Why an eCommerce Price Comparison Website Does Not Offer Cashback to Users

You might wonder why an eCommerce price comparison website doesn't offer cashback to users. The answer lies in the business models and the revenue streams of these websites. In this article, we will explore the reasons behind this common practice, and why it might be advantageous to consider alternative models.

The Business Model of eCommerce Price Comparison Websites

The traditional business model of an eCommerce price comparison website is based on advertising. These websites typically generate revenue through advertising from the eCommerce stores they compare. Advertisers pay the price comparison sites for clicks on their ads, a model known as Cost Per Click (CPC). The goal of these websites is to drive traffic to the eCommerce stores, which in turn helps them earn more in advertising revenue.

Price comparison websites do not directly earn money from the actual sales or offers provided by the eCommerce stores. Instead, they focus on providing a platform that helps users find the best deals and the lowest prices. They make a living by turning a profit through the advertising revenue they earn.

Why Cashback Is Not a Common Practice

Cashback programs typically require a different business model. Unlike price comparison websites, cashback providers often have agreements with merchants to offer a small percentage of the purchase price back to the user. However, in the case of price comparison websites, they are not directly involved in the financial transaction. They do not have a financial relationship with the users, nor do they control the pricing or the deals. This means that offering cashback would not be a straightforward or effective way for them to generate revenue.

Furthermore, price comparison websites operate on a competitive landscape where their value lies in the comparative pricing data they provide, and not in direct financial incentives to users. Hence, providing cashback could be seen as a costly and unsustainable model for them.

The Case for Alternative Models

Your idea of offering cashback through price comparison websites is indeed interesting. While the traditional model does not support cashback, there are alternative revenue models that could be explored:

Commission-based Affiliate Programs

Instead of relying on advertisers, price comparison websites could offer a commission to the users for bringing traffic from their website. This would incentivize users to use the site and act as a form of referral marketing. Users who refer customers might earn a commission on the sales, creating a mutually beneficial relationship between the users and the website.

For example, a user can earn a percentage of the sale if they refer a customer who makes a purchase through the price comparison site. This would align the interests of the users and the website, as the users would directly benefit from driving more traffic and generating more sales.

Partnerships and Loyalty Programs

Price comparison websites could also partner with eCommerce stores to create loyalty programs. Instead of offering cashback, the stores could provide exclusive discounts or rewards to users who use the price comparison site. This would enhance the user experience and create a sense of loyalty, driving continued use of the service.

Furthermore, partnerships could be extended to other relevant businesses. For instance, users who regularly use the price comparison site might receive special deals from travel agencies, subscription services, or other financial institutions. These partnerships could provide a broader range of value to users, increasing their likelihood of using the service more frequently.

Conclusion

In conclusion, the reason why an eCommerce price comparison website does not offer cashback is due to its business model and the nature of its operation. However, exploring alternative models, such as commission-based affiliate programs or partnerships for loyalty programs, could offer a more sustainable and mutually beneficial approach. These changes could enhance user engagement and drive more revenue for the website.

It is always worthwhile to consider innovative business models that align user interests with the goals of the website. As the eCommerce landscape continues to evolve, price comparison websites have the opportunity to adapt and offer new and better services to their users.