REI return policy
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Nate Meinzer
(Rezniem) - F

Locale: San Francisco
REI is not a Co-op on 02/22/2009 19:09:28 MST Print View

I don't care what they tell you when they ask you to sign up for a membership, it is not a Co-Op in the traditional sense (like the grocery store co-op most people think of when they hear the term.)

There is NO way they return 85 percent of their profit in dividend checks. It's just mathematically impossible. They are giving back only a measly amount on purchases, first of all, and only purchases BY members. (So members don't "profit" at all on purchases by non-members nor on purchases by members who neglect to use their member number.)

Just absurd. Where are you getting this stuff?

te - wa
(mikeinfhaz) - F

Locale: Phoenix
heads up on 02/22/2009 19:24:24 MST Print View

thanks for the info. seems logical. except for your last bit, which Im more inclined to follow Nathan's explanation that this one:
"REI has a rather rare set-up (in today's world). It is a Co-op, which means it pays out most of its profits it's members. This is a lot different than a typical company which pays dividends to shareholders"

the dividend is 10%. I dont know how that constitutes "most of" their profit.

Robert Blean
(blean) - MLife

Locale: San Jose -- too far from Sierras
Re: Re: Re: REI on 02/22/2009 19:34:51 MST Print View

"If we define driving smaller, self-owned businesses under as "being a burden on one's community", "

I also define it as paying your people so poorly they have to also go on welfare, an giving them such poor benefits that they are a drag on their community, especially health services. Walmart does that; I do not believe that REI does.

Nick Gatel
(ngatel) - MLife

Locale: Southern California
Co-op on 02/22/2009 19:37:44 MST Print View

The dividend has nothing to do with the selling price. Some years the dividend can be a lot lower that 10%. It depends on other costs. Also dividends are based on the total purchases made by members... not total purchases, etc. etc.

But it is definitely a Co-op and has to publish financial statements.

Here is one:
http://www.rei.com/pdf/aboutrei/2007REIFinancialStatements.pdf

Enjoy!!

BTW, their gross profit is around 56%. Higher than most retailers.

That is because they have also gotten involved with financial services (REI Visa) and their Travel Services probably have no cost of sale, but they are paid a commission from their vendors.

Robert Blean
(blean) - MLife

Locale: San Jose -- too far from Sierras
Re: HAHAHAH on 02/22/2009 19:39:09 MST Print View

"That's just clever marketing to sell memberships......which is why your dividend is a percentage of your purchases and not a percentage of company profit."

Ah, but it *is* a percentage of company profit. There is another posting in this thread pointing out that REI distributes about 85% of its profits as dividends.

The distribution is weighted by the amount you shop there ... seems as good a way as any to weight it.

Lynn Tramper
(retropump) - F

Locale: The Antipodes of La Coruna
Re: Re: It's a legal co-op on 02/22/2009 19:45:26 MST Print View

...meeting the criteria as follows:

"Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join. Economic benefits are distributed proportionally according to each member's level of participation in the cooperative, for instance by a dividend on sales or purchases, rather than divided according to capital invested. Cooperatives may be generally classified as either consumer cooperatives or producer cooperatives. Cooperatives are closely related to collectives, which differ only in that profit-making or economic stability is placed secondary to adherence to social-justice principles"

Craig W.
(xnomanx) - F - M
Re: Re: Re: Re: REI on 02/22/2009 19:47:47 MST Print View

You're absolutely right about being a drag on society Bob.

But like many businesses out there, I've heard plenty of stories about REI: keeping employees' hours low so as to never qualify for benefits, pay perpetually floating around minimum wage, etc.

Whole other topic, but all Walmart is doing is following state laws and paying minimum wage...which also qualifies one for welfare if you have dependents.
If I started full-time at REI today, I'd be on welfare and food stamps as well...even if they started me at $12/hour (150% of CA minimum wage).

Show me an entry-level job at a major retail company that wouldn't have you on welfare if you had two dependents.
This whole system is F-ed.

Edited by xnomanx on 02/22/2009 19:51:48 MST.

Nate Meinzer
(Rezniem) - F

Locale: San Francisco
REI's faux-co-opy status on 02/22/2009 20:54:55 MST Print View

Bob,

Of course the dividend is some percentage of their profits. (not 85, nowhere near), but the dividend is determined by your purchases, not the company profits.

They tell you when you sign up for membership you become an owner. This is ridiculous. No member is an owner of REI. If it goes under and is liquidated, members will not be liable. If it were to be acquired, members would not receive a share of the selling price. The relationship of members to the company has no resemblance to legal ownership whatsoever.

Lynn said a co-op was defined by "economic benefits are distributed proportionally according to each member's level of participation in the cooperative, for instance by a dividend on sales or purchases, rather than divided according to capital invested."

