Can ShopBack’s $80m reinvention take it to IPO?

Last week was momentous for ShopBack, the shopping and rewards platform. Aside from its latest US$80 million funding round, the firm also launched its payments product ShopBack Pay in Sydney, Australia. This makes the payment option available to over two million users in both Singapore and Australia.

Part of those funds will go toward ShopBack’s “public market readiness.” While ShopBack has shared few details on what that entails, its acquisition of Hoolah last year as well as recent hires from Zip and Fave point in one direction: financial services.

A ShopBack spokesperson tells Tech in Asia its new products will include more personalized content and offer more ways to earn and spend cashback. Meanwhile, its merchant partners will be able to use more tools to target, reach, and engage with their customers.

ShopBack is unlikely to excite investors by being solely a cashback platform when it eventually enters public markets. (The company did not disclose how soon that might happen.) Compared with ecommerce marketplaces or super apps with diversified revenue streams, a cashback platform that directs traffic to retail platforms may appear to offer limited revenue upside and growth potential. A cashback firm with a fintech spin, however, may be more enticing.

See also: How Hoolah fits into Shopback 2.0

As the lines between online and offline retail channels blur, so has ShopBack’s platform: A shopper can buy vouchers via the app as well as earn cashback both when they spend at online and offline partner merchants, while opting to pay in installments. At a physical retail store, shoppers can use that cashback to offset future purchases via ShopBack Pay (which can be tagged to a GrabPay, credit or debit card of choice).

However, relying on cashback – the firm’s main revenue engine – can only take ShopBack so far. “Most deal platforms, on their own, cannot be viable beyond a point. They need to find alternative revenue sources,” Varun Mittal, co-author of Singapore: The Fintech Nation, noted previously. Here’s where buy now, pay later comes in.

By incorporating payments, ShopBack is hoping to close the loop on every shopper’s journey: from deal discovery, voucher purchasing, transacting, and finally, payment itself – on which ShopBack earns a small fee. What’s better than if BNPL could drive customers to make purchases of larger ticket sizes – this not only provides ShopBack with an alternative revenue stream but also increases commissions on each product. It may also bring new customers into the fold.

At the moment, the integration of Hoolah’s pay-later capabilities into ShopBack’s platform appears to be well underway. Last month, ShopBack PayLater, its zero-interest installment payment product, was soft-launched in both Singapore and in Malaysia.

According to a ShopBack spokesperson, shoppers will be able to access its pay-later service through the ShopBack mobile app after completing the requisite know-your-customer checks. The firm has no immediate plans to launch the service in other markets, the spokesperson adds.

Launching a BNPL product in each of ShopBack’s 10 markets – should it plan to do so – will not be a straightforward process, given the increased regulatory scrutiny on the sector and potentially tougher rules. In Australia, for instance, BNPL firms may soon be regulated under the same laws as credit cards and personal loans.

Stacking payments

ShopBack isn’t the only ecommerce firm to foray into the BNPL realm, and neither is it the first. Shortly after it was acquired by fintech firm Pine Labs, Fave introduced its own pay-later option in Singapore and Malaysia in July 2021.

Consolidating positions and gaining share