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A Sneak Peek into the Future of Cashback Operators over the Globe

As e-commerce retains a critical and growing role in daily business and in the lives of consumers, cashback will continue to play a major role in helping businesses generate additional revenue and helping consumers find the best online deals.

By nature, we are creatures of habit and inevitably shoppers will discover and develop habits around purchasing behaviour that will continue into the future. Over the past six months, consumers have been exclusively turning towards their digital shopping options and this shift in behaviour will have a long-term impact. E-commerce will start to leapfrog within the next couple of years, potentially the next couple of months. This is probably a good time to plan your post-pandemic strategies and future sales growth tactics in new markets.
While each market has unique characteristics, we see a trend with a number of cashback sites trying to broaden user participation by including a mix of cashback, coupons, daily deals, coupon codes, and other promotional offers. Interestingly, some coupon and deals-exclusive sites have recently added cashback to stay in step with consumer preferences. In order to keep some data private for the companies, we would like to avoid mentioning names, however, we hope the general market picture will be clear overall. Let's begin:

US and UK stable

In the US, 9 of the largest 25 sites saw sharp declines in traffic, 8 showed substantial growth, and 8 had a traffic that stabilised by the end of April 2020. The general picture in the US looks positive as states plan for a gradual return to work barring any new pandemic hotspots. US consumers have seen the advantages of online shopping and research shows they are poised to increase their use of e-commerce for every aspect of daily life.

In the UK, only 3 of the 15 largest cashback sites showed some growth in monthly website traffic comparing November 2019 with April 2020. 6 of the major 15 sites maintained traffic while 6 showed substantial website traffic declines. As a matter of fact, one big cashback grocery shopping site closed in April because it's in-store coupon business model couldn't survive the dramatic drop of in-store shoppers and the corresponding rise of home delivery of groceries.

Other cashback operators with business models that included in-store coupons, cashback from restaurants, and shopping apps with in-store fulfilment saw similar dramatic decreases in monthly traffic although no other closures have occurred in any market yet. This pattern was consistent throughout markets from the US, UK, EU, and seven other markets.

Many pure cashback sites have enjoyed surprisingly strong traffic despite COVID-19. This reflects the obvious importance of e-commerce when nonessential businesses are locked down. Many sites are displaying affiliate ads for pandemic-related products including masks, gloves, sanitisers, cleaning products, and disinfectants, paper products, and other household essentials.


EU solid, Latin America struggling

In the EU, cashback operators seemed relatively stable in their business. 7 of the 20 largest cashback operators observed solid website traffic growth while seven sites remained flat but with steady traffic flow from site visitors.

6 EU cashback sites saw substantial traffic decreases primarily because of a business model dependent on coupons, in-store shoppers, restaurant, or grocery related sales.

Latin America though has a different picture where only 2 of the 20 largest sites saw traffic growth. Overall, around 10 cashback companies saw substantial decreases in traffic across Central and South America while the remaining 8 sites maintained relatively stable traffic between November 2019 and April 2020. The larger number of decreases in website traffic on the sites are probably a function of both struggling economies across the region as well as the COVID-19 impact.

SE Asia strong, India struggles

Cashback operators across SE Asia have fared relatively well despite the COVID-19 impact. 7 of the largest 20 cashback operators in the region experienced growth. 4 operators were stable with their website traffic. 9 cashback operators showed some declines in traffic but only a few were substantial enough for concern. Most of the declines were noticeable among fashion and clothing websites. With the easing of the pandemic, we can expect a recovery in e-commerce fairly soon across SE Asia.

India was a contrast and they have only 2 companies out of the top 20 that showed growth in website traffic between November 2019 and the end of April 2020. 16 of the largest Indian cashback companies showed substantial losses in traffic with some notable declines that are concerning for the operators and investors. Nevertheless, India is growing rapidly in the e-commerce market and the future is even brighter. Experts believe that India's e-commerce market is expected to grow to $ 200 billion by 2026 from $38.5 billion in 2017. By 2034, this industry has the potential to become the world's second-largest, just behind the US. But for now, the Indian economy will need to rebound very quickly for the survival of many e-commerce operators. As a result, we anticipate a large number of acquisitions or mergers as the industry consolidates to try and find stability and profitability in India. Something like this: Google Pay Partners With India’s Qwikcilver For Instant Digital Gift Cards.

Africa and Middle East regrouping

Cashback operators in Africa and the Middle East noticed across-the-board declines in monthly traffic. In Africa, none of the 9 largest cashback sites showed an increase in traffic. Many had substantial monthly traffic decreases of between 30% and 80%.
The picture was quite similar in the Middle East, where just 1 out of the 10 largest cashback operators showed an increase in traffic from November 2019 to April 2020. Many of the other nine large players showed traffic declines ranging between 24% and 93%.
With an industry that totals more than $108 billion in sales, there is a surprising lack of research available. However, some recent ones show that cashback is a powerful incentive for consumers to return, often within a week of receiving their cashback rewards, to spend more on their favorite online shopping sites. Cashback promotions create a 3.4 times lift in conversion rate and an average order value increase of 46% (from $76 to $106) according to research.

Give us a shout in case you want to know more about cashback/coupon platform development or digital tools that vastly improves the user shopping experience. We at BTB know all about it.

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