Update : Jeremy noted rightly that Zlio is not a cash-back, true in the sense that clients do not receive discounts because they went through a Zlio store, but there is still cash flowing from the retailer to Zlio. This cash is either in Zlio’s pockets or in the Zlio user’s (the one that sets up the store).
The question remains to me : “is this cash-back model viable from the merchant point of view ?” At what point is the retailer fed up with paying commission fees and stops using this kind of sales’ channel ?
Interesting numbers are displayed about it : around 100 K shops have been opened since the launch of the service (+1 yesterday by me, to test the service which is quite efficient to sell things). Revenues : 700 K$ per month to the affiliates and 80 K$ (round 10,2% commission rate) to the Zlio and its subscribers.
We also learn that Zlio has raised round 4 M$ in from Luxembourg-based Mangrove Capital Partners (“venture capital with a punch”)
Questions remained :
- how many shops remain active ? (let’s say a login in the last 3 months) ’cause 7$ a month per shop is not that much (in fact : 7,8 $)
- Apart from the buzz, what is the difference with traditional cash-back stories (CashStore.fr for instance) ? (answered by Jeremy : the cash does not go to the buyer, rather to the sellerS (Zlio and Zlio’s user who set up the store)
The basic principle : “I, Zlio, bring you sales and you give me a rebate, which I can share with my users to make them use my service (and some Google Ads on the way).”
The success point : Zlio enables leaders of opinion (I would say mainly bloggers but not only if you look at the number of accounts) to monetize their influence and knowledge by becoming salesmen. Zlio opens the catalogue and the users choose the product, do the windowshop dressing and tout their products.
The trick : is this cash-back model viable from the merchant point of view ? it is one thing to bring customers to a merchant in exchange for a commission shared with the customers (win-win situation, ever used an India Rickshaw and went to crafts workshop?). It is another to encourage the customer to go through your service every time he wants to purchase products from the merchant. At what point in time do you as merchant stop the cash-backer from charging you as a new customer every trustful patron ?
To my opinion, to be viable this requires a win-win-win situation, where the e-merchant stops paying the cashbacker for old customers : this means the e-merchant’s goal is to overturn at the end by various techniques the cash-backer. (Jeremy advocates the merchant is happy that way considering the volume brought by Zlio. Maybe, the merchant is arbitraging between buying Adwords or paying Zlio, it could make sense to see Zlio as a good alternative, considering the acquisition costs)
However from a customer point of view (to say some good), Zlio remains easy to use, and simple to implement. It is quite convenient when you have some kind of thematic discussions going on your blog or forum to recommand, using your knowledge or influence, a new product or a new service. Why not earn a bit of money if you do some marketing for others?
Follow up reading: the acquisition of Kaboodle by Hearst for an estimated 40 M$ via TechCrunch