THE RECENT LAUNCHES OF several cashback sites in Malaysia mark the long-awaited entry of the cashback concept, one that is new to the region despite being well-established in US and UK markets.
Simply understood, these cashback websites work by partnering online merchants, thereby securing a certain percentage of commission and cashback for shoppers who click through them.
The potential of the idea is undeniable: the e-commerce industry in Southeast Asia is currently valued at US$60 billion, according to The Business Times, and the rising affluence translates into greater access to technology. Indeed, the number of Southeast Asians who shop online is increasing every day and the brains behind these regional cashback sites have a great deal to be excited about.
The gap in the Southeast Asian cashback market has prompted many different companies to step up and give it a go – from small teams of young entrepreneurs to even large companies. The challenges that these companies face, however, are unique to the region and require careful strategising and resolving.
While the cashback concept took off quickly in the US and UK, their success does not spell out a sure-win formula that companies in Southeast Asia can copy wholesale. One stark difference between the markets is the difference in consumer spending habits.
Since cashback sites target the common middle-class shopper, companies here have had to understand the spending patterns of the average SE Asian, which even differs across countries. On the whole, Asian values in the region still hold fast – habits such as being exceptionally cautious with expenditure and “newfangled” ideas, can disrupt any cashback website’s plans of rolling out in a new market.
Addressing Uncertainty and Unfamiliarity
“It all sounds too good to be true”, is a common response from hardworking Malaysian shoppers who hesitate to entrust their dollar and cents to unfamiliar entities. Such apprehension could hurt profits but successful cashback websites are already one step ahead of consumers; the best are doubling efforts to make their website layout as simple as possible to suggest clarity and transparency.
Prominently displayed video tutorials, reviews and visual guides are just some of the several methods employed to assuage consumers’ fears and ease their foray into cashback websites.
Steps to Success
The shopping experience is key and the cashback website ShopBack notably does this well – their signature colours of red, white and black welcome shoppers into a visually exciting space that show the best deals from various merchants in one glance. Paired with their cartoon mascot of a smiling and waving shopping bag, the ShopBack page is definitely recognisable in an instant.
Such effort in branding pays off: Lai Shanru, co-founder and Marketing Director of ShopBack says in an interview with The Asian Entrepreneur, “There are some 200 million internet users in the region, who are potential online shoppers. Having launched the company in August 2014, we have seen a 50% month-on-month growth in shopping transactions. During the 2014 holiday season, we saw some 10,000 transactions on ShopBack. As we expand the platform regionally, this will increase further.”
The astounding results that such cashback sites have produced and the investments they have gathered reaffirms the region’s promising e-commerce industry and the opportunities it presents for enterprising companies.
Their success also reveals the changing mindsets of Malaysian consumers who are gradually becoming more receptive to the cashback concept. One thing is for sure – no one likes missing out on a good deal and online shoppers here have been found to continue using cashback services after positive experiences.
Customer loyalty speaks volumes about how far the cashback concept has come in Malaysia but along with the success stories, there have also been disappointments. A number of cashback site companies that have ventured into the cashback scene but failed due to the lack of traction for attention.
One such example is Coupay, whose startup pitch involved the creation of a coupon and price-comparison engine that rewards users with cashback for sharing deals on social media. Their participating investors include the founders of WEGO and travelmob, but after announcing their plans to raise their seed round of investments and to expand into Singapore, little has been heard about any further developments.
It seems that beyond just recognising the potential that the region holds, more planning in stages has to be done for a smooth launch and sustainable growth. It’s a competitive market but no doubt a lucrative one, provided cashback companies know how to navigate the industry and manage consumer demands.
The challenge for these businesses is to differentiate themselves from others: to constantly renew and improve to stay ahead of the competition and meet consumer needs by going the extra mile with user-friendly web designs and excellent customer service.
The steady rise of cashback websites in Malaysia signals a change in the expectations of online consumers. People are no longer satisfied with regular sales and they want bigger discounts, better deals and the best price possible even for small purchases.
Cashback websites are definitely sticking around with both companies and consumers standing to benefit. With some foresight for companies and growing consumer interest, the e-commerce cashback industry looks set to get even bigger in the years to come.
This article was contributed by local cashback site ShopBack Malaysia.