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.


Comments

    Do I have to activate the new flybuys card I was given or can I just keep using the old one?

      The barcode on the two cards is the same, so it doesn't matter which card you use, but you will need to activate the new card by the end of June/July (can't remember which the girl said) in order to keep your account, or redeem any rewards.
      This is because there are new terms and conditions, and new ways of redeeming your rewards.
      Also, you don't get your my5 10% discount until you activate.

    I like how there is no major airlines on Flybuys .. Webjet... slack

    In the time spent reading through this article and it's comments I could have earned another 300 flybuys points. But seriously.
    If you just have the card, don't mind giving up your shopping information & being "aggressively bombarded" (?), just use it. It's not hard. And if, as some commenters say, Coles is raising grocery prices to cover the cost of the re-launch, then you are losing out by NOT taking advantage of flybuys when you can, right?
    But what do I care, do whatever you want. I won't lose any sleep over it.

      "aggressively bombarded”

      I've hard a card for years but I only ever get a statement from them every few months. I'm sure it's possible to get a lot of mail from them, but it's also just as easy to opt out.

    To get a free 16Gb iPad at my current spending $350/week at Coles, I would need to save up points for 6.5 years, and had spent $118,300.

      or to paraphrase...

      "without changing my current spending habits, Coles will give me a free 16Gb iPad every 6 years" (possibly much less, if you get bonus points here and there for buying stuff you were going to buy anyway).

      those cunning devils !

      I can only assume that you'll be exercising common sense in purchasing decisions so won't be incurring any additional costs, so this boils down to a couple of free tablet devices every decade.

      honestly, how else do people expect to get free stuff with minimal effort?

    Thanks for the article. That truly is an awful deal. If someone came up to you with 25 cents at the exit to Coles and wanted to write down a list of everything you purchaced for their database so they could send you more personalised marketing material, what would you do? I, for one, would tell them to shove it.

    I also hate that this will waste the time of non participants in checkout lines and make everything in the shop more expensive.

      But they aren't. The reason that would be irritating to most people if because the work involved negates the worth of the deal.

      Because all you are doing here is swiping or scanning a card when you already have your wallet open to get your debit/credit/cash it's not much more effort.

    not sure if they have changed the rules now, but when i use to use flybuys 5 years ago the points would expire after 12 months! if thats still the same, then the points scheme is pointless.

      There's no expiry now, provided you use your card once a year. Before that, points lasted three years

    I shop at Woolworths, it's across the road from me, my rewards card is linked to my Qantas frequent flyers, yeah the points don't add up rapidly to the point where i'm flying to New York business class each month, but i certainly don't go out of my way to boost them with offers. I'm still gonna buy food, so the bonus is exactly what it is, a bonus!
    But on the articvle above, i'm pretty excited about booking travel at Coles Express fuel stores;
    and who spends $50 on alcohol a month???????

      Erm... plenty of people spend that much on alcohol per month. Depending on what you buy, that's about a sixpack per weekend.

    If you are already a flybuys member, then flybuys just got better. 1 point per $1 spent, and no expiry date on points.

    If you're happy giving up a little personal information for a little reward from time to time, then it may be worth joining, IF you don't let it change your spending habbits.

    As for the privacy question, I see it as no more insidious than having a Google account, (or nearly any other free service).
    The rule is always this: "If you're not paying for it, you're not the customer, you're the product"

    2 key things Coles want from this:

    1. Have shoppers switch from Woolworths to Coles.
    A lot of people shop at both, this aims to for those people to spend more at Coles and gain further market share

    2. Guide ranging decisions.
    Loyalty data allows Coles to track shopping behaviour, to see if products are substitutable, to understand if you only buy on special or are loyal to a brand, what makes you switch and what wont you compromise on. Will you buy the brands or just switch to Coles brand because its cheaper. So think twice when you buy Coles brand because in 6 months you'll see those brands that you used to consider and sometimes buy are no longer there because you wanted to save the 20 cents to buy the Coles own label...

    So yes you are giving away personal information, but you would be vain to think that they are going to get all big brother on you. You are 1 data point of millions of people of millions of baskets.

    Thanks to always having my flybuys registered online I have been able to save up to 28 cents per litre of fuel! The petrol at Coles express is generally the same price or less than other local service stations...so no loss for me...especially for the V8!
    I shop at Coles anyway...we're all going to have to pay the extras factored in to our grocery prices whether we take advantage of the flybuys program or not...if we don't use it that little $10 possible saving for each person could become an extra $10million profit for Coles!

    I have a flybuys card but this in no way weds me to coles, I also shop at Woolies but would prefer an independent if there was one locally. The fuel vouchers are not used as I get cheaper fuel at an independent and I buy my green groceries from a grocer. I am sick to death of Coles, Woolworths and Bunnings diminishing the choices I have to buy where and what I want.

    If you don't mind people knowing you like to eat steak and eggs on a weekly basis, then I don't think its a problem. Sure, the rewards aren't necessarily great, but the membership fee is zero if you are not concerned with the rather low impact it poses on your privacy. The points don't expire which helps. That said, I fall into the category of people that has a Woolworths near by, not a coles, thus while I will have the card, it will be limited to a few outlets. Personally I find the Woolworths card a bit more useful as it links with my frequent flyer card also.

