Cashback Site v Charity Site - Whats went wrong?

[markpearson]

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I have just recently come across this website www.ushopugive.com and it
seems like a great idea, but looks like it has failed - this is what it says
on the holding page:

"In the last four months UshopUgive.com has received a number of
communications from key retailers and affiliates (including Amazon.co.uk and
the affiliate representing Argos.co.uk and flybe.com) indicating their
reluctance to continue to work with the site because of the incentive-based
approach to online selling.

These retailers had apparently hoped that, having used our link to their
site once, our users would then link directly to their site. However,
because there was an ongoing incentive (i.e. the donation to charity) for
our users to continue to use our link, they did not do this but instead
carried on using the UshopUgive.com link.

As the retailers who have withdrawn represent close to 50% of the commission
generated through the site it is simply impossible for UshopUgive.com to be
able to cover the cost of administering the site and it is therefore with
enormous regret that the UshopUgive.com has decided to cease trading.

All sales made up to the point of the closure of the site are being honoured
so your charity will be paid for any sale made on its behalf.

We would like to thank both our charities and site users for their support
over the last six years.

The Management Team
UshopUgive.com"

I find this a strange reason for them to close since other affiliate sites
(such as www.greasypalm.com and www.freefivers.co.uk) promote these companies and are doing
no different - does every affiliate site not want their members to come
through them first to make more commission?

If anyone could shed some light on why this concept wouldn't have worked, I
would love to hear it as I cant see it.

Mark

[pricethat]

I find this a strange reason for them to close since other affiliate sites (such as www.greasypalm.com and www.freefivers.co.uk) promote these companies and are doing
no different - does every affiliate site not want their members to come
through them first to make more commission?

If anyone could shed some light on why this concept wouldn't have worked, I
would love to hear it as I cant see it.

Mark

Cutting a long story short many merchants hate cashback sites, after all anyone can sell something if they are bribing people to do so, however because of the nature of them if a merchant does not allow it then there is always someone else that will so basically its just upping the anti all the time. Greasy palm and freefivers were not exactly liked either when they started, in fact cashback incentive sites were and sometimes still are. But i thin greasy palm established a model, perhaps freefivers too.

I think in this individual case it was not marketing as such, just a system to take cash from sales that were normally coming to the merchant in most cases anyway.

anyway hey ho....

[essdeekay]

So basically the merchant wants the affiliate to "recruit" them a new customer then go away!

Nice way of doing business.

RBN

[loquax]

I think you also have to include the likes of Nectar and Airmiles, perhaps even Egg (and probably many others) in these models as they are now are incentivising their user base with rewards schemes - in cases with offers which can't be competed with.

I don't know whether merchants like/dislike them, but they participate - and from my point of view as an affiliate my view of cash back is double edged. On one hand if you can recruit users to them (and they participate) then good... if you can't (e.g. Nectar) potential sales can whistle out the door when an offer is bandied round the community sites.

Anyway that digresses from the question. Argos as I understand don't allow any incentives to sale - not sure on Amazon, but perhaps there needs to special requests?

If the site in question wished to continue they could easily join buy.at and take advantage of the buy.at charity section - no need to run a cashback site (although i guess they'd not earn themselves but the charity would). Just an added twist to a slightly rambling and tangental answer.

Jason

[shyguy0507]

Amazon has a firm no incentisation rule on ongoing sales.

They will however allow you to incentise the first sale (at least that's what i remember reading they may have changed since.

Associates may donate their earnings to a charity, but may not announce to their visitors in any way that a portion or all of the proceeds will go to a particular charity.

[renegade]

It's an interesting thread which sucks in the cashback shopping and discount vouchers sites.
It does seem a shame they can't make the model work especially when as an affiliate I'm keeping all the commission and merchants are "happy" with that (as a business we do donate to charity but not from source).
I suspect there's more to the story...

[markpearson]

So how many merchants do not allow charity sites, but allow all or some of the cashback to go to the consumer? Seems very strange and I don't see why it failed :-(

Feedback and help welcome....

Mark

[drivetowin]

I think the message they have put on the website is masking the real issue:

Amazon do not allow cashback sites.
Argos have not allowed cashback sites since January 2005.
Don't know the situation with flybe.

In the case of Amazon and Argos this is not against charity sites - they do not allow any cashback sites.

So I think they are using the facts in a way to suit themselves - and I would seriously doubt for any cashback site that 50% of their revenue comes from just 3 retailers.

More likely I would think is that a) either they did not attract enough members to make it sustainable or b) the weight of administering cashback claims got too heavy for them - it does require a considerable amount of administration effort.