“Cash-back is like icing on the cake. And this icing never melts,” said one online consumer. “It’s opium for shopaholics. It just makes you give in to the temptation to shop,” remarked another ecommerce buyer, who was also bitten by the cash-back bug.
While discounts have charmed customers over recent years, they have not managed to achieve retention for online marketplaces. The attention is now switching to cash-back offers to create customer loyalty.
“Cash-back is potentially a better way of engaging with consumers. It’s like building a loyalty programme in an indirect manner,” said Arvind Singhal, founder of consultancy firm Technopak.
Cash-back is a type of financial rebate given back to the customer to reward them for purchasing a product. It is fairly common in the bricks and mortar shops, but now it is rapidly gaining ground in Indian ecommerce, especially this Diwali.
Customers who purchase certain products can expect to find a cash reward placed in their mobile wallet. This electronic money can then be used to purchase more products or for other uses such as mobile recharge or paying utility bills which is finding favour with customers.
Last week Paytm came out with its 100% cash-back Diwali campaign. Paytm believes that cash-back has become an instant hit with Indian consumers. It is looking to retain as many buyers as possible by ensuring its cash-back offers are good value for money and transparent in nature
“Cash-back is the reigning king of Indian e-commerce market. Unlike other platforms where a cash-back earned on a purchase must necessarily be used for another similar purchase, on Paytm users have myriad possibilities for using that cash. The second transaction could be need-based or an impulsive buy but the chances of it taking place are almost 100%,” said Saurabh Vashishtha, vice-president, business, Paytm.
ShopClues is also betting on cash-backs to deliver this festive season and not only wants to reward loyal customers, but also to encourage first-time online shoppers to inculcate a liking and a warm feeling for its platform.
“We want to double our customers’ joy this Diwali. Our cash-back offers across unstructured categories are meant to push up festive sales,” said Nitin Agarwal, assistant vice-president, marketing, ShopClues.
“Cash-back is like icing on the cake. And this icing never melts,” said one online consumer. “It’s opium for shopaholics. It just makes you give in to the temptation to shop,” remarked another ecommerce buyer, who was also bitten by the cash-back bug.
While discounts have charmed customers over recent years, they have not managed to achieve retention for online marketplaces. The attention is now switching to cash-back offers to create customer loyalty.
“Cash-back is potentially a better way of engaging with consumers. It’s like building a loyalty programme in an indirect manner,” said Arvind Singhal, founder of consultancy firm Technopak.
Cash-back is a type of financial rebate given back to the customer to reward them for purchasing a product. It is fairly common in the bricks and mortar shops, but now it is rapidly gaining ground in Indian ecommerce, especially this Diwali.
Customers who purchase certain products can expect to find a cash reward placed in their mobile wallet. This electronic money can then be used to purchase more products or for other uses such as mobile recharge or paying utility bills which is finding favour with customers.
Last week Paytm came out with its 100% cash-back Diwali campaign. Paytm believes that cash-back has become an instant hit with Indian consumers. It is looking to retain as many buyers as possible by ensuring its cash-back offers are good value for money and transparent in nature.
“Cash-back is the reigning king of Indian e-commerce market. Unlike other platforms where a cash-back earned on a purchase must necessarily be used for another similar purchase, on Paytm users have myriad possibilities for using that cash. The second transaction could be need-based or an impulsive buy but the chances of it taking place are almost 100%,” said Saurabh Vashishtha, vice-president, business, Paytm.
ShopClues is also betting on cash-backs to deliver this festive season and not only wants to reward loyal customers, but also to encourage first-time online shoppers to inculcate a liking and a warm feeling for its platform.
“We want to double our customers’ joy this Diwali. Our cash-back offers across unstructured categories are meant to push up festive sales,” said Nitin Agarwal, assistant vice-president, marketing, ShopClues.
In April this year Snapdeal bought out mobile top-up company FreeCharge for a reported remarkable figure of Rs. 2,400 crore. In August, Snapdeal along with FreeCharge released a mobile wallet. This is further evidence that online marketplaces are turning to mobile wallets and to the cash-back facility in particular.
It is not just large marketplaces who are adopting cash-back offers into their strategy, but now etailers are also channelizing their efforts in this direction too, although some online merchants are not yet warming to the idea and maintain a skeptical stance.
New fashion portal start-up Kaaryah, which has attracted seed funding from Ratan Tata is already seeing results from its cash-back promotion,
“While discounting operates in spurts, cash-back has proven consistency in terms of traction. While discounts are a way to increase volume sales, cash-backs not only drive volume but also provide tangible rewards (value),” said Nidhi Agarwal, founder, Kaaryah.
Fashion start-up, IndianRoots think that the cash-back formula will only increase transactions but not necessarily revenue for etailers and will benefit big online marketplaces more such as Flipkart, Paytm and Amazon who can offer a wider variety of categories for repeat purchases.
“A vertical player like IndianRoots needs to be cognizant of what value we can offer to customers, if any, through a cash-back programme,” stated Rahul Narvekar, chief executive, IndianRoots.
Coupon company, GrabOn spoke with similar sentiments regarding big online marketplaces having the cash-back advantage, while believing it will be business as usual for small online players,
“Other brands will continue with their business models,” remarked Ashok Reddy, founder, GrabOn.
A recent study by Assocham revealed that by December the online festive season sales are set to fly past a record breaking Rs. 52,000 crore. While Cash-back promotions seems to be carving out a niche and substantially supplementing the growth in sales effort, it seems that those who are owning mobile wallets will be the biggest beneficiaries.
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