November 8, 2019
India is the seventh-largest country by area, the second-most populous country and the most populous democracy in the world. Due to recent geo-political paradigm shift in the Indian politics, India is all set to become one of the fastest growing economies in the world surpassing major developing nations in South Asia. With the massive population size and the growing Indian market, cashback activities have started taking a bigger shape and has become a reigning king of Indian e-com marketing. It is emerging as a tool for e-retailers to lure & retain customers. The online market has started filling with round the year discounts to lure polyamorous buyers in a hyper-competitive e-commerce market and retailers are betting big to woo consumers. A cashback activity is a form of incentive over and above the discount price offered to buyers as a refund in their mobile wallets which they can use to either shop for products or for any other services; these include paying utility bills, and for mobile and data card recharges. While buyers have more cash in hand to shop, sellers get a chance to get another slice of the consumer’s wallet.
While discounts attract shoppers, there is little that they do for customer retention. As a result, the focus of the cash-flushed ecommerce players has now gradually shifted a gear — from wooing to retaining them, and ensuring they come back again and again. Retail analysts point that on a retailing landscape dotted with promiscuous, deal-hunting buyers, cashback stands a better chance than discounts in instilling some sense of loyalty in consumers and plugging the ‘leaking bucket’ problem of acquiring and losing users quickly. In short, If a discount is value for money, cashback is double the value.
Cashback is potentially a better way of engaging with consumers. It’s equivalent to building a loyalty programme in an indirect manner. Disloyalty is inevitable in online shopping simply because most of the products consumers want are freely available, and they will buy them from the marketplace that’s offering the best deal. However, this doesn’t guarantee repeat buying nor does it promise brand allegiance. The basic idea behind a cashback scheme is to enable customers to shop more on its platform with added rewards, especially during festive seasons to push-up sales. Cashback has proven consistency in terms of traction allowing customers to experiment with new brands and products for free and providing tangible rewards.
Artificial intelligence and big data also makes the processes easier. Also, the strategy of owning a mobile payment wallet is a prime benefactor in multiple ways and would be a prime differentiator in future cutting precious commission of outsourced payment gateway provider. Investors also see immense business sense in the way e-commerce players are splurging money in acquiring consumers and achieving scale and ensure moving rapidly towards profitability. Barely 2% to 3% of the nearly $600 billion total retail spending in India happens online. The affiliate marketing business is worth $2 billion, a third of which is cashback. Point worth noting is that companies like Askme Bazaar, Tiny Owl, among others, have ceased to exist on this phenomenon.
A consumer on the other hand, who shops only when there’s a tempting cashback offer, identifies the platform offering maximum rebate and shop there consistently as their wallet never gets empty. Cashback is like icing on the cake. And this icing never melts. The buyer should be able to get the cashback quickly through a smart, predictive search engine and use at other retailers.
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