It wouldn’t be wrong to say the year 2015 was the year of affiliate marketing for ecommerce. The rising popularity of coupons and cashback prevented etailers from curbing deep discounts as customers seemed to want more and more. So though cashback created a stir in the ecommerce industry, there is room for more improvement.
We decided to chat up with Swati Bhargava, co-founder of Cashkaro, about the performance of the affiliate industry this year.
IOS: How does affiliate marketing, the concept, work? What is the model?
Swati: By definition, Affiliate Marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer.
In India CashKaro is the leader in Affiliate Marketing. We get paid commission from online merchants for providing sales to them. We then share this commission with our members as ’Cashback’! This Cashback can be redeemed in the form of REAL CASH or as Shopping Vouchers.
How did coupons/cashback contribute to the growth of ecommerce in 2015?
Cashback & coupons have become one of the driving forces behind the ever-increasing popularity of ecommerce in India. Cashback acts as a benefit for the user and eventually helps ecommerce players to gain traction, spearhead their new customer acquisition model and do more business at reduced costs!
For ecommerce companies, offering cashbacks/coupons has emerged as a popular alternative not just to attract new customers, but also to retain them.
Going by recent reports, cashback industry is growing at the rate of 62.9% with around 7.6 million unique users getting added every month and Affiliate Marketing accounts for a whopping 15-20% of total sales in the ecommerce sector.
Does cashback score over discounts? How?
Cashback is paid on top of any discounts available in the market (User gets discount as well as Cashback).
Cashback is actual whereas discount is notional. You can transfer cashback to your bank account and use it whereas discount is just a waived off amount which cannot be used in future.
Cashback with affiliate sites is lifetime, however discounts are occasional. This creates stickiness for customers to come back and shop again.
Do you think cashback contributes to impulsive buying?
In some situations, yes it does. Discounts undoubtedly tempt a buyer but it’s cashback that transforms that temptation into impulsive buying. In a way, Cashback is like icing on the cake. And this icing never melts. If a discount is value for money, cashback is double the value.
Is there a difference in male and female shopper attitude to cashback?
I don’t think there is any polarity in male & female shopping attitude with reference to cashback. I believe both would equally feel content on getting cashback through online shopping,
What is your retention strategy? Like the many marketplaces out there, there are many cashback sites as well.
Being the only VC funded Cashback site in the country, it allows us to service our users much better, have a team in place and market our services aggressively. Part of this fact becomes a competitive advantage for us. In terms of our retention strategy, it is largely based around consumer experience. We put in a lot of time, money, thinking and effort on strategies for reaching our target audience. We have an in-house digital team which takes care of SEM, SEO, E-mail and Social Media channels (Facebook, Twitter, Google+, etc) who work on attracting a different audience pool from each vertical. Our Facebook page is very engaging and informative. We also have an engaging Twitter account @Cashkarocom and are always doing creative activities on our social media.
What is the scope for cashback in 2016?
For a growing ecommerce market like India, the potential for Cashback sites is huge because you are in effect, taking a small percentage of the entire ecommerce spend in India. As per studies by Forrester Consulting and Google search trends, number of online shoppers in India is projected to be reach 100 million and the country’s e-tailing sector will become a $15 billion market by 2016.
These are not small numbers to start with, and will only grow more from here on. Aspects like Cash on Delivery, young population of India, increasing internet penetration, growth in T2 and T3 cities will further propel this growth. So this is the right time for a Cashback business like CashKaro to establish its foothold in India and be instrumental in contributing to this growth by providing a) an effective and high ROI way of driving sales to ecommerce brands or retailers and b) incentivizing people to shop online by way of discounts & savings.
Moreover, Cashback sites globally have done really well. Sites like Ebates in the US and Quidco.com in the UK have gross revenues of over $100 million and are valued at much more. So the model is tried and tested. When you apply this to the India market the opportunity is encouraging! We value money and why won’t we want to save money when it is so easily possible.
What changes do you foresee in the ecommerce sector in 2016?
With money flowing into large ecommerce giants from investors, consolidation in the sector is inevitable.
In fact there will be massive consolidation in the ecommerce segment over the next year. Series B and follow-on rounds will continue to be a challenge for most ecommerce companies except category leaders and the few big horizontal players. The ecommerce market is all about ‘survival of the fittest’. This consolidation spree is thus likely to continue in 2016 until we see the ‘last man standing’, who will be the undisputed king.
Apart from this, with more and more activities happening on the smartphones, m-commerce is becoming the future of ecommerce. In keeping with this, an m-commerce store will no longer be an additional feature, but a requisite by 2016.