Online retailers cash in on the cash-back scheme

Our Bureau Updated - May 22, 2013 at 08:55 PM.

Shop online and make some extra bucks! Sounds strange, but a number of tech-savvy entrepreneurs have been able to cash in on the ‘great Indian bargain mindset’ by paying back cash on every purchase they make at an online retail store, after clicking first from their own site.

Firms such as Pennyful.in, Cazback.in, Medicash.in and Cashkaro.com are betting big on the burgeoning e-commerce market in India. These firms have marketing tie-ups with most e-tailers such as Myntra, Jabong, Flipkart, and yebhi.com , which pay them a marketing fee, in the range of 3-5 per cent, to bag more business.

New concept here

Though the concept is quite popular in the US, it is just about starting to grow in India. However, the e-commerce market is expected to grow 33 per cent to reach Rs 62,967 crore by the end of 2013, according to a digital commerce report by Internet and Mobile Association of India (IAMAI) and IMRB International. Currently, it is pegged at Rs 47,349 crore.

Ravi Tej Yadalam, founder of

Pennyful.in , says that the marketing fee that they get from e-tailers is based on actual transactions, and about 80 per cent of the marketing fee is passed on to the customers, via a transfer to their bank accounts.

While customers end up getting cash, they can also avail of huge discounts by shopping online.

“One needs to just sign up on our Web site and we direct you to the online portals present on our platform,” said Yadalam, who started his firm in India in November 2011, after an initial launch in the US. He added that the company does not ask for any other financial details apart from the buyer’s bank account.

The cash-back trend is far different from the loyalty points that are offered by brick-and-mortar stores, where one gets points on every purchase to be redeemed at the next shopping at the same retailer. Other than fashion e-tailers, Pennyful.in also provides cash backs on restaurant meals, airline tickets, haircuts, pharmacy, dental clinics and even at gyms.

Baroda-based entrepreuner Rauf Sayyed, who started Cazback.in two years ago after quitting a high profile job in the US, said, “The scheme helps e-retailers get more repeat customers besides helping them get the best deals.”

Thin margins

Sayyed further added that though the margin in the business “is wafer-thin, it is more of a volume game”. Currently, Cazback.in witnesses about 55-60 transactions per day and expects it to cross 300 soon. With about Rs 10 lakh annual turnover this fiscal, Sayyed is expecting his firm to clock a five-fold growth in the next 2 years.

Meanwhile, Yadalam has floated another firm called Medicash.in that offers discounts and cash back on offline purchases at pharmacies, at dental check-ups, dialysis, and cosmetology centres, among several other health issues that are not covered under insurance.

priyanka.pani@thehindu.co.in

Published on May 22, 2013 15:25