Kenyan fintech startup CashBackApp is helping fast-moving consumer goods (FMCG) companies to build loyalty amongst customers by allowing them to earn cashback via M-Pesa on their everyday shopping.
Formed in late-2018, CashBackApp partners with FMCG companies and retailers, who use the app to reward shoppers with cashback for buying products that they promote on the app.
“FMCGs and retailers want to grow their sales volume, and shoppers want to enjoy more value/discount on their shopping,” Simon Ngigi, the startup’s co-founder and chief executive officer (CEO), told Disrupt Africa.
All a shopper has to do is download the app, and view cashback offers loaded retailers. They then physically buy those products from participating retailers’ outlets, and obtain the receipt that proves the purchase. They can then use the app to scan the barcode on the receipt in order to claim their cashback.
Ngigi said the app has 2,000 users at present.
“As with all new ideas, uptake started off slowly as early adopters tried it out. Moving forward, we expect this number to grow exponentially in the next few months as we partner up with even larger retailers,” he said.
This is a process that is ongoing. CashBackApp only finished development in July of last year, and launched a pilot with CleanShelf – a large tier two retailer – that went “extremely well” and allowed it to prove the concept. It has now added Tuskys, the second largest retailer in Kenya, to the platform, and Ngigi said it is now moving into fundraising mode for further growth.
He said CashBackApp delivers a strong value proposition to its customers and partners.
“The shopper benefits the most since they access a rich basket of offers from multiple FMCGs running in multiple stores and get the value as actual cash – not loyalty points – in one central app,” said Ngigi. “Extra cash earned that goes directly back into shoppers’ pockets makes a significant difference, particularly for shoppers on a tight budget.”
On the other side of the process, the app enables FMCGs to deploy offers fast, at scale, in a cost-effective way, helping drive sales through mobile channels largely unexplored so far by FMCGs.
“It also provides data and consumer insights and saves up to 50 per cent in promotion communication and marketing costs,” Ngigi said.
For retailers, the app is used to provide more value for their customers at zero cost to them.
CashBackApp charges the FMCGs who load cashback offers on the app, and earns a commission for all the cashback redeemed. Ngigi said it also plans to monetise on consumer insights generated by the platform, as well as advertising.
“On the insights front, we are in advanced discussions with a global market research firm, which sees value in using the app to track consumer panels to generate insights for their corporate customers,” he said.
The startup’s biggest challenge thus far has been building a network of FMCGs, retailers and shoppers.
“This business has a chicken and egg problem,” Ngigi said.
“The shopper needs to see attractive offers on the platform for them to see any value running at their favourite retailers. FMCGs see value in a platform that already has a good volume of shoppers. The challenge is how do you build this network extremely quickly and in a cost-effective way. This is the question that we’re constantly trying to solve for, but we now have a strategy to build this network and it is working very well.”
CashBackApp is for now focused on doing all this in Kenya, starting in Nairobi, where it plans to demonstrate the value of the platform and then scale elsewhere in the country.
“Eventually we will expand to neighbouring East African countries, then to the bigger countries like Ethiopia and Nigeria, and then to the populous North African countries like Egypt. But the focus for now is to capture our home market,” said Ngigi.