What is ShopBack?
ShopBack is a cashback reward program available for users in the Far East and Australia. This app allows online shoppers to receive a small percentage of their purchases on the platform. Usually, these offers come through affiliate programs offered by merchants. Apart from this feature, ShopBack also provides coupons, voucher codes and comparison features. Currently, it has over 5 million members.
ShopBack started its operations in 2014 through Henry Chan, Bryan Chua, Derrick Goh, Joel Leong, Lai Shru and Samantha Soh. Its founders knew each other during their time at Zalora, an online fashion retailer. At the time, the founders had a motivation to start an online platform since similar businesses were emerging. On top of that, the Southeast Asian market was attracting investors globally, making such operations more enticing. Furthermore, similar apps had existed in other markets. However, they did not have an alternative for the Southeast Asian market.
All these issues motivated ShopBack’s founders to create the platform. This platform allowed them to enter the online market and covered a significant market gap. Consequently, the founders capitalized on these issues to start their platform. Before even commencing work on this platform, they had secured $500,000 in seed round funds from Accel-X in 2014. Their experience and varied skillsets helped build and market the product better.
Over the next few months, the founders increased the app’s merchant base to 300. Furthermore, they had regular website visits of 120,000 users each month. This popularity increased the confidence the investors had in the app. Consequently, they provided $500,000 more in a seed round. At that time, the company had accumulated $1.1 million in finance. Using this finance, ShopBack increased expanded to Malaysia and the Philippines.
However, ShopBack also faced competition from other names, who tried to imitate its success. At the time, one of the well-known names, Ebates, expanded operations to Singapore. Ebates was a household name in various markets, including the US. However, it tried to expand into the Southeast Asian market through Singapore. As a retaliation, ShopBack launched in Indonesia.
ShopBack faced significant competition from local and foreign competition. The company became stronger as a result and continued expanding its operations. Consequently, it became one of the most prominent names for its services in the market. Soon, it also overtook its competitors and took them out of business. Using its popularity, ShopBack also expanded to Australia. It used funds received from an Australian venture capital firm to achieve that.
How does ShopBack work?
ShopBack is an online tool that allows users to get money back on their online purchases. This process is straightforward and does not require special skills or knowledge. Usually, users start using ShopBack by signing up on the platform. This process requires them to create a ShopBack account before accessing its services. Some other apps may allow users to use those services without any registration. However, ShopBack is different.
Creating an account on ShopBack is relatively straightforward. It does not require any approval or specific information. Usually, the process can take about a few minutes. Once users have an account on the platform, they can start using its services. At this point, they must also download the app or the extension for browsers. From there, users can search their favourite brands and visit those websites with a trackable link.
When users use the trackable link or ShopBack app, the platform registers any purchases from those brands. The app needs this info to allow users to claim money on those purchases. Once a user buys an item through the ShopBack links, the app will show them their pending cashback. However, this process is not instant. It can take many days to show users how much the business or company owes them. This process usually requires approval from the vendor first.
Once the vendor confirms the users’ purchases, the cashback will show on their ShopBack account. This amount is ready for withdrawal instantly. Usually, users can use PayPal or a bank account to get their cash back. However, the app only pays out $10 minimum. In most cases, achieving that amount should be straightforward. Apart from online cashback, ShopBack does not allow users to get in-store cashback.
Overall, the way ShopBack works is straightforward. The app has over 1,300 brand partners that offer users many options for online purchases. While it provides these services, it requires users to have an account first. However, registering on the platform takes a few minutes only. Once users sign up, they can use the services provided by ShopBack.
What is the ShopBack business model?
ShopBack does not charge users a fee for its services. When a user registers on the platform, there is no registration fee. On top of that, when they receive cashback, ShopBack does not hold a percentage of these amounts. Almost every service on this platform is free to its users. These features may make them wonder about the ShopBack business model and how it makes money.
ShopBack primarily uses a C2C business model. The company provides a platform to connect consumers and customers. Here, the consumer is the user that registers and uses the ShopBack app or extension. The customer, in contrast, is the platform’s various partners. The company connects these parties and allows them to transact with each other.
ShopBack further includes two other business models. These models also explain how ShopBack makes money. Primarily, the platform generates income through affiliate commissions. When the app provides users with a link, allowing the app to track their purchases. However, it also allows the platform’s partners to know the traffic coming through ShopBack. When a user purchases an item through that link, ShopBack makes affiliate commissions.
On the other hand, ShopBack also uses an advertising business model. This model goes along well with the C2C business model. Essentially, ShopBack offers a platform where users can shop online and receive cashback. This platform also serves as an online tool where ShopBack can show ads. The platform displays those ads, which generate revenues through user clicks and views.
How does ShopBack make money?
The answer to how ShopBack makes money lies in its business model above. As stated there, the platform generates income through two sources. These include affiliate commissions and advertising revenues. However, ShopBack relies on the former since most users shop on affiliate websites. However, advertising income can also be crucial when users don’t buy anything.
An explanation of the two sources of revenues for ShopBack is as follows.
Affiliate commissions
A significant portion of the revenues generated by ShopBack comes through affiliate commissions. These commissions come through user purchases on a partner’s platform. Also known as referral fees, the company makes money by charging those brands a percentage fee. This fee differs from one partner to another based on their contracts. Similarly, different product categories also fetch varying commissions.
Affiliate commissions also make up the cashback offered to customers. When the platform receives a referral fee from a partner, it pays a portion to the users. On top of that, ShopBack also works with other affiliate networks, for example, Commission Junction or Access Trade. These platforms offer similar returns on affiliate marketing.
Advertising
Compared to affiliate commissions, advertising makes up a smaller portion of revenues for ShopBack. However, the app can make money more easily with this source than the former. Advertising allows ShopBack to earn from users even when they don’t buy anything through affiliate links. On top of that, this income does not go into repaying users, which is more valuable.
ShopBack does not disclose details of how much it earns through advertising. Usually, the app charges a fixed fee for a campaign duration. The advertiser gets the advantage of accessing millions of users in specific markets. On top of that, it can provide opportunities for more focused advertising strategies. However, this income depends on various factors.
Conclusion
ShopBack is an online platform that allows users to get cashback on their purchases. Currently, it operates in the Southeast Asian and Australian markets. Registering and using the app is straightforward. ShopBack’s business model includes commissions from affiliates and advertising. The app makes money through these sources through its platform.