Why The New flybuys Is A Rip-Off

Coles has revamped its flybuys loyalty scheme, changing the way you can earn points and redeem them. But the most important feature of the scheme remains the same: you will have to spend a massive amount of money to reap any long-term benefits, and you’ll be sacrificing a lot of personal information to do so. We’ll tell you how to make the most of flybuys if you do sign up, but you really need to examine whether it’s worth it.

With a massive advertising campaign featuring Dawn French, it’s unlikely you haven’t heard about the flybuys revamp. And if you’re an existing flybuys customer, you’ll already have been sent a replacement card and asked to re-register it. (The annoying lower case ‘f’ is now Coles’ preferred style, by the way.)

Like its most obvious rival, Woolworths Everyday Rewards, Coles lets you earn points which can then be redeemed for a variety of items. But you have to spend a lot of money to earn a very small number of points. Here’s how the system works, and why you’re unlikely to get much out of it.

Earning points: a slow process

You earn one point for each dollar you spend at Coles, Target, Kmart and Liquorland. You can also earn one point per dollar of an AGL Energy Bill, and (as we’ve mentioned before) score points for recharging Telstra prepaid mobile services. All of those are, of course, dependent on you using those services: if you shop at Woolworths, have electricity with another provider and use Optus, there’s not much going on. And there are other catches: for instance, tobacco doesn’t count.

Other major participants include Coles Express fuel stores (you earn 1 point for every $2 you spend on travel booked through the service) and Webjet (which has the same $2/1 point ratio). Given that you’ll pay a $20 fee simply for booking flights through Webjet, it’s hard to see that ever adding up to a meaningful benefit.

The fastest way to accelerate your points earning is to sign up for a Coles-branded MasterCard. That gives you 2 points for each dollar you spend whenever you use the card, plus all the normal points you would earn. If you’re disciplined about paying off your credit card, this will definitely accelerate your points earning — but it will still take a long time to accrue a worthwhile reward.

Spending points: a small reward

One way you can use those points is for a discount voucher for your supermarket shopping (a scheme called Flybuys dollars). 2000 points equals $10 off your Coles group shop (and you have to redeem in $10 lots). In other words, when you have spent $2000 at Coles, you will get $10 as a discount. That’s a whopping 0.5% off. I don’t imagine you’d go rushing to a store offering that small a discount in a catalogue, so why would you think that was a good bargain?

Here’s a simple way to look at it. The flybuys brochure notes that if you spend (in participating stores) $150 a week on groceries, $60 a week on fuel, $50 a month on alcohol, $150 a month in Target and Kmart, $300 a quarter on power and $30 a month on phone recharges, take out an insurance policy with Coles and pay for it all with a Coles Mastercard, you will earn 52,100 points. “That would give you $260 off your Coles grocery bill in a year!” the brochure proclaims. What it doesn’t tell you is that you will have spent $14,880 to get there. Your $260 represents a 1.7 per cent saving.

You can also use the points to purchase other items, but this is (again) often expensive. To pick from the most obviously Lifehacker-centric category, iPods: you can score a 2GB iPod shuffle for $36 plus 7800 points (which could represent up to $7800 in spending). A brand-new 2Gb Shuffle direct from Apple is only $55, so you’re spending $7800 to save $20. That’s a lousy value proposition.

Making the most of my5

One of the more heavily-hyped features of the flybuys revamp is my5: a list of five items which you will get a 10 per cent discount on every time you shop. That sounds appealing — it’s a direct saving, not something you have to wait for — but the promotion is rife with sneaky conditions:

  • First and foremost, the offer only runs until October 31 this year. Coles might choose to extend it at that point, but it seems more likely it’s being used as an enticement to get people to sign up.
  • You have to spend $50 to qualify for the discount. That’s likely if you are doing a full family shop for the week, but it might not happen if you just dash in for a top-up. (What Coles is hoping is that you’ll buy additional items to crack the $50 limit, but that’s a ridiculous strategy for saving money.)
  • Only five items a day within each my5 “group” qualify for the discount. If you purchase more than five of one of your selections, nothing else in that group will qualify (though the discount will be applied to the highest-priced items in that case). With items sold by weight, you can’t get more than 5 kilograms.
  • Not everything in the store qualifies. Depending on the category, you might find only Coles-branded products on offer, or you might find everything but Coles-branded items in there.

To make the most of my5, you ideally need to choose items that are relatively expensive and which you buy regularly. Given the time limit, you might also want to concentrate on dry goods which don’t have an expiry date; that way, you can stock up on items while they’re cheaper. The most obvious items I can think of in this space are nappies and dog food.

You should also be wary of Coles’ automatic “suggestions” for your most frequently-purchased items, since those won’t necessarily reap the biggest savings. A friend of mine signed up and used those suggestions. On her first shop of $238.30, the saving was just $1.52.

But I’m spending money anyway!

This is the most common argument amongst enthusiasts for flybuys (or any similar loyalty scheme): “I’m already buying this stuff anyway, so I might as well get the points.” That’s arguably true if you genuinely don’t change your habits and continue to seek the best bargains. What Coles is relying on is that you’ll feel tempted to keep earning points and change your spending habits more permanently.

But in return for your discount, as we’ve also noted before, you’re giving away a lot of personal data. Coles will know a lot about your buying habits, and it will use that data to aggressively bombard you with offers. It can also sell that data to anyone else it wishes. Is that really worth a 0.5% saving? I’ll stick to hunting down the cheapest food wherever it is, thanks.

Lifehacker’s weekly Loaded column looks at better ways to manage (and stop worrying about) your money.

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