This Southeast Asian Start-up Gives You Cash Back When You Shop
In the digital world, it actually pays to be a shopaholic
PHOTO CREDIT: Getty Images
Every shopaholic worth her salt is only too aware of buyer’s remorse.
You come to the mall or log on to your favorite online retail store with the intention of only buying a basic white top, but end up with not one but five new shirts, two pairs of shoes, jeans, sunnies, and a necklace your compulsive shopaholic self insists you need. You feel guilty, so to forget the guilt, you shop again. It’s retail pleasure spiked with pain the moment your bill arrives.
Luckily for those suffering from shopaholism, Singaporean e-commerce start-up ShopBack is easing the pain by giving your money back—well, part of it. According to co-founder Joel Leong, the online cashback portal lets consumers earn “up to 30 percent cash back on transactions of any amount with ShopBack’s merchant partners.” Uber, Grab, Expedia, Lazada, and Nike are among its 1,300 merchant partners across Southeast Asia. “ShopBack earns through commissions from merchants, with bulk of that amount shared with customers who made the transactions. They receive cash back—actual dollars and cents—that may be transferred to their bank or PayPal accounts,” explains Leong.
Too good to be true?
Founded by six Singaporeans whose backgrounds are mostly in the e-commerce space, ShopBack was born out of the founders’ frustration over bloated marketing expenses that do not necessarily translate to sales. In efforts to address this pain point, the founders stumbled upon the online cashback business model in the United States and China. “It’s a proven and mature concept in these countries, but almost unheard of in Southeast Asia. We decided we could ride the e-commerce wave and come in to support fellow e-commerce businesses with our own online cashback portal,” says Leong.
The founders have clearly struck gold with this business model. ShopBack has been experiencing massive growth in the last few years. The company is now present in six countries in Southeast Asia, and has grown its 9 sqm space to 1,500 sqm, daily transactions from three to 15,000 orders, merchant partners from 30 to 1,300, and workforce from three to over a hundred.
Not the easiest road to success, Leong shares that growing the company in a fragmented market like Southeast Asia was beset with challenges. “Localization was the key to unlocking the market. The one-size-fits-all formula of the West does not work in this part of the world, with its cultural, language, and legislation differences,” says Leong.
It doesn’t help that their “Shop Online, Earn Cashback” value proposition sounds too good to be true. “Consumer education remains our biggest challenge—from the beginning and to this day. Even though ShopBack is a free platform, discerning customers need to understand how the model works before they’re willing to give it a try. We spend a lot of time and effort, both online and offline, to connect with consumers for a chance to educate them,” he says.
Uncertain times for e-commerce?
With such e-commerce giants as Lazada and Zalora retreating parts of its business from Asia—the latter’s most recent development being unloading 49% of its Philippine-based operations to local property giant Ayala Land earlier this year—one question begs to be answered: As ShopBack gains more market share, will this put its merchants in a better position or simply accelerate their cash burn?
Leong is quick to repudiate talks about e-commerce dwindling in Southeast Asia. “The money clearly lies in the future,” he says, pointing to the research results released by Google and investment firm Temasek in 2016. “According to these industry heavyweights, by 2025 there will be a projected $200 billion opportunity right at our doorstep. That’s more than six times the amount from now. The industry is undoubtedly on the rise; it just needs time to validate its growth and worth,” he says.
As for ShopBack’s role in the e-commerce space, Leong points out that the platform is an enabler of e-retail. “It’s the smarter way to spend for marketers,” he says. “We’re a performance-based marketing channel. Merchants only pay us commissions when they get an order—otherwise, any other marketing exposure is free. Compared to other advertising channels which require payment before delivery of concrete results, we’re seen as a cost-effective platform not only for generating awareness but contributing to the bottom-line,” adds Leong.
What’s the future like for ShopBack? “Internationalization has always been on our growth map since Day Zero,” shares Leong. Currently, ShopBack’s regional sales—sales channeled to its merchant partners—amount to over SGD22 million per month. “Being able to deepen overseas connections and presence is definitely critical for survival. It’ll remain as one of our top priorities moving forward,” he says.