With an increasing tendency for people to shop online, coupled with a worsening economic outlook (which results in people looking harder for discounts) has resulted in an increase in the prevelance of cash back websites.  A cashback website is exactly what it sounds, users are remunerated for purchasing  a merchant’s products, this is usually a percentage of what they have spent.

The process is mutually beneficial, as the merchants pay out a small amount for a confirmed sale, perhaps a much lower CPA than they would through other forms of advertising.  For them the process can be finely managed, adjusting commission levels when necessary.  For the consumer, they get re compensated for online purchases.  So who loses out here?  Well no one at the moment, but this could cause two potential problems in the future.  If consumers get used to getting cashback for purchases, will they expect this to be the case for all online purchases?  Will they circumnavigate merchants own websites and proceed directly to the cashback site (s), or will merchants be forced to integrate cashback systems on their own sites.

This could also potentially effect they way people navigate to e commerce websites, would people proceed directly to the best cashback site instead of querying a search?  Scenarios like this are a long, long way off at the moment, but it should no be underestimated the consumer will to receive some sort of financial incentive for shopping with one particular brand.  Recently some well known UK brands have entered into the cashback sphere, bringing into the mainstream.  One such example is the Sun’s cashback site, born out of the fact that the paper was giving money saving advice in it’s “Captain Crunch” column.  The site was seen as a natural extension, to provide an area where readers could actually take advantage of some of the offers.

Offering money off to online consumers is nothing new however, many sites offer 10% discounts to new users and run orthodox sales promotions.  Other “discount retailers” tend to promote themsleves has offering lower prices perennially.  However this new concept of giving the saving to the consumer could change the business model for a lot of these sites.