Ask yourself if you’re in as good financial shape as you were a year, five years, or ten years ago.

Worried about being able to afford health care?

Worried that you’ll never be able to retire?

Worried about pulling into the gas station and saying “fill-er-up”?

Worried about the cost of heating the house this winter?

Worried about layoffs?

Worried about the war?

Still think the economy is doing well?

– RoutingByRumor

( 1/18/2008 update: See our related article, entitled “Dear President Bush…“)

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Filed under Automobile Manufacturers, China, Consumerism, Employment, Energy, Energy costs, Jobs, Labor, Life, Money, News, Politics, Scams, Shopping, Terrorism, The Economy, Uncategorized, War, Your Money

What’s The Real Secret In Lipton “Recipe Secrets” Soup Mix?

I’ll give you a hint… The secret is not inside the box.

I think the secret might be what they left out. Shhhhhh !!!

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Another Shrinking Product:

Lipton “Recipe Secrets” Soup & Dip Mix

At RoutingByRumor, we love to use Lipton’s “Recipe Secrets” mix in recipes, rather than preparing soup with it. We’re not too pleased that the packages might have shrunk.

We pretty sure that Unilever has shrunk the size of their Lipton Vegetable “Recipe Soup & Dip Mix”. We don’t buy it very often, but if memory serves us correctly, it used to contain two one-ounce packets in a two-packet, 2.0 ounce box. When we bought a box recently, it was nearly impossible to read the weight printed in the box. Take a look at the box above. Do you think Unilever, the owner of the Lipton brand is trying to camouflage something here, or is that just a printing problem? Don’t you think it’s just a bit suspicious that the net weight statement happens to be printed where it partially blends in with the varigated background of the bowl of soup, instead of printing it over a solid background, where it could be easily read?

Notice the solid color, high contrast background behind the easy-to-read statement that claims “Also Great for Slow Cookers!”. As other websites have pointed out, a common ploy when shrinking the contents of a product is to place some eye-catching graphics or announcement on the package, to draw your attention away from the shrinking content statement, whether it is a lower weight, item count, square footage, etc.

If they have indeed shrunk the size of their Recipe Secrets dry soup mix, then it seems to us at RoutingByRumor that their Deception Engineering department could have done a much better job on the packaging. It’s so hard to read the package weight that it’s pretty obvious they might be trying to hide something here.

We don’t have an older package to compare this to, so if any readers of this blog have an older 2.0 ounce package of Lipton Recipe Secrets soup mix to compare this with, we would appreciate your comments, and if possible, a scanned image of the front of the box. We will post your box here for comparison.

If indeed Unilever has shrunk the size of their Lipton Recipe Secrets soup mix from 2.0 ounces to 1.8 ounces, that is a full 10% reduction in what you’re getting for your money, assuming that the package price has not gone up. To add insult to injury, the 0.9 ounce packets (two per box) of soup mix are now very thin, flimsy, metalized plastic, instead of the much more sturdy paper and foil envelopes that the mix used to come in. Perhaps Unilever will tell you they improved the packaging, but for my money, I’d rather have foil laminated paper envelopes instead of plastic. Paper is a renewable resource, unlike plastic, which is made from petroleum, and probably takes a zillion years to decompose in a landfill. If your trash is incinerated, do you want to be breathing in the waste products produced by burning plastic? I’m sure the switch to plastic has lowered Unilever’s packaging costs. Wouldn’t it have been nice if they passed on the savings to consumers, or used the lower cost of materials to INCREASE the size of their soup mix instead if shrinking it?

Are the ingredients in Lipton’s Vegetable Soup & Dip Mix so costly that they were forced to shrink the size of the package? They aggregate the (dehydrated) vegetable ingredients as the first item on the ingredient list (carrots, cabbage, onions, leeks, peas, green bell peppers, red bell peppers and tomatoes). The second most prevalent ingredient is salt, which as you probably know, is nearly as costly as gold and platinum. Give me a break.

