The cash-back shopping website ShopBack has arrived in Thailand and is focusing on familiarising customers with the concept, building trust and helping consumers to find more shops online.
"Users basically go to ShopBack's platforms and buy products from our partners and you can also get cash back of up to 30% which will be transferred straight to your bank account," explained Kawin Prachanukul, the man behind the launch of UberX in Bangkok and the co-founder and country head of ShopBack Thailand.
For example, he said, someone looking for a hotel room can access Booking.com via its link on ShopBack and get up to 6% cash back when they complete the transaction. If a booking costs 10,000 baht, 600 baht will be sent to the customer's account.
How does ShopBack make money? Participating vendors, such as Booking.com, share part of their commissions with ShopBack and keep some for themselves as revenue while giving the rest to consumers. The shopper still receives the product or service directly from the retailer, but also gets some money from the cash-back website.
Established in Singapore in 2014, ShopBack now operates in six markets: Singapore, Malaysia, the Philippines, Indonesia, Taiwan and Thailand, where it opened an office in July.
One of the co-founders, Josephine Chow, told Asia Focus that the concept came about when the founders, who all came from e-commerce backgrounds, realised that a crucial link was missing in the online shopping scene.
"The one piece of the puzzle missing in the e-commerce industry is a middleman that could help consumers understand online shopping and help them discover online stores," she recalled.
"At the very onset there were very few online merchants and only international names. No one was helping to promote the local guys as well, and that was one of the potential areas we saw."
Ms Chow pointed out that although many consumers like to make purchases online, a lot of them still do not really trust the entire journey and worry about transaction security, so building trust is the most important first step.
Trust building is certainly needed if online shopping is to reach its potential. According to Maybank Kim Eng Holdings, online sales in Southeast Asia have been growing strongly in recent years but they still account for less than 4% of overall retail purchases.
For example, the value of the e-commerce market in Indonesia is US$1.7 billion but that represents just 0.6% of the total retail market. The corresponding figures are $1 billion and 1.1% in Malaysia, $1 billion and 2.1% in Thailand, and $900 million and 0.8% in Singapore.
In contrast, online has a 16% share in China and 18% in South Korea, according to Maybank, which expects e-commerce sales could grow to between 5% and 10% of all retail purchases over the next five years.
One area where Southeast Asian consumers lead the world is in the use of mobile phones to make purchases, according to PricewaterhouseCoopers' Total Retail 2016 Survey, which interviewed nearly 23,000 online shoppers in 25 countries. It found that 73% of online consumers in Thailand and 66% in Malaysia and Singapore used their smartphones to shop, against the global average of 54%.
Malaysian consumers lead their Southeast Asian peers in terms of reading reviews on social media at 69% and accessing promotional offerings at 74%.
Nevertheless, one common problem that PwC found, and which appears to validate ShopBack's business model, is the lack of access to products desired by consumers locally, which leads to a loss of domestic sales. In Malaysia, 61% of online consumers said they were motivated to buy from retailers outside their country because they could not find what they want on Malaysian shopping websites.
Ms Chow points out that setting up a website to sell products is cheap but running it and getting traffic to the website is costly. Mr Kawin explained that Facebook, for example, has the ability to drive a million visits to a website and will charge for the assistance even if there are no transactions, but the cash-back idea is different.
"For us, we can also drive a million visits to a website but if there is no transaction, we do not charge the merchant anything. We only charge them per successful transaction. That's the beauty of cash back and that's why our merchants love to work with us," he said.
Besides getting money back from online shopping, consumers can also discover a lot of new merchants at ShopBack. Its goal is to try to get the best deals and promotions from each merchant for its visitors.
According to Ms Chow, bigger players with their own platforms and rebate programmes are still interested in partnering with cash-back websites because they see them as an "additional marketing partner."
"We can help them reach out to people that they cannot usually reach," she said. "For example, there are people who are used to purchasing travel online but they have never tried buying electronic goods or fashion online, and this is where ShopBack steps in.
"What we are very good at doing is getting these consumers to make purchases on every single online vertical possible. That helps the merchants to acquire new users while at the same time driving more repurchases as well."
ShopBack has partners that operate across a wide range from fashion and travel to lifestyle such as Lazada, Agoda, Expedia, Eatigo, Uber, Grab, Tesco Lotus, Central.com and Booking.com. The Shopback website offers up to 6% cash back for transactions with Lazada, Agoda and Booking.com. You can get up to 40 baht back if order food from Eatigo via the Shopback website or app, and 5 baht back from a ride in an Uber or Grab taxi.
For some consumers, there's a chance to benefit twice, earning reward points when using a credit card to pay for a hotel room, while using ShopBack to get cash back as well.
Thailand is a relative latecomer to ShopBack, but mainly because of the language factor, according to Ms Chow.
"In Singapore, most people can speak English and Chinese so we decided to go for countries that do not have that much of a language barrier at first. In Thailand, we have to start a Thai language website and application."
In Thailand, ShopBack aims to provide at least 10 million baht in cash back to Thai users within its first year of operation.
Ms Chow sees great growth potential ahead, saying that e-commerce in Southeast Asia is 10 years behind the Chinese market. "We are very fortunate in that sense because there is a path that has been laid down for us and we just have to follow that path but tweak it to a local context," she said.
"In Southeast Asia, each market is completely different. In Thailand it is purely mobile phone focused but Singapore is really desktop-focused, so the way that we approach the market is completely different but the way that consumers think, their mindset, is still very similar."
