Ebay Ends Cashback Test with Ebates

January 12, 2012 · 0 comments

It looks like eBay concluded its cashback test with Ebates yesterday.  As I reported on December 11th, Ebates was given exclusive cashback privileges as part of eBay’s continuing analysis of the incremental value of partnering with incentive sites.

Ebay cut ties with all cashback sites back on June 16th as part of a “temporary” test to see whether cashback sites were bringing in more business, or if they were just costing eBay money in sales commissions for orders the customers would have placed anyway (without cashback).

In mid-November, eBay decided to end cashback indefinitely as a result of that test.

The fact that eBay was willing to give it another go, through allowing Ebates to offer cash back at least for a little while, at least gives cashback fans some hope that eBay is reconsidering.  We will have to wait and see as eBay analyzes the results of the Ebates trial to determine whether cashback is worth it from a business standpoint:  that it encourages people to shop that wouldn’t otherwise, or that it encourages people to place larger orders.

The cost of advertising online has increased drastically over time, and eBay would do well to realize that cashback programs have the ability to keep their brand at the top of MILLIONS of potential customers’ minds at no cost to them except for a small cut of the sales they generate.  How much would it cost eBay to pay for display ads to reach millions of potential customers?  How much would it cost to pay for search engine placement to reach millions of potential customers?

Cashback programs have an incentive (their sales commission) to get eBay or ANY merchant’s name and most attractive sales offers in front of as many eyeballs as possible.  They’re an important part of the marketing mix.  While yes, it will cost eBay a couple of percent of sales to partner with cashback sites, the savings in other advertising costs should more than justify that.

We shall see…stay tuned!

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