REI does not meet this definition. Profits are not distributed based on your participation level. Here's the difference. If REI took all their profits, and then divided them up among the members based on their participation, then it would be a co-op. What it does now in giving a fixed percentage of your purchases back is nothing more than an incentive in the form of a rebate.

If you want to buy their definition of co-op, fine. But in this sense, airlines are co-ops. I get miles I can use for air travel later when I buy tickets.....oh, and VISA is a co-op too! I get VISA points to purchase items when I buy things on my card!! WOW...EVERYTHING is a co-op!

Edited by Rezniem on 02/22/2009 20:58:13 MST.

William Puckett
(Beep) - F

Locale: Land of 11, 842 lakes
Re: REI's faux-co-opy status on 02/22/2009 21:07:57 MST Print View

Nathan,

You're not accurate on some of your assertions. If you are serious about the truth on this, you need to check the financial statements about how much of the company's "profit" is distributed as dividends. Cooperative ownership is real and "liability" is not a requirement to be an owner in that form of organization, similar to being a limited partner or a shareholder. The members DO own the cooperative. I can accept that you have your opinions about these matters, but you're not well grounded in facts.

They operate the same as a local cooperative grocery store. Members who shop there are entitled to dividends based on the total purchases they make over time. The total of all member dividends is determined based on the monetary success (or lack thereof) of the retail business. Some portion of the operating surplus (i.e. "profit") is retained as capital for the business, but the majority is distributed to members as dividends...payable to members in proportion to the degree to which the member patronized the business.

In 2007, REI had $1.3 billion in sales. They paid $53.4 million in patronage dividends, $22.5 million in taxes and had $41.4 million in income retained for capital.

If you follow the link to the 2007 REI financial statements that is posted earlier in this thread, you can check on this. I would point out Footnotes #11 (Membership) and #12 (Patronage Refund) as dealing specifically with ownership and the "dividend".

Edited by Beep on 02/22/2009 21:23:57 MST.

te - wa
(mikeinfhaz) - F

Locale: Phoenix
Re: Re: REI's faux-co-opy status on 02/22/2009 21:20:09 MST Print View

someone here cited REI as being a "yuppie clothing store that sells gear on the side"
lol
that should be a "famous quote"

From my REI membership days, back before I saw 'the light' and I used to spend several hundred a year on products sold there, it was about a 10% average dividend.
So, in a nutshell I was "saving" ten percent off retail, regardless I waited till year's end to see the savings. (where, of course you will dump that "savings" right back into REI's cash register).
I soon wised up and realized I could save 15, 20, even 40% over Really Expensive Isnt it by looking for immediate returns at places like ProliteGear, Backcountry, STP, or other online markets.
Call me crazy, but the false perception that a measly 10% savings is worth my undying love (and sometimes arrogant support by some) for some retailer that sells TNF hoodies to poseurs by the millions each year is going to get my deluded devotion, think again.
So, if people love co-ops, cool. I dont care what REI calls itself. I call it Return Every Item. Thanks, REI for your return policy. It has, over the years, helped me offload a bunch of useless gear. Peace!

Edited by mikeinfhaz on 02/22/2009 21:21:42 MST.

Nate Meinzer
(Rezniem) - F

Locale: San Francisco
Rei is not a co-op on 02/22/2009 21:28:28 MST Print View

William,

I've looked over the financial statements and I'm incredulous that they give away 53mm with net income of 41mm. Yes, that seems very, very strange. When you read the fine print you realize that this is an estimation of the patronage refunds awarded and that not all members redeem their refunds (of course). You then realize that some (most?) members use the refund as a store credit which means they aren't giving away the full "value" of the refund because they are not selling the merchandise bought with it at cost, but with the usual mark-up. Curiouser and curiouser. What they do NOT divulge is the exact amount of money, real money not "store credit" that is given out in the form of patronage refunds and redeemed.

You point out that the percentage awarded changes year to year but this is really beside the point.....members are only tangentially harmed or benefited by the store's performance since they are only getting a percentage of their purchases and not a percentage of store sales. The hypothetical still stands: if american airlines changes its ratio of award miles year to year based on its economic performance, does that make it a co-op?

REI states that:

Being a co-op means we can run our business in a different way. We answer to you, not to shareholders or a quarterly bottom line.

This is just patently not true. The store does not interact with its members. They do not have a say in operating the business and have no traditional hallmarks of ownership. I'm fairly well-grounded in legal issues and I'm confident that I'm correct on this point. (Notice also that the financial statements they disclose are not regulated by the SEC and thus only fit guidelines laid out by corporate policy. The financial statements are just as much a part of the marketing gimmick as everything else.)