Lipton’s nutrition panel lists over 3100 mg of sodium per box (>5 servings with 610 mg sodium per serving). Considering the fact that sodium is only part of the weight of table salt (NaCl contains Sodium and Chlorine atoms), my guess is that if they did not aggregate the vegetables on the ingredient list, that sodium would be the first ingredient listed (in descending order of predominance, by weight). Bear in mind that, atomically speaking, table salt is almost exactly 40% sodium and 60% chlorine by weight. That means that the 3,100 mg of sodium per box (as per the nutrition label) equates to approximately 7,800 mg of table salt per box. So, when you think of it, getting less soup mix, besides meaning less soup mix, also means less sodium, which means less hypertension (ie: lower blood pressure) for Lipton’s consumers. Thanks, Unilever !!! We’re feeling healthier already.

If our hunch is correct, it shouldn’t surprise anybody that other Unilever brands are shrinking also. See our previous post about the incredible shrinking bottles of Hellmann’s Mayonnaise (known as Best Foods Mayonnaise, West of The Rockies), another brand brought to you by Unilever.

As is our policy at RoutingByRumor, if Unilever wishes to comment, we will be happy to post their statement here, unedited, and correct any factual mistakes in this article.

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Filed under Consumerism, Deception Engineering, Food, Home, Life, Money, Personal, Retail, Routing by Rumor, Scams, Shopping, Shrinking Products, The Planet, Your Money

Shrinking Products – Pay More, Get Less !

This is the first installment of what will be a continuing category of articles from RoutingByRumor. We will be documenting the most egregious examples of popular consumer products that are shrinking, being downsized or otherwise reduced in quantity or quality by manufacturers often employing “deception engineering” in an attempt to hide the changes from consumers.

Shrinking Product # 1 – Scott Toilet Tissue

Perhaps the most visible and distressing shrinking product category is paper products. Paper manufacturing requires large amounts of energy and water, and transportation costs represent a larger portion of the finished product’s price than most products. Because of their weight and bulk, paper products are particularly vulnerable to increased energy, transportation and raw materials costs.

The result has been ever decreasing quality and quantity of tissues, toilet paper and paper towels, to name just a few paper products. One of the largest manufacturers, Scott / Kimberly-Clark of Neenah, Wisconsin, has responded by a series of price increases and successive product downsizing.

Focusing on one Scott product, toilet tissue, we will examine some of the tactics Scott has employed in am attempt to camouflage the fact that you are paying much more for much less. One of Scott’s flagship products is the 1000-sheet roll of tiolet tissue. In the last few years, the retail price of a 1000 sheet roll of Scott toilet paper has roughly doubled, from about 45 cents (US) to about 90 cents. But the price increase only tells part of the story.

While Scott still advertises (in my opinion, deceptively) that it still contains 1000 sheets per roll, a roll of Scott tissue is substantially narrower and shorter than it was a few years ago. Since I started keeping track, the size of each individual sheet has gone from 4.5 x 4.4 inches (19.8 square inches), to 4.5 x 3.7 inches (16.65 square inches). Each time Kimberly-Clark has downsized the roll of ScottTissue, it has shrunk by almost ten percent. While I am not absolutely certain about this, I believe that if you go even further back in time, the standard toilet paper roll was 5 inches wide. I believe the tissue is substantially thinner, and in my opinion, much lower quality than it was previously. Another attempt to hide the reduction in quantity is to wind the roll on a much larger diameter paper tube, and to emboss the tissue, adding bulk without adding paper, so the outside circumference of the roll appears larger. Another indication of the decreasing amount of tissue on each roll is weight. Pick up a 6-pack or 12-pack of toilet paper these days, and it feels like it weighs perhaps half as much as it did a few years ago (some other brands are even worse).

In my opinion, the most insidious part of this is not that you are paying more per roll. It’s that because you are getting less in each roll, they are forcing you to buy more and more rolls (assuming that your consumption remains constant). It’s like the oil companies figuring out how to produce gasoline that provides lower and lower miles-per-gallon, forcing you to fill up more often, on top of the fact that the price-per-gallon keeps going up! Reducing a product’s size or yield masks the true extent of a price increase.

You are paying about double, but qetting 15-20% less than you did a few years ago, of a product I believe is substantially lower in quality. While Scott does not disclose the percentage of recycled fibers in their toilet tissue (or in any of their other products, to my knowledge), I have to believe their toilet paper is either made from 100% recycled paper, or it is made from predominately recycled fibers. I base this conclusion partly on the fact that when it comes in contact with water, it disintegrates instantly. I believe that is an indication that the length of the cellulose fibers is extremely short, and indicative of recycled fibers.

