- ShopBack is a cashback reward scheme available in the Asia-Pacific region. The company was founded in 2014 with co-founders looking to profit from the cashback reward scheme in the Asia-Pacific region.
- ShopBack operates a marketplace business model and earns most of its revenue from affiliate commissions. Industries with higher margins tend to earn higher commissions, with a percentage then shared with the customer in the form of a cashback reward.
- ShopBack also sells prominent advertising positions on its website and mobile app in the form of a flat fee.
Business Model Element | Analysis | Implications | Examples |
---|---|---|---|
Value Proposition | ShopBack’s value proposition includes: – Cashback Rewards: Allowing users to earn cashback on their online purchases. – Discounts and Promotions: Providing access to discounts, coupons, and deals from partner merchants. – Convenience: Offering a one-stop platform for users to discover and shop from various brands. – Mobile App: Enhancing the shopping experience through a dedicated mobile app. ShopBack appeals to consumers seeking savings, discounts, and convenience in their online shopping. | Attracts users looking to save money and earn rewards while shopping online. Encourages loyalty through exclusive discounts and promotions. Simplifies the shopping experience by aggregating multiple brands on one platform. Enhances user engagement with a dedicated mobile app. Offers a comprehensive value proposition for online shoppers. | – Earning cashback on online purchases. – Access to discounts, coupons, and deals. – A convenient one-stop platform for online shopping. – A dedicated mobile app for an enhanced shopping experience. |
Customer Segments | ShopBack serves the following customer segments: 1. Online Shoppers: Users looking for discounts and cashback on their online purchases. 2. Budget-Conscious Consumers: Individuals seeking savings and deals while shopping. 3. Tech-Savvy Shoppers: Customers comfortable with using mobile apps and digital platforms. 4. Bargain Hunters: Individuals actively searching for discounts and promotions. ShopBack caters to a diverse user base with various shopping preferences. | Attracts a wide range of online shoppers with different motivations. Engages budget-conscious consumers looking to maximize savings. Targets tech-savvy users who prefer digital shopping experiences. Appeals to bargain hunters actively seeking deals and promotions. Addresses the needs of diverse customer segments. | – Users looking for discounts and cashback on online purchases. – Budget-conscious consumers seeking savings and deals. – Tech-savvy shoppers comfortable with mobile apps and digital platforms. – Bargain hunters actively searching for discounts and promotions. |
Distribution Strategy | ShopBack’s distribution strategy includes: – Mobile App and Website: Providing a mobile app and website for users to access cashback and deals. – Browser Extension: Offering a browser extension that alerts users to cashback opportunities. – Partner Integration: Collaborating with partner merchants to facilitate cashback tracking. – Referral Program: Encouraging users to refer friends and earn rewards. ShopBack ensures user access through its platform, browser extension, partner integrations, and referral incentives. | Provides multiple channels for users to access cashback and deals. Enhances user awareness with a browser extension for cashback alerts. Collaborates with partner merchants to track cashback effectively. Drives user acquisition through a referral program and rewards. Implements a multi-channel distribution approach for growth. | – Providing a mobile app and website for accessing cashback and deals. – Offering a browser extension for cashback alerts. – Collaborating with partner merchants for effective cashback tracking. – Encouraging users to refer friends and earn rewards. |
Revenue Streams | ShopBack generates revenue through several streams: 1. Commission from Merchants: Earnings from partner merchants for driving sales and traffic. 2. Advertising and Promotions: Income from advertising partnerships and promotional campaigns. 3. Data Insights: Selling anonymized shopping behavior data to brands and retailers. 4. Subscription Services: Offering premium subscription services for additional benefits. ShopBack diversifies its income sources through commissions, advertising, data insights, and subscription services. | Earns commissions from partner merchants for driving sales. Generates income through advertising partnerships and promotions. Sells anonymized shopping behavior data to brands and retailers. Offers subscription services for recurring revenue. Diversifies revenue streams for financial sustainability. | – Earnings from partner merchants for driving sales and traffic. – Income from advertising partnerships and promotional campaigns. – Selling anonymized shopping behavior data to brands and retailers. – Offering premium subscription services for additional benefits. |
Marketing Strategy | ShopBack’s marketing strategy involves: – Advertising Campaigns: Running advertising campaigns to promote cashback offers and deals. – Partnerships: Collaborating with e-commerce platforms, brands, and retailers for exclusive offers. – User Engagement: Engaging users through email marketing and notifications. – Referral Program: Encouraging users to refer friends and grow the user base. ShopBack focuses on user engagement, partnerships, and referrals to drive platform usage and adoption. | Promotes cashback offers and deals through advertising campaigns. Collaborates with e-commerce platforms and brands for exclusive offers. Engages users through email marketing and notifications. Encourages user growth through a referral program. Implements a multi-pronged marketing approach for user acquisition and retention. | – Running advertising campaigns to promote cashback offers and deals. – Collaborating with e-commerce platforms, brands, and retailers for exclusive offers. – Engaging users through email marketing and notifications. – Encouraging users to refer friends and grow the user base. |
Organization Structure | ShopBack’s organizational structure includes: – Executive Leadership: Led by the CEO, responsible for strategic direction. – Product and Technology Teams: Focused on platform development and user experience. – Merchant Partnerships: Building and maintaining relationships with partner merchants. – Marketing and User Growth: Engaging in user acquisition and marketing efforts. – Data and Analytics: Analyzing shopping behavior data for insights. – Customer Support: Providing assistance and support to users. ShopBack maintains a structure aligned with core functions for efficient operations. | Led by an executive team responsible for strategic direction. Focuses on platform development and user experience. Builds and maintains relationships with partner merchants. Engages in user acquisition and marketing efforts for growth. Analyzes shopping behavior data for insights and optimization. Provides dedicated customer support for user satisfaction. Maintains a well-structured organization. | – Led by an executive team responsible for strategic direction. – Focused on platform development and user experience. – Building and maintaining relationships with partner merchants. – Engaging in user acquisition and marketing efforts for growth. – Analyzing shopping behavior data for insights and optimization. – Providing dedicated customer support for user satisfaction. – Maintaining a well-structured organization. |