Dan Cunningham
(mn-backpacker)

Locale: Land of 12,000 Loons
Return Every Item on 02/22/2009 21:48:51 MST Print View

I returned an REI Spruce Run jacket to REI today. It was only worn a couple of times, it was uncomfortable, and I quickly realized it wasn't worth the 15 ounces and $150. I returned it with no hassle, got my money, and bought a Mont Bell jacket online when I got home that's better, 1/2 pound lighter, warmer, and cheaper. I hope it fits - if not you'll see it in the gear swap forum ;).

I got the REI jacket on a whim. I hadn't done much research on lightweight insulating jackets, but it was right there and I liked that the sleeves came off, so I bought it and tried it out. It sucked. I returned it. However, I had no intention of returning it when I got it. It was even added to my gear list spread sheet. That said, I wouldn't have made that type of purchase at too many stores. I KNEW that if I didn't like it, I could bring it back.

If I am buying something, and REI happens to carry it, I'll more often than not get it there because I can return it so easily if it doesn't pan out. That's how the REI system works, and that's why they get some of my business.

I do think that buying something with the full intention of using it and then returning it is dishonest.

Nick Gatel
(ngatel) - MLife

Locale: Southern California
sigh... on 02/23/2009 00:13:21 MST Print View

I hope this is my last post on this. :)

Yes, you can have a say in how the REI business is run. Members do get to vote for members of the Board of Directors. Or at least they used to. I don't buy much there anymore (except this year as a Xmas present for my son), and when I get a dividend, I throw everything else away and don't read what's in the envelope; and just redeem it. Oh, and that is a hook. Use or lose it (edit: acutally you can get a check, but I suspect most checks are so small, many forget to redeem it by the deadline). So people end up buying more stuff, and often stuff they don't really need. But they make these choices of their own free will. REI is not forcing anyone to buy a members, purchase their goods, or partipate in their co-op.

Futhermore, philisophically I am not a fan of Co-ops or collectivism.

What about REI's contributions to environmental and social issues? For some folks that is important. For those reading this post, and feel that 'socially responsible' companies are best... then REI might be your first choice to buy gear. That extra money might be supporting the programs you feel are the right thing to do. In that case, perhaps it is in your best interest to buy products from them. But that mindset does not define me.

REI was created in 1938, because gear was hard to find, and the co-op made it easier to obtain gear and leverage some buying power. This is a critical point... it was, and remains a co-op.

When I started backpacking, the only place you could get gear was at sporting goods stores, Army-Navy Surplus stores, REI and Campmor catalogs, and a few speciality stores that were never close to where you lived. REI filled a need for me, and I guess I have developed some loyalty to them. But now I shop via Internet, which pretty much excludes them due to price and a choice. For what I want and need, the cottage industry best fulfills that.

In 2007, REI had $1.3 billion in sales. That is not a big company, by today's standards. Their net profit was 3% of sales, not stellar. Without the dividends, it would have been 9%... which is reasonable. However, without the membership factor, they probably would have done a lot less in sales... and probably would not be in business at all.

The great thing about all of this, is that we can buy gear wherever we want. So if we don't like REI or WalMart or whoever, then we can go elsewhere. If you don't like REI or the way they run their business, then don't patronize them. I ocassionally buy from REI. But on the other hand, I wouldn't put a foot into WalMart, even if they were giving their stuff away. Just a personal choice, and not something I need to crusade about.

Freedom of choice!! Isn't it wonderful? :)

Edited by ngatel on 02/23/2009 00:58:11 MST.

Nate Meinzer
(Rezniem) - F

Locale: San Francisco
Dividend Checks on 02/23/2009 00:56:12 MST Print View

Speaking of...when are they getting here this year? And will they be less than last year with the downturn? I love having REI around for browsing at stuff when I get bored....I don't have any grudge against the store; I just think the co-op, member-owned thing is silly. But I always spend my rebate at the store....

Nick Gatel
(ngatel) - MLife

Locale: Southern California
Re: Dividend Checks on 02/23/2009 01:33:03 MST Print View

"Speaking of...when are they getting here this year? And will they be less than last year with the downturn? I love having REI around for browsing at stuff when I get bored....I don't have any grudge against the store; I just think the co-op, member-owned thing is silly. But I always spend my rebate at the store...."

Nathan,

Total agreement here. The membership is rather silly, and actually co-ops are an alternative to captialism. No need to go down that road.

But, I spend my rebate at the store. I think they come out around April or May. When I am beginning to research a product I usually start at REI.com, because they list most weights, and have reviews (but often not reiable). And REI's intent to provide quality products and services is sincere.

I suspect that REI is faring no better than other retailers, and it could be doing worse. They have done quite a bit of expansion in the past few years, and have wandered into the social/environmental advocacy, financial, and investing arenas. IMO this is not the purpose of a co-op.

