A real estate manager based on Mumbai, Aditya Chidurala was ordering lunch via a restaurant aggregator TinyOwl for the very first time. He paid for the same using his Paytm mobile wallet. On paying Rs 150, he received cashbacks from both Paytm and TinyOwl that made him earn Rs 77.
He is a beneficiary of the rising cashback trend that is fuelled by the industry involved in deep discounting. In this case, the customers are not saving money as they will be in the form of discounts that they can use for their next purchase on the website. This cashback concept is used by the taxi service providers widely as the market was maturing in the last year. Now, the same is used by the mobile wallets including Paytm, MobiKwik and PayU and also by the other e-commerce firms.
Regarding this, Shankar Nath, the Senior Vice President of One97 Communications, the parent firm of Paytm claimed that the cashback programmes are aimed at luring new customers and increasing the frequency of transactions of the existing customers. The payment wallet is expanding to e-commerce cashback promotions as the same bumps up the mobile recharge orders by 15 percent to 20 percent. It also has the potential to double the e-commerce sales.
Also, an Assistant Professor in Marketing at IIM Bangalore, Sreelata Jonnalagedda claimed that the customers will probably buy now as there is a discount and they will not return again. But, when there is a cashack, they will visit again and it is a consumption cycle. The firms that are aggressive to acquire customers can consider spending the amount meant for discounts on cashback.
This concept is driven based on the customer demand, claimed CEO and Founder of Crown It, Sameer Grover. The firm provides an online cashback for the offline purchases that are made.