With businesses always unsure if the same customer will walk in a second time, cashbacks have become par for the course rather than just one more benefit that a brand might throw in in its marketing mix. CashKaro has taken full advantage of the trend to become the go-to service for brands and e-commerce platforms looking to ensure consumers return for a second try if not convert them into loyalists. In this interview, CashKaro co-founder Swati Bhargava spoke to Pallabi Dey Purkayastha about the changing buyer behaviour and growing competition in the coupons and cashback business. Edited excerpts.
The cashback and coupon industry is still seen by customers with a lot of suspicion. How do you plan to convince, for example, a farmer in Rajasthan about CashKaro’s credentials? Is the idea of cashbacks widely accepted in tier 2, tier 3 markets?
We are doing quite a few things in this area. We have built a CashKaro stores network, which is a sales team of 150 people, who are on the field. They go to kirana store owners in rural India and tell them that if they want to buy products online, they can do so via the CashKaro app and get a cashback not only for themselves but also for their walk-in customers. So we actually have kirana store owners who are now appraising customers about cashback options when they come to their shops to pick up, say, grocery items. The shopkeeper will ask them: “Do you want a mobile phone from this online marketplace?”; “Do you want a pair of jeans?”; “Do you want a mixie or a computer?”. And then they place the order for these walk-in customers. By doing that, the kirana store owners are earning a cashback for themselves, which is giving them extra money, and the rural customer is getting access to e-commerce and online products.
That model has worked very well. Other than that, we are running our ad campaigns in tier 2 and tier 3 cities because many of the new online shoppers are coming from these markets, and when they become familiar with CashKaro, they end up saving money.
What are the other more significant trends in the cashback and coupon industry, and is CashKaro equipped to capitalise on these developments?
Cashkaro is a market leader, and also an industry builder. When we launched CashKaro, the concept of cashback wasn’t even there. And, because we were the first to raise money, we’ve been able to make the most of this situation. Some have copied us, but it’s been hard for them to raise money because this is a bit of a winner-takes-all market.
Internationally, for example, you will see many cashback sites in the same market. Ebates (now Rakuten Rewards), for instance, is the largest cashback site in the US; Quidco is one of the UK’s leading cashback services like Fanli is in China. Because India is also a very big e-commerce market, we believe that there is a big potential for a large cashback business in the country. With that in mind, we are working to build on our first-mover advantage, and be ahead of the trends.
What we really need to do here now is educate consumers on how cashback works. Because people in India have seen cashback on credit cards, or they have seen it on loyalty programmes they want to know how CashKaro works, how it is different from payment gateways and other platforms. So we need to explain to them that when they use CashKaro and shop, the cashback they’re getting is on top of everything else the brand is offering. That is the consumer education part.
The other thing we need to address is, how do we improve the supply side.
What are the challenges on the supply side? And why should a brand go with you and not, say, a Google?
You will see more and more D2C brands are taking to affiliate marketing. The new D2C brands are all keen on adopting the performance marketing and affiliate marketing game because they see that there the ROI they get is the highest. The main problem in India is that customer acquisition costs are very high. But if I am a D2C brand, my cost of customer acquisition via Google or Facebook is actually four to five times higher than what I would pay CashKaro because I’m paying CashKaro only if a sale happens. With Google, I have to pay them for the click, then the traffic that I get, and finally, traffic conversion. So the cost of a “buying” customer via Google is higher. So we see D2C brands are really taking to the trend of affiliate marketing.
The brands that are taking to affiliate marketing are willing to deploy more and more budget there because that is how they get better returns on their marketing spend. Any brand working with CashKaro only pays us if we drive a sale. This is our business model. We send them traffic and when a sale happens, we get paid a commission. From this commission, we give cash back to our customers. So as long as you are going via CashKaro and shopping, we get commission from partners, but partners only pay us if a sale happens — we don’t get paid for traffic, which is what Google gets paid for. So that’s why the cost of acquiring customer from Google is four to five times higher compared to CashKaro.
You have spoken about D2C brands gravitating towards affiliate marketing. Has that helped CashKaro in cutting losses in FY23?
There has been a revenue increase of course, because you know some of our new verticals, like EarnKaro, for example, has been doing very well. We thought we should do something that helps influencers make money from their recommendations. Earnkaro has an 80% market share on Telegram and group owners make their affiliate links via EarnKaro and share them on groups. And when anyone shops via their link, they earn money. So EarnKaro has influencers from YouTube, Instagram, Telegram, and WhatsApp group owners who are making affiliate links for their recommendations and sharing, and based on that they’re earning money. The impact of Earnkaro is immense. It has contributed a lot to our overall growth helping us reduce losses.
The second thing that has helped is the number of partners and the kind of partners we are working with. We are now the largest affiliate for most D2C brands in India, and that has also helped us improve revenue. We have worked with Mamaearth, Wow!, and we have onboarded a lot of new clients like Renee. We also have marketplaces, such as Nykaa, that have made us the largest affiliate.
How are you planning to scale up? Which are the new markets or segments that you are aiming to enter?
These are interrelated. We are doing a lot of work in the finance category. We are now the largest affiliate for banks for their credit cards. We work with SBI, Axis Bank, HDFC, and AU Small Finance Bank. We send them leads for credit cards, and we get paid for conversion. CashKaro has a huge database and with the help of data analytics, we can also understand which card will be best suited for which user. So we can recommend cards to users and get higher-than-usual conversion. So finance is a fast-growing segment for us. It’s also the category in which we’re expanding. That apart, a lot of YouTube influencers are also using Earnkaro, apart from the Facebook, Telegram, and WhatsApp groups.
And which are those areas that require more work on your part…
I think a key part of our innovation would be improving the user experience. What happens with cashback is that we are reliant on our partners to give us reports, and that’s how we track cash back. When we send a sale to Amazon, they will share with us in the live panel the report, and accordingly, the cashback of the user. We are innovating a lot in terms of integration—server-to-server integration with our partners—which enables us to attract cash back faster and also to make payments to users faster. There’s a lot to be done in terms of improvement of the user experience at the tracking and confirmation stage. We are also offering personalisation on the app — getting recommendations and extra bonuses based on your shopping behaviour. We might actually consider going into offline cashback as well. All these are creative ways of looking at cashback as a product and getting it ready for the next financial year.