Retail TouchPoints: Ebates Cash-Back Shopping Site Scores Double-Digit Sales Growth for Retailers

Through a special arrangement, presented here for discussion is an excerpt of a current article from the Retail TouchPoints website.

Macy's, Kohl's, 1800Flowers and Sephora are just a selection of retailers who are investing in cash-back shopping to boost online sales. The average year-over-year growth for retailers who participate in the cash-back program on Ebates.com is approximately 20 percent, according to Kevin Johnson, president and CEO. Prior to the recession, Mr. Johnson adds, year-over-year growth was consistently at approximately 50 percent.

"When the economy recovers we expect to see this type of growth again," said Mr. Johnson.

To participate, retailers commit to share a portion of their sales commission with consumers. "It's a win-win for the retailers and the consumers," says Johnson. Retailers benefit from increased sales and consumers who sign up for a free membership receive cash back for all their purchases completed through Ebates.

To date, more than 1,100 retailers have signed on with Ebates.com to reach more than eight million shoppers enrolled in the program.

Since Ebates was founded in 1998, members have spent more than $1.3 billion at participating retailers and have received more than $40 million in rebates. The average basket size for Ebates members is more than $100, resulting in an average quarterly rebate check of $30, according to Mr. Johnson, "But we regularly send out checks for thousands of dollars" to shoppers who make larger purchases.

Cash-back awards vary depending on the product category, Mr. Johnson said. "Higher-margin products can give back as much as 26 percent; shoes and magazines average 10-12 percent; clothing and accessories are in the 6-8 percent range; and consumer electronics and travel may return 2-4 percent."

Most recent Ebates statistics show that appliance retailers and department stores/mass merchandisers are experiencing the largest sales increases. Year-to-date, Appliance sales were up 209 percent and Department Stores increased 121 percent. Health and Beauty also is a strong category, up 64 percent, and Clothing increased 41 percent.

While retailers are only required to commit a voluntary percentage of their sales commission to join the Ebates program, they also can participate in paid promotions to bump up sales. Recently, 20 retailers who participated in an Ebates holiday promotion averaged 90 percent year-over-year growth.

Mr. Johnson attributes much of Ebates' success to quality customer service and a strong partnership with the merchants. Retailers participating in the Ebates program often offer exclusive deals and special promotions to Ebates consumer members. "We have a really good relationship with our retailer partners and in exchange they provide exclusive deals to our members," he said.

Discussion Questions: What do you think of the potential of Ebates.com and other cash-back shopping websites? Should retailers be more aggressively pursuing such programs?

• Ebates Cash-Back Shopping Site Scores Double-Digit Sales Growth for Retailers - Retail TouchPoints