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Managing the Risk of Rebates

In light of a shift in rebate structure, distributors rethink purchasing strategy

February 10, 2009

Manufacturers have for the past couple of decades commonly offered pricing tiers to distributors, setting purchase quotas to qualify for price discounts and offered rebates based on growth and penetration. These rebates have been of great benefit to distributors - actually we buy our bottom lines - and have been the primary driver behind the growth of buying groups.

In some industries, rebates based on quantity purchases alone have been removed from the table. Pricing at the time of purchase, and special rebates or pre-bates to grow specific markets seem to be the emerging trends.

This means that many in distribution will have to rethink their purchasing strategy and start to look at shorter term growth and market penetration. Pre-bates are paid ...

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