They sell discretionary items, and most people today are really cutting back on this type of spending. Guess I picked the wrong year to buy a lot of stuff at REI. :( But my investment portfolio has done rather poorly too.

It has been fun pontificating with you and others on this thread.

Craig W.
(xnomanx) - F - M
The "evil" Walmart on 02/23/2009 08:35:33 MST Print View

So why are they worse than, say, Target?

Not that I'm a fan of them by any means, but why is Walmart so different, so much more "evil" in the public eye, than most other major retail stores?

They're actually making a substantial nationwide attempt to become extremely energy efficient and "eco friendly", launching major solar, recycling, and sustainability campaigns within their stores. They're actually becoming a model in many areas.
Make no mistake, I think they're only doing it because they realize it saves theme big $$$, but they're doing far better than others.

On a side note, where are BPL's products being made? How about Patagonia? Mountain Hardware? Name a major brand. Unionized, well paid workers with benefits or overseas factories with little or no regulations on working conditions?
I guess my question really is what is the difference between any large retailer's business practices these days?
I think it's mostly spin...some do it well, others don't do it at all.
Patagonia for example...tons spent on environmental initiatives, recycling, etc., all creating an "eco friendly" public image. But they do a pretty good job about hiding their massive contracts with the military and their factories certainly aren't supporting US jobs- check their website for discount "Alpha Green" clothing...mostly made for mountain warfare units...
Spin...
spin
spin...

William Puckett
(Beep) - F

Locale: Land of 11, 842 lakes
REI Patronage Dividend on 02/23/2009 10:21:50 MST Print View

1. I asked at the local REI on Saturday and was told that the first checks are going out the first part of March. They will spread the mailing out over 2-3 weeks.
2. As a reminder, if you wait until July 1 (I think), they will just cash the refund at your choice rather than limiting it to purchases.

Chris W
(simplespirit) - MLife

Locale: .
Re: REI Patronage Dividend on 02/23/2009 10:25:35 MST Print View

I don't think you have to wait on the "check". They're already showing up on the website accounts as available for use.

cary bertoncini
(cbert) - F

Locale: N. California
walmar worst of the worst on 02/23/2009 10:50:13 MST Print View

there was actually a congressional study done on walmart a few years ago that concluded they are detrimental to small, local economies.

it's a combination of factors, but more than other retailers, they pay low wages and manipulate their workforce hours to have as few as possible who are eligible for any kind of benefits. they actually have employees whose job is to help other employees sign up for food stamps and other government assistance; yes, by design, they are creating a workforce that will drink from the government trough, rather than provide reasonable wages and benefits to their own employees.

because of their business model and because local employee wages are so low, they effectively siphon money directly out of a local economy. normally, a dollar spent at a store will pass from hand to hand within the same community about seven times before leaving that community (which is why tourism is such a huge economic impact), but that number is much smaller for money spent at walmart since they don't source any of their products or supplies locally, have their own centralized transportation system, and of course since the % of each dollar going to employees is so low.

this is the case to varying degrees with any company with a centralized business model, but Target is not quite as centralized and doesn't have the same approach to employee wages and benefits (not saying they are a lot better, just somewhat).

for the ideal model (if we must have large, centralized corporate retailers), i'd say it is costco - they are probably the leaders in the largescale retail business for paying good wages with benefits to their workers. they also have a surprisingly ethical approach to profit: if you have to buy prescription medications, they are likely 4 to 7 times cheaper there than at any other pharmacy in the USA. Why? Costco makes exactly the same % markup on every prescription - they determined the workable profit & apply it evenly. Every other pharmacy marks up as much as possible, and especially on generic pharmaceuticals, this is oven several hundred percent over cost (and possibly even more than 1000 percent over). For example, we have a cat on fluconozol (an antifungal). My wife originally bought it at Walmart because that was where the vet's office called the prescription. It is about $90 for a month's supply at Walmart. At Costco, it is $16 for the same (and now it is $13 because they decided to give a discount for drugs purchased for pets). Keep in mind, Costco is still making a profit on that. And yes, the federal government did a study a couple years ago re: prescription costs & determined that Costco was by far the cheapest (study was for medicare program).

Ali e
(barefootnavigator) - F

Locale: Outside
I love Wallmart on 02/23/2009 10:55:26 MST Print View

While I typically shop at my local co-op there are many things I choose to purchase from Wallmart such as canned free range organic chicken 3.35 by the can plus a case discount. The exact same thing at my co-op is 5.50. While I try and support local I wont do it at the expense of loosing my hard earned pennies. Our local Wallmart just donated 675K to our local schools. I guess I share the wealth with everybody. Ali