SINGAPORE — When other businesses scale back, rewards and shopping discovery platform ShopBack is taking the other route: expansion.
In April, deep in the throes of the coronavirus pandemic and its fast-spreading impact on businesses across the region and world, ShopBack acquired Ebates Korea for an undisclosed sum from Japan’s Rakuten. Ebates was South Korea’s largest online cashback platform. The acquisition is key to ShopBack’s expansion plans this year.
The homegrown startup had earlier expanded into Vietnam at the end of 2019. Besides these markets, it now operates in Malaysia, Indonesia, the Philippines, Thailand, Taiwan and Australia as well.
“We are always evaluating new opportunities to connect with and serve more consumers, and will continue to keep a lookout for such opportunities in 2020,” co-founder and chief executive Henry Chan said in a recent interview with Yahoo Finance Singapore.
So, is an initial public offering in the works? Chan merely said that “nothing is off the table for us, but for now we want to remain razor focused on creating value for our users and merchants during a time they need it most”.
The six-year-old company has raised a total of US$113 million, after closing an extended US$75 million funding round led by Temasek in March. It declined to comment on its financial numbers such as profitability.
The region’s Internet economy is expected to triple to US$300 billion by 2025 from last year, according to the e-Conomy report by Google, Temasek and Bain. More than 150 million people in Southeast Asia bought or sold items online last year, compared to some 49 million in 2015.
Relatively new concept
Chan said the company’s concept — whereby merchant partners pay ShopBack a commission when a successful sale is made, and the company in turn share the commission with shoppers by giving them back a small percentage of their purchases — was relatively new in this region even though it has been around in countries like the US and UK.
The idea for ShopBack was conceived one night during a late night chat with classmate and co-founder Joel Leong, Chan said. They then roped a mutual friend Bryan Chua who is a “tech guru” and locked themselves up in a hotel room and after a weekend of brainstorming, the trio conceived the prototype.
The venture almost failed to take off when its application for government funding was rejected, said the 35-year-old who left his job as director of strategic partnerships at SP eCommerce, part of the SingPost Group. The founding team eventually managed to secure funding of US$1 million led by Accel-X and East Ventures, and ShopBack was launched in Singapore in September 2014. The company has grown from a team of six to over 500 today.
Currently, ShopBack partners with over 3,000 merchants including Taobao, Expedia, Shopee and Zalora to reward its users with cashback. To date, US$100 million in cashback has been given to over 20 million users.
Yahoo Finance Singapore had a quick-fire catch-up with the 35-year-old father of one.
What is the biggest challenge for the company currently?
Our biggest challenge has always been consumer education.
Though the cashback concept has existed for decades in other countries, it is still relatively new in this region. Therefore, there is a lot of work needed to educate and build trust among our users. Before the concept of cashback was popularised in online shopping, it only existed within the credit cards or offline transactions space.
What are some of the common misconceptions about the cashback model and how do you address these concerns?
Consumers are often wary about the idea of being ‘paid’ to shop online, even though it is completely free-of-charge to create an account and use ShopBack.
It is an uphill task to first capture consumers’ attention in the crowded online retail scene, and educate them about ShopBack’s service and credibility, before we can persuade them to embrace and use the service. However, we believe that it is a universal truth that consumers will always want better value for their purchases.
On the merchant side, one key challenge is the need to shift the marketing mindset of potential merchants, with regard to the allocation of their budgets. Traditionally, brands allocate a fixed budget for their marketing and advertising campaigns, paying upfront for eyeballs or for clicks. With ShopBack, instead of a fixed budget, merchant partners pay for performance — more specifically, they pay only when a sale takes place.
How is ShopBack coping with the coronavirus pandemic?
To ensure that we survive this crisis, we will be extra-focused on optimising the business and rationalising our cost structure to operate more effectively with limited resources. The goal is to keep our expenses as low as possible without significantly slowing business growth.
It is important for businesses to seize opportunities during times of uncertainty. Shoppers are seeking out the best way to cut costs and maximise savings as they shift their spend online. The recession in 2008 taught us that the concept of ‘value’ becomes extra important to consumers when the economic outlook is grim.
Hence, we will continue to innovate new features and simplify the shopping experience in order to bring value to them during this unprecedented time — and we believe this commitment is what will allow us to emerge from this crisis stronger.
What advice would you give to aspiring entrepreneurs?
I will share the ShopBack core value that I resonate with the most: “Can’t” is not an option.
If you aspire to be an entrepreneur, you need to have the courage to face challenges, and the grit and resourcefulness to overcome them. Look beyond your limitations and have the guts to fail – the difficulties, challenges, and failures that we overcome will become our advantages and strengths.
After all, great meaningful work never comes easy.