Incepted in 2011, Pennyful.in, a leading cashback and discount coupons website, allows customers to make the desired purchases by directing them to the online retailer’s site and availing of the cashback offer. Today, Pennyful.in has entered into collaborations with over 250 of the most popular e-commerce merchants like Amazon, Myntra, Jabong, Yebhi, Tradus, Homeshop18 and Flipkart among others. What sets Pennyful.in apart from most other players in its category is that a user can request to withdraw their cashback at any time, which means no minimum payout is required. In conversation with IMAGES Retail, Ravitej Yadalam, CEO and Founder, Pennyful Online discusses the brand’s strategy and highlights the latest trends and measures taken by the company to offer a good customer experience.
Inception
A brainchild of Ravitej Yadalam, CEO and Founder, Pennyful Online, Pennyful.in is one of the first players in the Indian cashback and discount coupons market. Yadalam originally put to test the concept of a cashback and discount coupons website in the US market with Pennyful.com, and based on the positive feedback he received, along with the emerging popularity of e-commerce in India, he took the concept to the Indian market with Pennyful.in.
Talking about the inception of Pennyful.in, Yadalam says: “The idea of Pennyful came to me when I was in college. The e-commerce space always fascinated me, and I began experimenting with the idea in college during the 2007–2008. During that period, I used to work with some market vendors to sell products and that is when I witnessed a significant trend in consumer behaviour. I saw that customers preferred branded products to unbranded ones, in spite of the latter having just as many features at a lower cost. This made me move my e-commerce experiments to the affiliate marketing space. Through affiliate marketing I was able to tie up with big brands and deliver to customers the products they wanted.”
“While doing this helped solve the problem of selling large brands, I figured out that there was another challenge at foot – that of customer loyalty. There were many sites that offered the same product at the same price. So the question I asked myself was, how could I make my customers choose me over my competitors? The answer was to offer my customers something that others weren’t offering, to ensure customer stickiness. I realised that through affiliate marketing, I make an ‘x’ amount of money as commission, and if I shared part of this with my customers as an incentive, I would be able to deliver the best customer shopping experience. And, the feedback I got for this model was incredible. This is how Pennyful Online was born and Pennyful.com was launched for the US market in January 2011. Through Pennyful.com, we started offering real cash back to our customers for every purchase they made through us,” he added.
According to Yadalam, the initial challenge in the US market was that e-commerce there is extremely sophisticated. There are many players and thus establishing a differentiation was initially challenging. Some of the challenges included setting up the office and ensuring the operations, which ran out of India, aligned with the US time zone. However, they overcame those challenges and currently work with around 1,500 e-commerce players in the US. They are also one of the few players there to have a price comparison tool.
After registering noticeable success in the US market, and seeing that the Indian e-commerce market was becoming popular and more relevant, they decided to take this concept to the Indian customers.
Formed in November 2011, Pennyful.in is one of the first online cashback sites in India. As one would know, the Indian market is extremely cost-conscious and the concept of cashback here has been gaining traction at a rapid pace. In fact, they are the only cashback player to offer cashback, or reward vouchers, on both Amazon.in and Flipkart.
Profit ratio
Pennyful.in gives their customers 1–50 per cent of their spending through cashback. This means that the company shares anywhere between 50–90 per cent of the commission with its customers. As they refer more sales and business to partners, these numbers are expected to grow.
The performance of Pennyful has been nothing short of great. Also, the feedback they have been receiving from customers so far has been overwhelming. According to Yadalam, “We did expect to see positive traction for the site, but the way our customers have been reacting to receiving their money back from us suggests that we are on the right track.”
Progress and current developments
Talking about the performance of Pennyful.in, Yadalam asserts: “As of now, we have given close to Rs. 1 crore back to our customers in the form of cash. While metros and large cities constitute a large portion of our audience, we have also been seeing an increase uptake in tier-II and -III cities. In fact, today 25–30 per cent of our audience rests in these cities. Mobile is also garnering traction, which is not very surprising. Fifteen per cent of sales is achieved through mobiles and this should go up to 25 per cent by the end of this fiscal. From a business perspective, we have been seeing a growth of 300 per cent Y-o-Y and we hope to break even by the end of this year.”
