How Cashback Shopping Is Becoming a Trend in eCommerce

Cashback Shopping Is Becoming a Trend in eCommerce

Statistics reveal that 46% of cashback users view it as a significant aspect of their purchasing decisions. 

Statista projects that the worldwide cashback sector will be worth over $200 billion annually by 2024

According to this study, businesses that used cashback programs have seen revenue growth that’s up to 2.5 times quicker than that of their rivals who don’t. They’ve also seen 100–400% larger returns for shareholders.

In a system where sales are driven by consumers, discounts primarily attract seasonal or niche customers. Simple rebates don’t, however, entice repeat business. 

First of all, businesses never know whether the same client will give a second attempt. Customers also grow accustomed to discounts being applied to their bills. 

When marketers remove concessions from the picture, customers feel as though they’re overspending for an item. In short, discounts are viewed as an inevitable, regular part of eCommerce transactions. Hence, the addition of cashback wallets plays an essential role in the digital eCommerce industry. Let’s see how.

Why and how do cashback schemes play a crucial role in eCommerce shopping?

Cashback ensures repeat purchases, customer loyalty, and long-term buyer satisfaction

With the aid of cashback wallets, fashion portals, gadget websites, automakers, home décor stores, cosmetics and beauty companies, and even health and wellness brands, give additional discounts on occasion. 

To give you a clear picture, let’s dive into the details in the sections below.

  1. Client devotion via repeat purchases

Cashback encourages repeat business — the buyer will return for another order if they’ve money in their virtual wallet. The strategy is a means to make sure your buyer stays on board. With an increasing number of discount policies available today, customers are moving to platforms with more incentives.

Cashback protects your website and makes sure the customer visits it again. For instance, if your brand sells smartphones for $5000, you might provide a cashback of $500 in order to entice customers to return and spend the funds in their wallets on future orders. 

Gaining consumer loyalty is difficult because most people are price-conscious. They’ll surely move to the website with more deals and discounts. 

  1. Reduction in transaction fees through cashback cards

Cashback cards provide a means for companies to avoid paying transaction costs. Each time a consumer uses a debit or credit card to pay for a purchase, you’re billed a transaction fee, if you accept credit cards. These costs can quickly mount up and reduce your total eCom earnings. 

However, cashback on ad spend via cashback credit cards can help you defray these expenses. For instance, it may offer a 1% cashback while your business is being charged 2% in transaction fees. 

Pro tip: Read the tiny print and comprehend the terms and restrictions before selecting a cashback card for your company. Additionally, it’s critical to confirm that your payment processor accepts the card. For instance, American Express and Discover may be accepted in fewer places than Visa and Mastercard.

  1. Increased spending

According to studies, customers of companies with loyalty programs spend an additional 12 to 18% of their annual income with them. Therefore, paying cashback not only encourages customers to return but also boosts the amount they spend whenever they do.

Consumers cling to the proverb “A penny saved is a penny earned.” The need to buy is inevitable given the wide variety of goods and brands available. However, the cost aspect can occasionally be a significant barrier. In these situations, cash backs are useful.

Nowadays, the average consumer always earns some payback through the use of payment systems and gateways like electronic wallets, which is how buying never ceases. In the same way that a deal draws clients to a web retailer, cashback makes sure that they stay there. The greatest thing about this kind of transaction is the assurance of permanence.

Customers may now select sites that will offer them the most savings opportunity because so many companies offer cashback wallets. In this manner, consumers conserve their hard-earned money by making good decisions.

  1. Tie-ups of cashback sites and major retailers

Major online retailers are now aware of the advantages of cashback website. They’ve been able to attract, hold onto, and grow their market share while outpacing their rivals thanks to it. 

The royalty from such a B2B (business-to-business) deal enables the cashback sites to provide a portion of that back to the clients in the form of rewards. Rising investments in free delivery and free cash upon delivery services have resulted from larger profit margins.

  1. Small and medium-sized businesses are keeping up

The globe is currently at the top of the entrepreneurial ladder. Since creating a website is simpler than starting a physical business, most of the rising SMEs (small and medium enterprises) in the eCom sector have an internet presence. 

By forming a connection with several reward and discount websites, they’ve discovered a novel strategy to promote their business and raise brand recognition. It’s a risk-free and economical way to sell their items and present their business to a wider audience.

