This holiday season, a free mobile shopping app Ibotta (I bought a ..) is spreading the cheer with its “Naughty or Nice List” list, ranking 50 states according to their purchasing power.
Ibotta analyzed 5.1 million item-level receipts for purchases made in the run-up to Christmas from 2015 to 2017. The results show that Utah residents purchased the most number of cookies, milk and carrots (combined) than any other state (winning the top spot on Santa’s list) while Oregon, with the most carrots purchased, established itself “as the top destination for reindeer”. There were some miscreants too: Maine topped the Naughty List with the least number of cookies, milk and carrots purchased, followed by Wisconsin, Mississippi and North Dakota, respectively.
Ibotta has, subsequently, earned some nice PR points itself as the CEO and Founder Bryan Leach said, “Whether you make or buy your Christmas cookies, Ibotta will be there to help you save money during the holidays.”
Ibotta … Savings
The Denver-based startup knows that everyone loves cashback and has built its business around it. It’s the current, digital answer to old-fashioned printable, newspapers coupons and a solution for app-flooded phones. The company claims to have delivered $435M+ in cumulative cash rewards to its users on groceries, clothing, electronics, home and office supplies, and much more, since its launch in 2012. Ibotta’s business model involves partnership with leading brands and retailers (1500 so far) and an offering of cashback on purchases made both online and at brick and mortar stores through mobile-enabled redemptions. The partnership model works on commission and Ibotta earns on every transaction.
With Bryan Leach as the Founder and CEO and Luke Swanson as the CTO, Ibotta raised a Series A funding in 2012 followed by a $20M Series B funding in June 2014, a $40M Series C in September 2015 and a $25M Series D in August 2017 from investors such as GGV Capital, James Clark among others.
Leach, one of the most successful entrepreneurs in Denver, now talks about “Pivoting to Colorado” just as his own journey of building Ibotta began with pivoting. In 2012, Leach was a successful lawyer when he took the leap to start the coupon redemption company. The idea was, and has remained, to build a universe where users “Find offers” by selecting the physical store they would like to shop at and browsing offers in that particular retailer’s gallery. A short activity, such as “answering a poll question or discovering a new recipe”, is completed to add an offer and once done, the user uploads the retailer’s receipt, confirms the offers, and then, redeems the cashback.
However, as the years have passed, brands and users have moved online and so has Ibotta. Today, according to the Pew Research Centre, eight in ten Americans are shopping online. But just as online shopping has increased, so has the maddening hunt for coupons and deals. Users, in return, are increasingly bombarded with ads promising to provide the best deals and cashbacks with a few clicks and swipes.
The Cashback Economy
It’s no wonder that, according to the 2015 Cashback Industry Report, there were 235 cashback companies currently operating around the world, 51 of which, were based in the US, where the industry is worth $84B.
Couponing, therefore, is very much a part of the 21st century, made even more relevant by the ardent, thrifty millennial. Dave Schaff, Ibotta’s Director of Research says that its users are not average shoppers. “They know how to seek out deals, and they use smart shopping to make a positive impact in their finances. That’s why we call our users “Savers”.
Ibotta has its own research to supplement what it’s doing. Its 2018 Mobile Commerce Report finds that users spend 70 hours per month on their smartphones and most of this time is spent on their three most used apps. In a world that’s constantly deleting apps, the challenge for app-first companies is to find a position among these three coveted apps. The way Ibotta wants to achieve this is by becoming that one platform parsimonious shoppers come to for the best deals and then incentivize them to stay or keep returning through a clear value proposition and a good shopping experience.
Naturally, the increased mobile use means that Ibotta is not just focusing on its brick and mortar stores but also online. Today, the Ibotta app takes you to the online retailer where you can shop, and return to Ibotta to receive your cashback. Ibotta has secured 30 million downloads so far and the company says that users open the app five times in a day.
The startup today is 500-employees strong and has been called one of the best places to work by Inc . The company also has mentorship programmes for employees and initiatives for women to receive dedicated guidance. CEO Leach, in fact, has been recognized by ColoradoBiz as the CEO of the Year 2018 for “changing the way retail brands connect with customers” and Ernst & Young dubbed him a regional Entrepreneur of the Year for 2015.
Ibotta, however, has plenty of competition from other numerous third-party coupon sites like Checkout51, Shopmium to brands that have built their own robust cashback programs.
The current surge and proliferation of cashback economy also means that each site will provide a varying amount of value based on its deals with different retailers. Each venture must, therefore, seek out its own customer base and build loyalty and trust. A way for Ibotta to share the pie has been by partnering with the bigger players like Groupon or Amazon and allowing its dedicated set of users to have more choice. That Ibotta collaborates with brick and mortar shops work too as among regular users of coupons, about 64% frequently redeem coupons for food at restaurants or brick-and-mortar retail stores.
Ibotta has understood what its users wants and its online reviews, in turn, reflect the community’s appreciation for the app.
Jenna, a blogger, for instance, summarizes what works in Ibotta’s favour: “The thing that really appealed to me (about Ibotta) was that it was a one stop shop for savings in all categories. Travel, beauty, fashion, home – you can save at retailers in all categories with the Ibotta app.”
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