Of course, the proof is in the pudding, as the saying goes. Without getting too graphic, I believe the efficacy of Scott toilet tissue has decreased substantially as a result of Scott’s tinkering with the recipe, if you will. Certainly, there is a lower limit, at which a product’s size, quality and value will drive consumers to choose a competing product. My guess is that for some consumers, that limit has already been reached by Scott / Kimberly-Clark. I guess manufacturers try to find out what that limit is, without exceeding it.

Here’s some photos of the “Incredible Shrinking Roll” of ScottTissue.

(Note that the most recent wrapper below no longer unequivocally says “Made In USA”, but rather states “Made in USA of domestic and imported materials”, and fails to provide further details as to what percentage of the product is domestically sourced.)

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1000 sheets @ 4.5″ x 4.4″ = 137.5 square feet scott-45x40.jpg
1000 sheets @ 4.5″ x 4.0″ = 125 square feet

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1000 sheets @ 4.5″ x 3.7″ = 115.2 square feet

LATE BREAKING NEWS…

Dateline: June 8, 2008

CVS Stores has just beaten Scott Paper in the race to create the world’s smallest roll of toilet paper.  Read all about it here.

– Routing By Rumor

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Filed under Consumerism, Energy, Energy costs, Environment, Home, Kimberly-Clark, Life, Money, News, Personal, Retail, Routing by Rumor, Scams, Scott Tissue, Shopping, Shrinking Products, The Planet, Uncategorized, Your Money

eBay – A Buyer’s Market or a Seller’s Market?

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I love eBay. I hate eBay. I’ve used eBay since 1999.

If you are looking for a hard to find, vintage, used, discontinued or rare item, eBay is the first place to look. If you want to find the latest tech gadget at less than retail, check eBay first. A lot of people won’t even consider buying something online or at a “brick-and-mortar” local retailer without checking the price on eBay first.

With all those “Get Rich Selling On eBay” books and seminars out there, you would think everybody could quit their day job and watch the money pour in when they become an eBay seller. Don’t bet on it. Most eBay sellers hardly make enough to make it worthwhile. When you factor in the amount of time you have to invest to set up an auction, respond to buyer’s questions, deal with deadbeat bidders, and pack & ship the item, and the cost of eBay’s and PayPal’s fees, it’s hard to make a profit. Meg Whitman, eBay’s CEO, and eBay’s stockholders have made fortunes on eBay. If you want to make money on eBay, buy some eBay stock rather than trying to sell on eBay.

eBay has incrementally introduced new features over time that makes it a more secure and useful platform, but eBay has also devolved into an uneven playing field that benefits few but eBay itself. In category after category, you have sellers selling items for pennies, but charging outrageous amounts for “shipping”. Even the majority of sellers who aren’t selling through “Buy-It-Now” auctions for $0.01 are still inflating their shipping charges to try and make some money. This is especially true with sellers from countries like Chins, which have become a larger and larger presence on eBay.

I’ve seen it over and over again… For example, very small items selling for a few pennies, but with a $29.00 shipping fee. Shipping that will cost the seller anywhere from a first-class postage stamp to perhaps a dollar or two. Few buyers or sellers seem to care much about the practice, and eBay is certainly not complaining. There is so much competition between sellers that they all have to resort to this tactic. eBay actually helps sellers inflate their shipping fees by allowing them to build their margin into eBay’s auction shipping charge calculator.

Why is this happening? eBay does not charge a commission (final-value fee) for shipping charges assessed by a seller, so sellers shift all or most of an item’s cost to the shipping fee. eBay appears to have made no serious attempt to curb this practice. Why? I think it’s because eBay also owns PayPal, the bank thru which the vast majority of eBay transactions are paid for. If eBay doesn’t get their cut thru auction fees, it will still earn it’s money through PayPal fees.