Competitive Advantage | ShopBack’s competitive advantage stems from: – Cashback Rewards: Offering a compelling incentive for users to shop through the platform. – Extensive Merchant Network: Collaborating with a wide range of partner merchants. – User Engagement: Engaging users through promotions, referrals, and notifications. – Data Insights: Leveraging shopping behavior data to optimize offerings. – User Loyalty: Building loyalty through cashback rewards and exclusive deals. ShopBack’s strengths in cashback rewards, merchant network, user engagement, data insights, and user loyalty position it as a leading cashback and rewards platform. | Distinguishes itself with a compelling cashback rewards program. Collaborates with a diverse range of partner merchants. Engages users effectively through promotions and referrals. Optimizes offerings using shopping behavior data insights. Builds strong user loyalty with cashback rewards and exclusive deals. Enjoys a competitive edge in the rewards platform industry. | – Offering a compelling incentive for users with cashback rewards. – Collaborating with a wide range of partner merchants. – Engaging users effectively through promotions, referrals, and notifications. – Leveraging shopping behavior data to optimize offerings. – Building strong user loyalty with cashback rewards and exclusive deals. – Maintaining a competitive edge in the rewards platform industry. |
Origin story
ShopBack is a cashback reward scheme available in the Asia-Pacific region. The platform was founded by Henry Chan, Joel Leong, Derrick Goh, Lai Shanru, Samantha Soh, and Bryan Chua in 2014.
The idea for ShopBack was born one night when Chan and Leong were brainstorming entrepreneurial ideas in the car.
The pair knew each other from their time at fashion retailer Zalora and were looking for ways to profit from the cashback rewards scheme – which had seen great success in the United States among other countries.
When ShopBack was launched in 2014, the entrepreneurs eventually settled on a year-round cashback model where shoppers could receive a proportion of their money back on purchases from specific retailers.
The platform was slow to grow at first, with some consumers finding it difficult to believe they could receive money for something they were already doing for free.
However, uptake began to increase as ShopBack made an effort to target price-conscious mothers and young professionals.
The platform disrupted the traditional advertising model that made companies such as Google and Facebook profitable, delivering better results for merchants at a lower cost.
In an interview with Malaysian business publication Options, Leong described this advantage:
“In the e-commerce space, merchants always want to diversify their online marketing spend, which is understandable. We are always able to offer better rates than Google or Facebook because we charge on a cost-per-sale model. With Google, for example, you get charged even if there isn’t a resulting sale.”
Today, ShopBack operates in nine Asia-Pacific countries, including Australia, Indonesia, Malaysia, Philippines, South Korea, Taiwan, Thailand, Vietnam, and Singapore.
Across this region, the platform has almost 30 million users who have driven $10 billion in revenue for more than 5000 participating merchants.
ShopBack revenue generation
ShopBack operates under the marketplace business model, connecting merchant sellers with buyers who are looking to receive cashback on purchases.
The company makes money via two strategies which are outlined below.
Affiliate commissions
The majority of ShopBack revenue is derived from affiliate commissions.
Essentially, merchants pay ShopBack a commission in exchange for sending them customers who are motivated to spend money.
The company then shares a portion of this commission with the customer in the form of a cashback reward.
Consider a scenario where a ShopBack customer purchases a $120 pair of jeans. The participating clothing merchant must pay a 5% commission which is then shared between the customer and ShopBack.
Exact commission rates are undisclosed, but in an interview with McKinsey, Leong stated that the total commission depended on industry-specific margins.
For example, online travel agencies with higher margins may pay a commission of 10 to 13% whereas general marketplaces margins are much lower with commissions as low as 1 to 2%.
Advertising
ShopBack also makes money by selling advertising spots on its website or mobile app.
On the website homepage, for example, there are two prominent banner ads above the fold advertising various brands and promotional events.
The company is compensated by advertisers in the form of a fixed fee for the duration of the ad.
Key Highlights
- ShopBack Overview:
- ShopBack is a cashback reward scheme available in the Asia-Pacific region.
- It offers customers cashback on purchases from specific retailers.
- The platform operates a marketplace business model and generates revenue through affiliate commissions and advertising.
- Origin Story:
- ShopBack was founded in 2014 by Henry Chan, Joel Leong, Derrick Goh, Lai Shanru, Samantha Soh, and Bryan Chua.
- The idea was inspired by the success of cashback reward schemes in other countries.
- Initially targeted at price-conscious mothers and young professionals, ShopBack disrupted the traditional advertising model by delivering better results for merchants at a lower cost.
- Business Operations:
- ShopBack operates in nine Asia-Pacific countries and serves almost 30 million users.
- Users have driven $10 billion in revenue for over 5000 participating merchants across the region.
- Revenue Generation:
- Affiliate Commissions: The primary revenue source for ShopBack is affiliate commissions.
- Merchants pay commissions to ShopBack for sending motivated customers who make purchases.
- ShopBack shares a portion of the commission with customers as cashback rewards.
- Commission rates vary based on industry-specific margins, e.g., higher margins for online travel agencies and lower for general marketplaces.
- Advertising: ShopBack also earns revenue by selling advertising spots on its website and mobile app.
- Prominent banner ads on the platform promote various brands and events.
- Advertisers pay a fixed fee for the duration of the ad placement.
- Affiliate Commissions: The primary revenue source for ShopBack is affiliate commissions.
- Marketplace Business Model:
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