Services like Best Buy’s Buy Back program are presented as consumer safeguards. A customer who buys a new TV, cell phone, or other electronic gadget can be assured that the retailer will buy back the item if it’s brought back into the store within a certain window of time. This might sound great, but the way these programs work, the net result is more profits for retailers and more money paid out more often by customers.
As a Chicago Tribune story explains, buyback services are marketed as a means for consumers to avoid having to worry that the gadgets they’re considering buying will soon be outdated. Consumers who are contemplating a new electronics purchase often experience what’s been called a “fear of obsolescence.” The phenomenon causes anxiety among consumers, who are worried that because few gadgets are built to last, just about every purchase is bound to seem outdated and useless in the near future.
Interestingly enough, this “fear” causes more concern among retailers and manufacturers than it does among consumers. Why is that? It’s been shown that many consumers are so worried that gadgets will be outdated or obsolete that they delay purchases or even skip upgrades entirely. By doing so, they’re not buying stuff as often as stores and manufacturers would like. Any pause in buying patterns is scary if your business model requires customers to purchase a steady stream of sleek new gadgets.
Enter buyback programs, which remove one reason why consumers pause before buying or upgrading. Or at least that’s what retailers say these programs do. The Chicago Trib’s story gives some specifics on Best Buy’s service:
Under Best Buy’s program, the consumer who buys a gadget pays an upfront fee, which varies on the type of product, to participate and is guaranteed a resale price of 10 percent to 50 percent of the item’s original price. Most gadgets, except for TVs, have to be sold back within two years to qualify for a resale. Televisions have a four-year window for resale.
Think about this: Not only does the program increase the likelihood that a customer will buy on the spot (because the “fear of obsolescence” is removed), it also increases the likelihood that this same customer will upgrade to a new model in the near future (anyone who opts for this service is probably an early adopter or frequent upgrader). Of course, Best Buy also charges that upfront fee—just so that you can buy a product you’re unsure about, and so that you can hop on a path leading to more purchases down the line.
This scenario is a win-win, and neither of those wins is for the consumer.