If you’re looking for a bargain on the latest high-tech gadget, I doubt you’ll find a bargain on eBay. Items that are in demand usually sell for prices close to retail, especially when you add in the “shipping” charge. Most eBay sellers will not accept returns or issue refunds. Many manufacturers will not honor rebates or warranties on items purchased thru online auctions. While most sellers do a good job of describing an item and it’s condition, some do not. Some are deceptive.

For items like used or out-of-print books or DVDs, eBay is great, and there are many bargains available. I think eBay has done more for the environment by keeping stuff out of landfills than any recycling program has ever done. If you want to get rid of it, don’t throw it out. Put it on eBay.

One of eBay’s strengths is it’s feedback system. I like the very democratic rating system, where buyers get to rate and comment on sellers and vice versa. It encourages people to treat other eBayers they deal with fairly. It also holds you hostage to some extent. You have to avoid giving negative feedback to someone you’ve dealt with, even if it is justified, for fear of receiving retaliatory negative feedback. The feedback system is a double-edged sword.

…When I continue, I’ll discuss some of the issues I’ve touched on in greater detail.

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Filed under China, Consumerism, ebay, Employment, Environment, Home, Life, Money, Movies, Rebates, Retail, Retailers, Scams, Shopping, Technology, The Planet

Still Waiting For That Rebate Check? Don’t Hold Your Breath If Staples, Symantec or Parago Are Involved !

I’m a sucker for almost anything that comes with the promise of a rebate, particularly technology products. The phrase “FREE AFTER REBATE” is music to my ears, even though this is never quite true when you take into consideration the sales tax, postage, and other costs associated with filing the rebate claim.

Rebates were the one saving grace for a retailer that I thought was otherwise worthless, CompUSA. Most of the CompUSA stores in the USA have closed within the past year, and  I suspect they will disappear completely in short order. The funny thing is, I’ve never come across anyone who was sorry that a CompUSA store closed. I’ll usually hear comments like “I can’t believe they lasted as long as they did”.

I’ve been running into a problem receiving rebates I’ve qualified for on a number of products I’ve purchased at Staples stores recently. Most often, they have been rebates on software titles from Symantec. The common thread with all of the rebates I’ve had trouble getting my rebate checks for is that they are fulfilled by a company called Parago. Quite frankly, I have a pretty good nose for this stuff, and I smell a scam. It wasn’t always this way. In the past, Symantec rebate checks always arrived quickly and without a problem. I could always depend on receiving my check within a few weeks, which was much quicker than many other manufacturer’s rebates, but things have changed.

I meticulously follow the requirements of each rebate offer. I’ll include the UPC barcode, proof-of-purchase seal (if applicable), cash register receipts, product registration requirements, proof that I qualify for rebates available only to owners of previous versions or competitive products, etc, etc. I double and triple check everything, including the offer expiration date. Then I make copies of everything I submit. I double check the postage and the addresses.

At least half of the time, I’ll get a postcard from Parago telling me that I did not qualify for the rebate, listing one or more bogus reasons. Funny, but when I check my copy of the material I submitted, I do qualify for the rebate, and I’ve submitted whatever it is that they say was missing from my submission.

Read this: “The Great Rebate Runaround”, published by Businessweek.

Here’s a story about Parago posted by another consumer, who has had the same experience with Parago.

Here’s another.

I’ll call the phone number listed on the postcard, and I’m forced to navigate thru several menus before I can press the appropriate key and speak to a real live human being (or wait on hold until one is available).

Each time I’ve called about a rebate submission that was rejected,  the person taking my  call will take a few seconds to look over whatever records they have on their computer screen, and then announce that it was their mistake, telling me I will receive my rebate in a few weeks. Sure enough, about a month later, my rebate arrives.

What’s going on here? Let me take a guess. I think that either the retailer, in these cases Staples, or the manufacturer, in these cases usually Symantec, or more likely the rebate processor, which in every case has been Parago, has figured out how to make money. Conveniently manufacture a bogus reason to disqualify the rebate claim, and hope that the customer doesn’t pursue the matter. If the customer does complain, just say “oops, our mistake… so sorry… we’ll get that check out to you in a few weeks”. If this is indeed what is happening, it’s fraud, and it’s a crime. Could you imagine how much money is at stake if even a small percentage of the rebate submissions never get paid out? And this is on top of the fact that most rebates are never claimed by consumers to begin with.

