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• ShopBack is growing fast, offering cash back from 1% to 100% on purchases through its platform.
• Chris Wilkinson says it boosts retailer profiles, but Bodo Lang warns it may encourage overspending and reduce market transparency.
• Lang advises caution, noting it could disadvantage small retailers and lead consumers to miss better deals.

ShopBack says New Zealand is its fastest-growing market – but many shoppers are still asking, “What’s the catch?”

The online platform offers to pay back a percentage of shoppers’ online purchases.

It has about 300 brands listed, and people who sign up and go to those sites via ShopBack can receive a payout of anything from 1% to 100% of their purchase.

Angus Muffet, general manager for Australia and New Zealand, said it was a relatively new model for New Zealand but was launched in Australia seven years ago.

He said retailers would pay a commission to ShopBack for transactions made by its members, and most of that would then be passed on to the shopper.

Cash back specials

If it was a travel purchase, the cash back would arrive in the customer’s ShopBack account once the travel had been completed. Other purchases would have their cash back paid when the retailer’s returns policy had expired.

Members could get $1000 a year if they were booking travel on the site, he said, or $20 or $30 if they were just doing the odd bit of online shopping.

Retailers would run specials increasing the amount of cash back they offered. Retailers with higher margins could offer higher cash backs than others, he said.

Muffet said it worked for retailers because they would only pay if they made a sale, whereas if they were advertising on a platform like Facebook they would pay for customers clicking on their links.

“There is no catch. It’s a marketing channel and we share the commission.”

Muffet said data was only collected to enhance the ShopBack experience for members and was not shared with third parties.

He said ShopBack had started to offer incentives for people playing mobile games, too.

Chris Wilkinson, of First Retail Group, said ShopBack was popular in other parts of the world, particularly Singapore.

“We know it has been successful for the brands - selling direct to consumers - and retailers, as consumers channel purchases towards participants, many of whom are already value-oriented choices - such as Chemist Warehouse. Essentially, it provides another window to those selling products and services - heightening their profile and priority in shoppers’ choices.”

But Professor Bodo Lang, a marketing expert at Massey University, said there was reason to be wary.

Professor Bodo Lang is cautious of the scheme. Photo / University of Auckland

‘Gamifies shopping’

“ShopBack essentially gamifies shopping. Therefore, it may encourage consumers to potentially spend more money than they otherwise would, all under the premise of ‘saving’ money.

“Consumers who are prone to overspending, gambling or impulse buying should use such platforms with caution because there is a risk of becoming addicted to this type of shopping.

“This is a major concern, as studies have found that around 5% of consumers suffer from compulsive buying behaviour. Younger consumers and females are more likely to exhibit this trait.

“Second, platforms such as ShopBack make the marketplace less transparent for consumers. This is the last thing we want from a consumer protection perspective.

“In an ideal world, consumers would have perfect information, including the pricing of products. Platforms such as Shopback make the marketplace more opaque and make it more difficult for consumers to access clear and easy-to-understand information when needing to buy a product.”

He said people might also be tempted to only look for brands that were available on ShopBack and miss out on other deals.

“These brands may not always offer the exact product that consumers need, or they may not always offer the lowest price for the product consumers are seeking to buy.

“Therefore, consumers may end up buying products that are not quite right, or they may spend more than they would have if they had bought the product through another retailer.”

He said because ShopBack tended to feature larger brands, it could make it harder for smaller retailers to compete.

Lang said people could save more money by finding the products they wanted through independent reviews, such as by Consumer NZ, and then using a price comparison site.

“Never pay full retail or the recommended retail price (RRP). Instead, ask for a discount, particularly if you are a regular customer, are buying more than one product, or are spending a lot of money in one session.”

RNZ