NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, November 9, 2015

For Bhumika Grover, it was never a choice between the ‘Big Billion Days’ of Flipkart or Amazon’s ‘Great Indian Festive Sale’ in the run-up to Diwali. Even the ‘Electronics Monday’ sale by Snapdeal was not captivating enough.

“I knew I would have got some amazing discounts, but I wanted something extra,” says the 33-year-old designer, who had been planning to upgrade her television for the last few months. Grover’s ‘extra’ moment came when payments and e-commerce services provider Paytm rolled out an ‘up to’ 100% cash-back Diwali campaign on November 3.

With a maximum retail price of Rs 77,900, a 48-inch Full HD LED Samsung television was available at a selling price of Rs 63,371, thanks to a 20% odd discount. A mouthwatering deal indeed, but it didn’t end there. Grover may have perhaps got a similar discount at a few other e-tailers, too; what she wouldn’t have got was over Rs 10,000 cash back in her mobile wallet, on top of the discount.

“Cash-back is like icing on the cake. And this icing never melts,” says Grover, who shops only when there’s a tempting cash-back offer. “If a discount is value for money, cash-back is double the value,” she grins.

As round-the-year discounts — at times as high as up to 80% — become par for the course in luring polyamorous buy in a hyper-competitive players in the e-commerce market, a raft of e-tailers such as Paytm are betting big on cash-backs to woo consumers with a fresher, juicier carrot.

A cash-back, quite simply is a form of incentive over and above the discount price offered to buyers as a refund in their mobile wallets which they can use to either shop for products or for any other services; these include paying utility bills, and for mobile and data card recharges. While buyers have more cash in hand to shop, sellers get a chance to get another slice of the consumer’s wallet.