Essentially, cashback sites have a simple and performance-driven business model where they receive a commission from the retail partner only after a sale takes place.
The global e-commerce industry, as per industry estimates, is expected to grow at a CAGR of more than 20 per cent by the end of 2022 reaching the $5.8 trillion mark. As a fast and efficient deal distribution system becomes critical for businesses, particularly small enterprises as they have lack of large scale resources much like large enterprises, cashback sites come in handy. Essentially, cashback sites have a simple and performance-driven business model where they receive a commission from the retail partner only after a sale takes place. A part of this commission is then passed on to the user as cashback. This model works exceptionally well for small businesses by helping them limit their marketing expenses while receiving great returns on their investment.
“CashKaro today drives an annualized GMV of Rs 2,500 crores to the large, medium and even small online retailer partners. A cashback website helps SMEs drive sales and gain traction in terms of revenue and publicity. Cashback websites increase a brand’s visibility as they already have a huge user base of high intent shoppers,” Swati Bhargava, Co-founder, CashKaro told Financial Express Online.
Even though small businesses are fast becoming a major hub of opportunities within the economy, visibility remains the challenge for them. Cashback websites help SMEs by taking them a large audience and gaining their trust so that they choose their brand among the many options available in the market.
SMEs can do this “without having to make any significant upfront investment. Also, the new retailers that will be promoted by the cashback sites will reap the benefits of the trust of the users of the site they have partnered with as the users will trust all the content promoted by the website they have been using for a long time,” Shankar Kotuli, Founder, Paisawapas.com told Financial Express Online.
Since all it takes for a retailer to partner with a cashback website is a certain percentage of the sale value, this “in itself implies guaranteed results as the sale is as important to the cashback websites income as it is to the retailer,” Kotuli said adding that retailers can see it as getting sales by sharing margin over spending upfront in marketing which brings guaranteed results and thus is central to their growth strategy.
Moreover, cashback sites also promote special deals and offer on behalf of the brands associated with them and further helps them drive maximum impact. Most marketers use affiliate marketing to drive conversions and increase their sales.