Online cashback and coupons site CashKaro has scored its latest batch of funding – INR 25 crore (approx US$3.8 million) in a series A round from Bangalore-based Kalaari Capital, marking the first time a local VC firm has invested in a cashback-oriented startup.
The vote of confidence from Kalaari is promising – it has previously invested in Indian success stories including Snapdeal and UrbanLadder – and also indicates a unique aspect of India’s tech market. While group-buying sites, most notably Groupon, have been in a slump since 2011, markets like India and China have been working well with online coupons.
Started in 2013, CashKaro is the product of founders Swati and Rohan Bhargava’s previous experience with London-based Pouring Pounds, which involves the cashback concept.
Swati and Rohan, based in Gurgaon, India, plan to use the money for global expansion, particularly in Southeast Asia, targeting Indonesia and Singapore. Android and iOS apps are also in the works, slated for release in 2016.
Keeping hold of shoppers
Different from sites that just offer discounted deals, CashKaro links its customers to over 1,000 partner retailers and helps customers save on their purchases. The “cashback” is a portion of the sale refunded into the consumer’s mobile wallet, which can then be used to top up mobile credit, pay bills, or buy other items on the cashback site. The goal of a cashback site therefore focuses less on simply attracting customers and more on retaining them. CashKaro’s affiliates include some familiar names, including Amazon India, Myntra, and Snapdeal.
“Affiliate sites account for 15 to 20 percent of ecommerce sales in India, and because the model is performance-based, it is also recognized as a key marketing channel for retailers,” say the founders.
It’s a relatively fresh model for India, a market garnered toward bargains and savings with several successful ecommerce businesses already, and it’s working well for CashKaro. Within a year of its founding, the company crossed the Rs 1.8 crore (approx. US$ 270,000) mark, making them the first and the fastest in India to do so. The company has made a successful foray into India’s now booming mobile platform in 2011, and growth is currently 30 to 40 percent month-on-month.
“I think cashback is exciting because it’s the model that gives the most options to customers,” founder Swati Bhargaya tells Tech in Asia. “I believe that once customers find the site, they don’t need to go out and buy somewhere else.” CashKaro can be a one-stop savings destination, she adds.
CashKaro has been compared before to China’s huge daily deals site Meituan as well as online discounts store Fanli, which works on the affiliate links model. There’s also US-based Ebates. Fanli secured a small stake from Japanese ecommerce company Rakuten in April but remains one of the smaller ecommerce stores in China’s booming market. Meanwhile, Meituan merged with Tencent-funded Dianping last month, a testament to the faith the tech titans have in the Chinese group-buying market. Affiliate marketing seems to be be working just fine in India at the moment.
CashKaro is much younger than its Chinese and American counterparts. Meituan has been operating since May 2010. Fanli was founded in 2006, and Ebates has been around since 1998. CashKaro is barely two years old, but Swati sees an opportunity for CashKaro to find its own niche in the cashback market.
“We are aiming to be the Ebates and Fanli of Southeast Asia,” she affirms.
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