Cashing in with a cashback site

SINGAPORE — Three years ago, Henry Chan and Joel Leong were sitting in Chan’s run-down Mitsubishi Colt, which was parked at Leong’s HDB block in the western area of Singapore. They were in a deep and intense conversation that lasted four hours, as they discussed how they could start a business of their own.

Eventually, after ruminating over several ideas, the two of them — who were former colleagues — came up with ShopBack, a popular e-commerce website that offers cashback.

Chan, 31, and Leong, 29, then roped in four others — Bryan Chua, 30, Lai Shanru, 28, Samantha Soh, 22 and Derrick Goh, 35 — who became their key co-founding team.

“We decided to go with a cashback site as we knew that coupons and deals only help consumers, but not the merchants. While consumers get to enjoy savings, merchants will have to keep a close watch on their profit margins,” Chan explained.

“The cashback model is one of the very few that’s attractive to both merchants and consumers, creating a win-win situation for both parties,” said Leong.

ShopBack works by giving customers a percentage of their purchase money each time they make a transaction with its partner merchants through its website. Merchants do not have to pay to get listed with ShopBack but only need to pay a cut to the site if customers buy something from them. This means new merchants need not fork out money for marketing and 
brand-building.

After coming up with the business idea, the pair booked a hotel room at The Ritz-Carlton for three days to further develop it in 2014.

“We just thought to coop ourselves up in the nice hotel room to make ourselves focus on the task at hand,” Leong said. They spent three days and two nights continously working on the idea, and at the end of the three days, the prototype for the ShopBack website went live.

For Chan and Leong, they took a risk by giving up their stable careers in May 2014. Chan was the director of strategic partnerships at SingPost eCommerce while Leong was the regional head of partnerships 
at Zalora.

To get ShopBack started, they received seed funding of US$500,000 (S$682,225) from venture capital fund Accel-X in April 2014 and ploughed in S$15,000 each. ShopBack eventually went live officially on Sept 9, 2014.

PERSISTENCE PAYS OFF

To keep the site going, the pair worked long hours, travelled constantly to different countries and were on call almost 24/7. “We answered customers’ queries till 2am,” Chan said. “It’s really part and parcel of a typical day in this entrepreneurship grind,” he added.

Besides the heavy workload, the pair also faced obstacles in the form of doubts from their loved ones. “We received all sorts of questions, challenges and pressure from our loved ones who couldn’t understand what we’ve gotten ourselves into,” shared Leong.

Still, their persistence paid off. In two years, the fast-growing e-commerce platform, which was handed the Emerging Enterprise Award in an awards ceremony last week, organised by The Business Times and OCBC Bank, now has more than one million shoppers on its platform — a far cry from the 250,000 shoppers 
it had just a year ago.

The number of transactions delivered to merchants is expected to grow, too. These figures, Chan said, are expected to increase by 15 per cent month-on-month.

ShopBack has also expanded to five other locations; besides Singapore, it is available in Malaysia, India, Indonesia, the Philippines and most recently, Taiwan. Its regional traffic now stands at more than two million for both desktop and mobile users per month, with at least six orders coming in per minute compared with last year where it generated one order per minute. It now receives more than 10,000 orders a day, up from 
10 orders per day when it first started two years ago.

Its staff strength has also grown from six to more than 85 people in total.

The site now has over 1,000 merchants, with more than 500 in Singapore, including popular online platforms such as Lazada, AliExpress 
and Expedia.

The pair cited being able to hire the “right people with the brains and skills” to join their team, as well as having relevant connections in the industry that was cultivated from their prior work in e-commerce, as reasons why ShopBack was able to grow so much within these two years.

“Targeting the 600 million population in the South-east Asia vicinity makes natural sense,” said Chan. “Honestly I don’t think we’re growing fast enough!” he enthused.

To celebrate their second birthday, the pair rolled out a ShopBack 9.9 Cashback Day on Sept 9 which offered consumers deals such as an upsized cashback of up to 99 per cent and exclusive voucher codes and discounts in collaboration with merchants such as ASOS and Taobao. The move, said Chan, was to show 
their gratitude.

“(I’m) thankful that we have the conviction and support of our customers as well as team members,” he said.

Leong added that he hopes to inspire others who are thinking of launching their own start-up. ShopBack, he surmised, is living proof that aspiring entrepreneurs should take risks to build start-ups, and that Singaporeans can and are willing to support an unknown 
Singaporean entity.

More plans are afoot, said Chan, with the team eyeing the rest of South-east Asia. He hopes “to become the market leader in the cashback realm over the next year”.

A new service that will provide aggregated reviews and comparisons when consumers shop on ShopBack is also in the pipeline.

“We want to be the platform to help shoppers make informed decisions before they shop, be it helping shoppers through reviews, or discovery of new products, deals and offers. We want to be that first, top-of-mind platform shoppers visit before making any purchasing decisions,” Leong said.