- Oct 09, 2019
"Cashback", the new wave of online retail?
- Aug 07, 2019
- 255 views
The word cashback comes from English and literally means "money back". It's not a discount. By the cashback system, with each purchase, a percentage of the value of the product is returned to a customer account. Currently, this percentage varies from 1% to 50% of the value of the transaction, according to criteria defined by the company.
It works like this: if a product costs $ 100 and the percentage of cashback is 20%, when buying this item, the consumer receives back $ 20. Thus, the final cost of the purchase for the customer will be only $ 80.
In face-to-face purchases, the user receives a portion of the amount he spent in the form of a bonus in reais or money in a checking account. In virtual purchases, the customer first accesses the cashback platform and from there, is redirected to the site of the store of his choice.
Popular in the United States, cashback has gained strength in Brazil with the emergence of startups focused on this service. The business model is simple: by attracting the customer to the store, the cashback sites receive a commission because they function as an ad platform. Part of this value, then, is passed on to the consumer.
The system has existed since the 1990s in the US, in physical retail. Now with the advancement of technology, a more open market and with e-commerce, people are more likely to bet on tools that bring benefits.
Acquisition or education strategy
Executives of cashback companies argue that, ultimately, the proposal is not to encourage consumerism, but rather a greater awareness of the act of buying. The idea is to educate the consumer to buy better.
With more startups in this market, the system has advanced rapidly in online retail. All you have to do is install a plugin in your browser (Chrome, Firefox) and then activate the service whenever you are shopping in a partner store.
Another way to take advantage of the "benefit" is to access the store by the cashback company website.
Sectors that have already joined
Cashback - reward program based on money back to users - begins to gain strength among financial products. The usage is expected to expand and reach significant volumes of customers and partners by 2022.
The hotels usually offer a very advantageous cashback. Large retailers, like the Americans, already deliver a lower percentage of returns, with the exception of Amazon and book-focused stores.
However, it's good to watch out for very aggressive cashbacks. Delivery apps, for example, are using an acquisition strategy, paying a good amount of cashback for the customer to use their tool, a strategy that should not have a very long operating time.