According to an eMarketer report, more than 100 million users in the US will use digital coupons this year compared with 96.6 million users in the previous year. Another report by IDC estimates the consumer e-commerce market to grow 18% annually over the period 2012 through 2017, with mobile commerce growing 36% annually during the same period. As the share of online transactions increases, more and more shoppers are turning to discount sites like eBates.com to make better purchase decisions.
Ebates.com is different from a traditional coupons website as it does not just offer discount coupons on purchases, but also offers cash back to consumers for buying products from online retail stores. The website was founded in 1998 and became a pioneer in the cash back shopping model. The site was founded by two Deputy District Attorneys in Silicon Valley who used to prosecute online fraud & identity theft. The site allows users to open accounts on the site for no charge and it keeps adding cash back to these accounts on the basis of the purchases made. The amount of cash back earned by a consumer ranges from 1%-25%, depending on the store where the purchases are made. Since inception, the company has paid back over $250 million in cash to their users.
Ebates, in turn, earns a commission for every sale made through their link. Today, Ebates has tied up with three primary affiliate networks – the Commission Junction, Google Affiliate Network, and Linkshare. Their site has access to more than 1,600 online retailers.
Early last year, Ebates announced the acquisition of grocery shopping app, Pushpins for an estimated $10 million to $15 million. The Pushpins app offers digital coupons and rewards to users when they scan bar codes at the grocery store. The app enables users to access digital shopping lists and get additional details such as coupons, nutritional information, and access to their shopping history. The app also has a smart algorithm that suggests purchases based on the consumer’s previous purchases. The app has tied up with grocery store chains like Lowes Foods and ShopRite, so that when digital coupons are clipped using the app, the savings are instantly loaded onto the consumer’s loyalty card with the grocery store.
Ebates’s latest financials are not known, but in 2011, they were on track to earn $60 million to $80 million in revenues. 2012 revenues were expected to grow 50% over the year. The company has been profitable since 2003 due to its very lean organization structure. They are venture funded, but details are not available. Their investors include August Capital, Canaan Partners, and Foundation Capital. The company is now looking to list on the stock market and has selected JP Morgan Chase & Co. as lead banker for their IPO slated for this year.