Cashback Sites: How do they Work and the Benefits for Businesses
Let’s be honest, we all love cheap thrills.
We always look out for cheaper deals when spending our money. This is why products or services with cashback rewards are captivating. The cashback industry has experienced a meteoric rise in recent years. According to Market Insider, the global cashback Industry market size was around $108 Billion in 2020. The cashback trend is also recently booming in Indonesia. Indonesia is the largest e-commerce market in South East Asia. As online shopping has become a new habit, the cashback sites continues to blossom in Indonesia.
What is a Cashback Site?
Cashback sites are companies that reward customers with cashback or “discounts” after they purchase a product/service through the cashback platform.
How do Cashback Sites work?
The way cashback sites work is pretty simple. Cashback sites use referral methods or affiliate marketing. Marketplace startups/businesses cooperate with cashback sites and pay them whenever a purchase is made through referral links from the cashback sites. Cashback sites make money through these processes:
- Cashback site partnered with businesses and got a unique referral code from the marketplace
- The cashback site promotes the referral code to consumers and attracts them to purchase a product/service through that link to get cashback.
- When a purchase is made through that unique link, the business will share some percentage of its profit to the cashback site.
- The cashback site will share some percentage of that profit with users in the form of cashback and take the remaining percentage of profit.
Why do Businesses want to cooperate with Cashback sites?
You might question why businesses share their profit back with the consumer. Here are some of the reasons why businesses give cashback:
1. Creating Loyal Consumer
Giving cashback might be a short-term loss, but it will do wonders for the business in the long term. Cashback incentivizes customers to repeat their purchases in the future. When there are a lot of similar products/services offered in the market, customers will be more attracted to purchase one that offers a cashback reward.
2. Better Option than Giving out Discounts
When a business is reluctant to give discounts, it can use a cashback reward as an alternative. Cashback often costs less than discounts, but it is also better for long-term benefits. Discount is a great way to get a short-term increase in sales, but a cashback strategy will bring long-term benefits. With a cashback incentive, a business can attract new consumers while increasing retention from existing consumers.
3. Acquiring more Consumers Data
Giving out cashback can help businesses acquire more consumer data. Since new consumers make more purchases, businesses can access the data from a previously untapped market. Businesses can leverage this data to make better decisions in targeting the right market and build more effective marketing strategies in the future.
Need Help Building Your Startup?
We help you navigate the never-ending challenges of building a startup. Gear Up is a startup brainstorming partner in Indonesia that provides one-on-one and catered support for the chosen startups in our network. We can help you find the correct business model, gain funding for your startup from venture capital, and scale up your startup. Join us to begin your startup journey.