Online shopping is steaming up and so is the advertising spend from the players wanting to get a share in the pie. Pay-Per-Registration or Pay-Per-Sale has been the safest payment model for the ecommerce players as these guarantee top line. There are ad networks like DGM that are thriving fundamentally on this model.
With the invent of affiliates there is another business model cropping up India, that of paid-to-purchase models. Like the old days of paid-to-read programs wherein a users would be incentivized to receive ads on email/SMS, this model pays to complete a purchase or register at one of the advertisers’ site. The business model is simple, the advertiser pays an affiliate commission to the network and network passes a major portion of this to the user.
Cazbak is one startup exploring this model. Based out of Baroda with a team of 8 people, Cazbak has launched parallely in US and India. For India the startup is dependent on a lot of direct affiliate sign up with the e-commerce players and other advertisers are sourced through DGM. Cazbak passes on around 75% of the affiliate commission they earn to the users. Once the user reaches a minimum limit of Rs.500, he can ask a payout through Paypal or cheque.
Amulyam is another early player in this space and has grown quite big. Though the cash-back offered by Amulyam is way lesser than what Cazbak offers for the same merchants. Amulyam has removed the logistics of sending cheques or depending on Paypal and gives out the payout in terms of mobile recharge (talktime).
Other players like Khojguru bargain out a coupon code for the users, this gives the incentive to the user and a tracking for the affiliate commission to them.
Though this is very attractive proposition for online shoppers, the one reason I am skeptical of this model is that there is no value add to the ecosystem (it simply is piggybacking on the rising ecommerce industry).
The model is already quite popular in US with some well established players. It would be interesting to see how Cazbak fares there.
What do you think of this model? What value add can they provide?
[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]
