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https://www.afr.com/companies/retail/cashrewards-rival-shopb…
Cashrewards’ underwhelming sharemarket debut has not dented investor demand for the fast-growing cash-back sector, which has benefited from the shift to online shopping during the pandemic.
Cashrewards’ arch rival, Singapore-based start-up ShopBack, has raised another $55 million, after a $102 million raise in March last year, taking the total to more than $200 million.
ShopBack country manager Angus Muffet. “The opportunity is infinite,” he says of Australia.
ShopBack plans to invest the funds into acquiring new customers and merchant partners and developing new products to take advantage of strong growth in e-commerce, as well as the inevitable shift in spending back to bricks-and-mortar stores when lockdowns end.
Cash-back programs enable consumers to get a portion of their online and in-store purchases back and are used by retailers such as Coles, Amazon, The Iconic, Target and David Jones, travel companies such as Booking.com and food delivery services such as DoorDash and UberEats to attract new customers.
Over the past few months, Shopback Australia has launched a digital equivalent of the “stamp” card, which allows members to earn more when they shop with certain brands in stores, launched in-store cashback offers, product comparison functions and gift cards, and has doubled the size of its local team to 24 staff.
ShopBack has operations in nine markets, including Singapore, Malaysia,
Indonesia, the Philippines, Thailand and South Korea, and sees Australia as a key growth opportunity because cash-back sector is still in its infancy.
“The opportunity is infinite,” said country manager Angus Muffet.
“If you look at markets like the UK and the US, Australia is still massively underpenetrated – in Australia only 12 per cent of shoppers use some form of loyalty discount or cash back, in the UK it’s 35 per cent.”
ShopBack’s registered members in Australia grew by more than 50 per cent to 1.5 million in the 12 months ended June, active customers (those who have shopped on the site in the past 12 months) reached 458,822, and merchant numbers have risen to 2000 from 1200 in the last year.
Cashrewards shares halved
In comparison, Cashrewards has 1.1 million members in Australia, 260,000 active members, up from 178,000 a year ago, and 1700 merchants. Cashrewards shares have halved, falling from $1.73 to 81¢, since the company listed in December.
Across the Asia-Pacific, ShopBack has almost 30 million users and has driven more than $10 billion in revenue for more than 5000 merchant partners since inception.
The latest capital raising was syndicated in March but only lodged with regulatory authorities earlier this week after approval from the Australian Foreign Investment Review Board.
Investors included Temasek, East Ventures, EDBI, Indies Capital and Australia-Singapore based January Capital.
Mr Muffet said an initial public offering was a “natural path” for ShopBack but it had no current plans to float.
“Right now we’re focused on driving that market and acquiring world-class talent to help us do so and further enhancing products for customers and merchants,” he said.
Benjamin Dunphy of January Capital said the investment company had been ardent supporters of ShopBack since 2017.
“The team has proven time and again their ability to execute and innovate in the highly competitive e-commerce enablement space,” Mr Dunphy said. “We have high conviction that the company will continue to create massive value for partners, users and shareholders alike.”
Talking garbage.
Able to raise money just means there is enough fools out there. Problem is going to be path to profitability. I'd suggest it is harder than people think otherwise if Shopback is driving $10bn in revenue then a 1% cut is $10m. I'd assume their cost is probably $5m per country (7 countries listed) means $35m a year which means they need to grow 3.5x and that is conservative.
Uber needs to take 30% of every dollar to get UberEats to be profitable which fills in the cash black hole known as Uber (ride share).