Ebates. Cash Back for Business

Today’s focus will be cash back website Ebates. The e-commerce company was founded in 1998 in San Francisco as a shopping portal and has performed pretty well so far, to say the least. 

What Ebates is

The shopping portal gives its customers cash back for their online shopping. As a customer, you can click on a link of a listed store and it takes you to the actual online shop. Ebates is an affiliate to more than 2600 different retailers. An affiliate is a person or a company which makes a small commission for referring customers. 

An example - Dell

Let’s say you would like to buy a Laptop from Dell and it is $900. Ebates currently offers 5% Cash Back on Dell Products. Their affiliation with Dell includes a commission of 10% for each sale. This equals $90. Ebates gives half of that money back to their customers, $45 in this case. This way, the company itself makes $45 off that sale.

A win-win-win situation. Dell wins because they receive more sales through this cash back model. You as a buyer win because Ebates pays you $45 in cash back. And the website itself keeps $45 of their commission, which they received from Dell. Sweet deal, isn’t it?

Rakuten, Inc. acquires Ebates

Now that we know what exactly the company does, let’s have a look at their performance so far. The company was founded in 1998 in San Francisco. Ever since then, they grew continuously and soon became the biggest provider of cash back in North America. In 2014, Japanese e-commerce company Rakuten, Inc. agreed to acquire Ebates for $1 Billion in cash. Now they own 100 Percent of the website's outstanding voting stock. According to Rakuten, Inc CEO Hiroshi Mikitani, “the combination of Rakuten and Ebates is entirely unique and will revolutionize ecommerce”.

Even before this deal, the online cash back retailer was performing really well. The California-based company generated a net revenue of more than $167 million in 2013, resulting in income of $13.7 million. In 2011, their revenue was at just under $74 million, growing to $122 million in 2012.

Conclusion

Enough numbers for now. The Cash Back Website seems to be on the right track with their simple, but efficient business model. Many questions are still unanswered, but you will have to bear with me until my next post.

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