Yesterday, Logitech launched a 100% cash back offer on selected products for Australian customers, but within four hours it had shut the deal down, saying that it had already reached the $300,000 limit for the value of the promotion. Is that actually possible? It might sound odd, but the answer is yes.
We mentioned this promotion briefly earlier in the week in the context of a different discount, and given how rapidly it sold out, it's probably just as well we didn't give it more prominence. The terms and conditions made it clear that Logitech would close the promotion once $300,000 had been spent, but no-one expected it to happen quite so quickly, especially given that only physical store sales were eligible.
Several journalists I know have expressed scepticism at this outcome, using a logic that goes roughly like this: The cheapest product in the deal (a mouse) cost around $20. To reach $300,000, you'd need to sell 15,000 mice, which means over four hours or so, you'd need to sell roughly one every second — something that would be pretty obvious in any electronic retail store.
While this sounds like an appealing superficial logic, I don't think it takes account of all the facts. Any individual household could purchase up to five items for the cashback deal. The deal had been heavily promoted on Logitech's Facebook page, and also made a prominent appearance on OzBargain. And even before the deal kicked off, OzBargain commenters had noted that it might run out quickly:
This deal has 2246 click throughs. Assuming others out there know about the deal, consider what happens if 3000 people have made purchases? $300,000 is available for the cashback. If there are just 3,000 customers, so far, who know about the deal, that’s about $100 each.
If each person purchases five of the cheapest items, that takes care of $100 pretty quickly. If they go for the pricier items (such as a full-priced chill mat) at $60, they could spend even more and drain the funds pool even faster. And leaving aside dodgy types trying to stock up for later eBay sales, who wouldn't stock up on a few gadget Christmas and birthday presents (plus a new mouse for themselves) if they could get them for free?
Such a scenario also wouldn't necessarily mean a rush at retail either. Officeworks, Harvey Norman and Dick Smith collectively account for about 600 outlets. Assuming $100 is spent (which is really a lowball figure), that would require just five visitors to each outlet — and that's without accounting for other stores that also sell Logitech gear. That certainly wouldn't lead to massive queues throughout the day, or anything more than a quick rush by a handful of well-organised types first thing in the morning. Saving money is a popular hobby for many people, so it's not hard to imagine what amounts to less than 0.02% of the whole population (if you use the 3,000 figure) getting on board for this one.
Note that I'm not saying that is what happened — just that it's not as improbable to sell that much gear as it first sounds. Cashback deals are carefully monitored by the ACCC if complaints are received, as HP knows all too well, so trying to fudge the numbers would be a really bad move. It may turn out to have been a bad PR strategy for Logitech anyway, given the disappointed customers who have purchased gear and won't get a refund, but I don't think it's possible to argue that it's impossible purely on the basis of the numbers we know.