Online wallets or cash payment applications have become more popular as the world moves closer to becoming fully digitalized. Since digitization is the answer, SMEs and the cashback sector have embraced it.

  1. Cashback and consumer behaviors go hand-in-hand​​


Consumers perceive cashback as windfall profits. This belief that money is literally falling from the sky would account for why customers are more willing to use cashback payments made by the cashback provider.

Second, customers use payback payments to plan purchase decisions for the future. Customers with cash flow issues postpone purchases until they get cashback payouts and have additional money available.

Additionally, experts believe that receiving cashback may cause customers to experience a fleeting state. Consumers view them as acts of generosity and respond by making purchases from the reward provider. Cashback incentives may temporarily improve a customer’s willingness to spend and make purchases.

The first of the three aforementioned reasons is the most plausible because the impacts are less significant the larger the payback payout. People will spend windfall profits to the point where they seem insignificant, meaningless adjustments to their fortune. Windfalls are more prone to be viewed as resources as they increase, thereby increasing their likelihood to be preserved.

Holiday discounts and deals are topped off with cashback, which has been and will continue to be the optimum customer draw. In terms of POS (point of sale)’ conversions, it serves as the finest incentive. Cashback is also too ingrained in the shopping culture and has its own devoted following. 

The majority of buyers are excited by the prospect of making further savings on every transaction. Therefore, it’s thrilling to continue growing the cashback business and establishing a situation where the partner brands and the customers both profit.

  1. Reducing the usage of hard currency 

Everyone detests using the ATM frequently to get cash. By minimizing the usage of physical currency, cashback programs assure the electronic flow of money. In fact, experts predict that e-wallets will play a major role in long-term financial dealings, and major players like Apple and Google are vying for the top spot. 

Cashback is surely a blessing for consumers, particularly shopaholics, in such a scenario. Buyers feel that reusing virtual cash in their digital wallets for purchases is far more convenient and quick than physical orders. Cashbacks also function well for fluctuating market locations by increasing revenues and confirming customer loyalties. 

  1. Seamless integrations with UPI

The world is going through significant shifts in how things are done. With the integration of electronic wallets and UPI, the eCommerce sector is actively promoting transactions online. Over the past year, UPI has witnessed a nearly 91% increase in both users and payments

Cashback is the ideal motivation to usher in this transformation with its strong support for electronic transfers, and cashback websites are already taking numerous steps in that direction. 

Companies, which are now engaging in assisted eCommerce, hope to introduce a totally new user base from tier-3 cities and elsewhere to the online marketplace. They’re targeting those who’re familiar with internet purchasing but are unsure about how to navigate these eCommerce sites. 

By connecting with tiny Kirana shops, cyber cafes, cell phone recharge locations, etc., eCommerce platforms are enabling their operators to profit across each online order that originates in their communities by giving them cashback. As a result, shop owners who choose to represent a business, earn money on goods they don’t even keep in stock! Shouldn’t you join this trend as well?

  1. Ideal for holiday deals and promotions

Due to the amazing discounts and sales that eCommerce companies offer throughout the holiday season, a massive volume of orders are placed online. Every significant festival now comes with a large promotion and additional cashback in addition to already-applicable discounts. 

Consumers anxiously anticipate such times to complete all of the items on their wishlists in addition to purchasing the necessities. During these discounts, consumers take advantage of great bargains on electronics, clothing, and cosmetic products. Realistically speaking, cashback will always be in style. 

Cashback has emerged as the most successful strategy

Infact, cashback has immensely boosted customer retention and acquisition since the introduction of internet retail. 

When it concerns ramping up and expanding quickly, cashback has consistently performed well over time for businesses and remains among the most efficient and lucrative ROI methods for eCommerce sites.

The fact is that keeping consumers is less expensive than finding new customers, and a rewards program like such a cashback scheme is an excellent method to achieve it. Additionally, nobody can abuse it excessively!

Author bio

Atreyee Chowdhury is a freelance content writer with more than 10+ years of professional experience. She is passionate about helping SMBs and enterprises achieve their content marketing goals with her carefully crafted and compelling content. She loves to read, travel, and experiment with different cuisines in her free time. You can follow her on LinkedIn.