According to the company, the last 2 years have been extremely fruitful and exciting for Pennyful.in. They have been successful in garnering traction not only in the number of users they acquired, but also in the number of partners they have worked with. Yadalam points out: “In fact, when we compare our growth in terms of our customer base with last year, we saw a 150 per cent increase Y-o-Y, and this is expected to grow up to 200 per cent this year. We look at the last two years and compare it with the time we started off. The next few years are going to be very exciting.”
Initiatives
“Customers are the lifeline for a company like Pennyful and we are continuously focusing on delivering the best customer experience for our users. In line with this, we wanted to ensure that our customers have access to us wherever they are, even on the move. Keeping this in mind, we recently launched a mobile compatible version of our website. Also, customer acquisition is obviously important to us and while we encourage our users to share Pennyful.in with their family and friends, we also want them to be rewarded for doing so. In order to do so, we came up with a Refer-a-Friend policy, wherein our customer gets 10 per cent of their referrals’ cashback whenever they shop via Pennyful.in for one whole year,” says Yadalam.
Soaring high
He adds: “Most importantly, we want our customers to come back to us, but purely for the experience we give them and nothing else. We do not want to force customer loyalty, and keeping this in mind, you will see that there is no minimum withdrawal limit at Pennyful.in. This means that a Pennyful user can withdraw any amount of money they accumulate as cashback, even Rs. 5. This has definitely been one of the reasons our customers love us.”
Festive season
At any festive season depending on the festival, they have offers such as extra cashback, or double cashback for their consumers. They also run festival-specific giveaways where consumers stand to win prizes either in terms of money, vouchers, gifts such as iPads or gold coins or gift hampers.
Moreover, their partners usually offer great deals and better discounts on the select categories, and Pennyful.in gives cashback on top of these as well.
Challenges
One of the biggest challenges the brand is facing in India is that cashback, as a concept, is still relatively new to the market. Hence, educating the costumers remains a challenge for them as a cashback company. Yadalam shares: “At times, it seems that receiving your money back is too good to be true, and is often misconstrued as being the same as a discount. But once our users see that there is actual money coming back into their bank account, they become believers and evangelists of the concept.”
Talking about the process of recruiting and setting up their office in India, Yadalam says: “As we setup in the US first, we did find the process of setting up operations in India to be a bit challenging and time consuming as compared to the US. For a startup, recruitment is always challenging, but I believe that today we have the right team in place and we are in a great position to deliver a superb customer experience.”
Trends
While consumer behaviour in terms of e-commerce is quite well known, insights on the Indian cashback user have never been discussed. Nevertheless, at Pennyful.in they feel that they are in a good place to provide insights on this due to two reasons. Firstly, because they give real cashback to their users, and secondly, because they do not force their customers to accumulate a certain amount before they can withdraw their cashback.
Elaborating on this, Yadalam says: “In light of this, we are seeing a trend wherein there are two phases to the Indian cashback user. The first phase is the experimental phase. During this phase, the user is skeptical about the concept of cashback and feels it is too good to be true. This is when they try out our website for the first time and find out that they have received cashback into their account. After this, the experimental consumer chooses to withdraw their first cashback, even if it is as low as Rs. 5. Once this small amount of money is credited into their bank account, they become a believer and move on to Phase 2.”
“The second phase of a cashback user is that of a confident user. The customer is confident of getting back their money and hence has no inhibitions when it comes to letting their cashback accumulate in their Pennyful.in account. When they do this, they shop and wait for their cashback to grow. When it reaches an amount of money they are satisfied with, they choose to withdraw it. We have seen Phase 2 users withdrawing around Rs. 30,000 on an average, but there have been many instances where this has been much higher,” he adds.
Marketing plans
As they are an ‘online only’ company, their marketing and promotions mostly take place on the online space. This includes social media, e-mail marketing, affiliate marketing, content marketing – blogposts, blogger reviews, guest articles, mobile marketing, PR (offline and digital), advertisements – SEO and SEM.
The road ahead
“We at Pennyful have been witnessing tremendous growth over the last few years and we expect this momentum to continue, if not increase dramatically. The future looks bright. As of now, our Indian customers have access to all the major Indian stores at Pennyful.in. As a next step, we will be looking at bringing not only more stores, but also stores from beyond India, to our customers. Our customers are in for some great times, and we will definitely prove to be their one-stop shopping destination for any of their needs,” concludes Yadalam.
