Cashback Websites
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How do they work?
The cashback website will receive a commission payment from the retailer and once the purchase, free trial, or information request is confirmed will then share this payment with the customer who made the purchase. This means that the cashback site makes a profit on the sale, free trial or information request and the consumer gets to recoup some of the initial outlay back or if they had a free trial or information request earn some money from it.
Users can earn money on many types of online purchase. These can range from consumer electronics to finance products and furniture. The most profitable cashback deals often involve finance related goods such as insurance products, loans & mortgages where significant amounts of cashback can be generated from a single purchase. Other retailers such as expensive fashion retailers often tend to carry high percentage cashback rebates due to their profit margins.
Some cashback websites often place a threshold on when a customer can withdraw their earnings, thus making it necessary for a customer to return to the cashback site to add to their cashback earnings in order to reach the threshold target, driving loyalty to the site. This is particularly important since many of the shopping websites advertised through cashback websites would rather customers visit their site directly.
Some cashback websites do not require a threshold on when a customer can withdraw their earnings.
When the member's earnings have reached the threshold they can request a payment from the cashback website. Usually this will be paid via BACS (bank transfer) or there may be the option of being paid in gift vouchers. The gift vouchers are usually obtained at a trade price, and so the cashback website saves money by paying people in online gift vouchers. These vouchers can be sent using e-mail to the customers, and consist of a code of numbers and letters, which when entered on certain online stores can be used to deduct money from the final cost of their order.
Many cashback sites incentivise their customers further by offering them benefits or cash to refer others to the site. This provides the benefit both to the cashback website and the customer as it helps the customer to build up their cashback and helps the cashback website to grow by signing up new members without having to worry about spending money on advertising.
Cashback websites also enable consumers to save money online by providing them with various coupons and discounts. Bigger cashback websites will even feature exclusive coupons available only at those sites. By combining the coupons and discounts with the cash back rewards, consumers can save even more.
The number of cashback websites has increased due to the presence of companies like Tradedoubler and Commission Junction which make it relatively easy to create this kind of website. Other low barriers to entry mean there are many new companies still entering the market.