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    Is cashback a win-win for all?

    Is cashback a win-win for all?

    Is cashback a win-win for all?
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    By CNBCTV18.com Contributor  IST (Published)

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    From credit card companies to cashback websites to online payment platforms, the concept of cashback is being widely used under marketing strategies.

    In layman language, cashback can be defined as a small amount of money that a person gets back out of the money one spends during a transaction. The origin of the Cashback program dates back to the 1980s when a division of a financial services company had first started giving cashback to its credit cardholders. But now, with the advent of technology, the meaning and use of the term 'cashback' has been revolutionized.
    From credit card companies to cashback websites to online payment platforms, the concept of cashback is being widely used under marketing strategies. However, among all, cashback websites are a unique model that is proving to be beneficial to all their stakeholders including consumers, associated brands, and the cashback websites themselves.
    How does it benefit the eCommerce players?
    Cashback websites work on the model of performance marketing. They partner with various companies such as e-commerce giants to help them drive their sales. When a user shops via any cashback website on a partner’s retailer site, they are entitled to extra cashback on top of all existing retailer discounts. This adds to the overall sales on the eCommerce platform and also helps opens a new channel to build loyalty between the brand and the consumer. Affiliate marketing in India contributes nearly 15 percent of total sales across online retail sites.
    How does it work for cashback websites?
    While e-tailers do see their userbase widening, cashback websites earn bucks through this channel. For every sale that takes place through the cashback websites, they get a commission from their retailer partners. The size of the affiliate marketing industry in India is pegged at USD 96 Mn and growing at an aggressive rate given the pandemic effect.
    Big savings for consumers
    The commission earned by Cashback websites is further shared with their users in the form of cashback. This cashback is equivalent to real cash and can be transferred to a user’s bank account once it reaches the minimum amount set by the specific cashback website. Hence, it is actual cash saving or free money for a person on every shopping and online transaction. Not only online transactions, but many cashback companies give cashback on cash on delivery orders also. Sometimes, instead of crediting the amount in the bank account, a user can redeem the cashback to purchase a gift or another discount voucher too offered by the website’s affiliated retail partners.
    Considering the profitability aspect of Cashback websites and their retail partners, these websites have gained good traction, and some top cashback websites of India have distributed over Rs. 100 crore each to its innumerable users in the past 5-6 years in the form of cashback.
    Scope of Cashback websites in future
    These cashback companies have immensely helped their users in making economical deals. Due to the pandemic, online shopping became a rising trend. This resulted in good traction for all sorts of eCommerce businesses- digital learning, shopping websites, and in sync with these, the cashback websites too. It is anticipated that the trend will continue to grow and the number of users is going to rise. All these factors add up to a good scope for cashback websites.
    Final thoughts
    The concept of cashback-by-cashback websites in India is a win-win for all the parties involved in it because this cashback is on top of all the bank credit card offers and on-site coupons. Offering great cashback is not only the way to encourage people to buy a company’s products and services, but also a great way to incentivize its loyal customers by rewarding them. The concept of cashback is better than discount because offering discounts for a long time make a company lose its credibility, while cashback is a way to keep the user engaged.
    The author, Ankita Jain, is Co-founder and marketing head at GoPaisa. The views expressed are personal
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