Here’s an article on zdnet.com, that discusses the fact that Parago has actually patented ways to reduce the number of rebates it has to pay out to consumers. This is disgusting. It’s like being admitted to a hospital that has patented ways of killing it’s patients. It’s like a restaurant that tries to give their customers an empty plate. You can’t get away with it for very long. I think the fulfillment industry is going to destroy itself, just as the telemarketing industry did, by abusing the public to the point that legislation was passed which created the U.S. Government’s Do-Not-Call list. Americans who were sick and tired of being harassed by telemarketers have placed almost 150 million phone numbers on the DNC Registry. Telemarketers killed the goose that laid the golden egg. They have nobody to blame but themselves. The government recently decided to make DNC list registrations permanent. Good !

It appears to me that job #1 at rebate processors like Parago is not to get your rebate check to you quickly. Rather, their first and highest priority seems to be finding any way possible to avoid honoring a rebate offer. Who in their right mind would want to do business with a company whose goal, it seems,  is to cheat you out of what they owe you? If a lot of companies offering rebates were being honest with their customers, I think their products would carry stickers such as this…

“$50 MAIL-IN REBATE, BUT WE WILL DO EVERYTHING WE CAN TO ENSURE THAT YOU WON’T QUALIFY FOR THE REBATE”.

Manufacturers or retailers who employ rebate processors that attempt to prevent as many consumers as possible from collecting their rebates are shortsighted indeed. It’s not the consumer who stands to be hurt the most by these practices. It’s the manufacturers themselves, and the rebate fulfillment companies who are destroying the consumer’s trust in rebate promotions. Successful companies don’t have to pinch their customers to make a profit.  Throwing up as many barriers as you can, forcing your customer to jump thru hoops and clear hurdles before they will get their rebate is simply not good business.  These types of practices are a sign of greed or desperation, by companies that are willing to sacrifice future income and goodwill in the name of a fast buck.  It’s simply not the way an ethical company operates.

Now I know what you’re saying. You’re saying “why should we believe anything that RoutingByRumor says. Who the hell is RoutingByRumor anyway?” In that case, don’t take my word for it. Parago holds at least five U.S. patents, which can be viewed here. Among them is Patent # 7,146,328, which contains a number of claims, including the following…

“Rebates offer cash back to consumers who fulfill a set of requirements after purchasing a product bearing a rebate. By requiring post-purchase activities, the rebate offerer attempts to reduce the number of successful rebate claimants. Breakage occurs when a product bearing a rebate is sold, but the rebate is not successfully claimed.”

“Breakage refers to any event that prevents a rebate transaction from being completed, for example, denying based on bad verification materials such as receipts or UPC symbols, denying based on improper purchase dates or purchase price, or slippage from checks issued but not cashed.”

The patent also boasts that Parago’s system “provides opportunities for breakage”. Based on my experiences with Parago, I’m surprised it doesn’t say that their system “guarantees that breakage will occur”.

I have sent complaints to both Staples and Symantec about the difficulties I’ve had with rebates processed by Parago. Sadly, but not surprisingly, neither Staples or Symantec responded to my complaints. My guess is that retailers like Staples, and their vendors, such as Symantec, actually want Parago to mail out as few rebate checks as possible. If this is not the case, then they need to contract with a different fulfillment company. In my opinion, if companies like Staples and Symantec are involved in this practice in an attempt to avoid having to pay valid rebate claims, they should be prosecuted. I believe that a rebate offer is a contract between the buyer and the party offering the rebate. A class action lawsuit might be in order. Perhaps it’s time to stop buying products offering rebates.

If Parago CEO Juli Spottiswood (see nbpca article), Staples CEO Ron Sargent (see Forbes article), or Symantec CEO John Thompson (see Forbes article) wish to comment on this article, RoutingByRumor will post their comments here. If you click on the links to the Forbes articles above, you can see the incredible compensation these CEOs receive, made possible by your purchases and by all those rebates you thought you were getting, but never received.

If you have experienced this or similar problems trying to collect a rebate, post the details of your experience here, or e-mail them to me. If I receive a response to my complaints to Staples or Symantec, I will post the details, but I’m not holding my breath.

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