    On a related note, while it is hard to rack up points at a specific store for some rewards card, I just checked and as I suspected, my awards credit card which I pay an annual fee for has paid for itself quite comfortably should I choose to redeem the points for cold hard cash. In fact, I'm probably *slightly* better off with the gold card than a zero fee card. Certainly as far as award schemes go, I think credit card ones are ahead of these chain specific ones as they don't discriminate on where you shop nearly as much, and if you used a debit card they'd have the same information anyway. Theres no temptation to buy one more item to tip you over some arbitrary $30 or $50 threshold either. Just an observation anyway.

    I've been a flybuys card holder from nearly day 1. I've redeemed points for gift cards,that you no longer can do,which in times past has been ok,but not ok is the amount you have to spend initially. What I found intriguing is that the letter stated it was a all new revamp look & it was much easier to earn points. Ok. It then went on to state that in the past you redeem 2000 points for $2o. Now you redeem 4000 points $ 20. And nothing had changed ?? They claim this is better ? How ?

    If you use a card to pay for your groceries then Coles and Woolies already know what you are buying. They track what your card is paying for. So if you are avoiding Flybuys because you are worried about your purchases being tracked, I hope you are paying with cash.

    Obviously when tracking payment cards they know nothing about who is using the card. Flybuys gets them the added benefit of that basic biographical information that allows them to target their advertising.

    Good article.

    Flybys, Its like people trying to scab off coles or woolworth, they only give you a little tiny slice of a piece of cake. Even with the 4c fuel discounts I only get under a buck off for spending over $30.

    They can shove their discounts + saving up their asses...

    Flybuys (sorry flybuys now) always had been the worst value rewards program I've ever been a member of! In the 10+ years that I've had a card all I've ever managed to get was a book of 10 movie tickets, most of the time my points would expire before I had a chance to accumulate enough for anything.

    The good thing is that now points don't expire, so at least there's hope of getting something after a few years! In terms of value its still hopeless, as this great article points out.

    You're much better off getting a good value credit card and earning points that way. The only thing I'll use flybuys for is when I'm already buying something at a store that gives flybuys points. If I ever spend $2000 I'll get my $10 off at Coles, but I certainly won't be going out of my way to earn points when I can be getting a lot more on my credit cards which can be used for almost anything, including flights.

    As for my5, its the biggest load of BS ever! Its so convoluted, even the staff at Coles had no idea about how it works when I asked them. I've got a Coles 5 mins walk from me, so I never spend $50 in 1 transaction there, so my5 is totally useless for me. And things like meat cost almost double what they do from a butcher 5 mins drive away, so why would I bother!

    Nice try Coles, but back to the drawing board I think!!

    I guess this winge like all the others will fall on deaf ears at Coles. I signed up to my 5 thinking it might be a good idea, but would not included the Coles milk because it is sending dairy farmers to the wall, figured I would put down dairy farmers milk ,only to find they don't stock it in any of my local Coles. So I suppose dairy farmers paid to get some promotion out of this scheme that is not going to work because the whole scheme is about Coles. so they have my 5 favorite buys in a data base, but I can get a discount, I still have to by bread and milk but I won't buy Coles bread and milk. In fact the IGA is starting to look like better value all the time now.

    Just did my first shop at Sunbury, Vic. with the new card, spent $311.53, saved .70cents only. It appears that if you buy more than 5 items in one group (as in my case, cat food tins), the rest is not discounted. Sorry, but Coles has just lost one consumer. Their call centre logged my query, but were unable to assist. Back to Woolworths where the parking is easier and any award cards are automatically sent out to you during the year.

    Woolworths and Coles make millions out of shelling consumer purchasing habit data to others including manufacturers and marketers.

    If they want to make dollars out of my data like this I want a much bigger reward and more easily obtainable than those now on offer.

    I agree that if these reward programs don't change your spending habits, and you are able to resist the 'spend more to save more' trap at fuel stations, etc, you will get some rewards, albeit slowly. I have the flybuys (haven't activated my new card yet) and Everyday Rewards (linked to my QFF) and shop where and when needed and convenient at the time, only for what I need. It seems to work for me. But, I reckon you're right... Another hotel stay may just be a very long way off!

    I used to have a Coles Group Source card that allowed me to have additional 4cents discount when I spend $30 or more at Coles. I've been told that I have to switch to the new Coles Platinum card which provides 2 points per dollar spent at Coles.

    Additional fuel discount of 4 cents is available upon claiming 500 flybuys point. I think this is a rip-off as in the past, spending $30 gave me that discount while now, the $30 will equate to 60 flybuys points .... still short of 440 points to redeem a 4 cents discount voucher !!

    Would love to hear why this new rip-off option has been forced to loyal customers like myself. I'm sincerely looking at switching over to Woollies !!

    I've had a Flybuys card for many many years probably from the time it was implemented. I've shopped buying my regular items from Coles, Kmart, Target etc including specials that I would normally buy no excess spending to earn points & have over the years collected an LG Video player (I did say many many years ago) Tefal toaster, Microwave, a Sander & very recently a Spice & Coffee Grinder. I was about to buy one from Kmart & found it was on offer at Flybuys & I qualified for it. All of these items are still working perfectly. This was earned just going about doing my normal shopping. There's nothing wrong with Flybuys. I shop at Aldi & Safeway too. My family consists of 2 instead of 4 now so it just takes longer to earn the points but the points dont expire so it doesnt matter. If I need a new appliance or anything I check my points first incase its on offer at Flybuys. I havent registered for the my 5 yet because I dont think it will benefit me.

    And you have to activate for Coles Express separately, and it takes forever to get onto the website!

    the only reason for a fly buys card is just another way for the goverment to check up on what you buy. they know how many people live with you to the amount of grocerys you buy, they know what you buy when ever you use this system. i refuse to use it. pay cash

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