Wednesday, May 21, 2008

Live cashback - GOOG killer or AMZN killer?

Henry, if that is correct, then it is a more direct assault on amazon and ebay. I understand that amazon refused to sign up which could be for this reason, but I'm surprised that ebay has signed up. It will basically kill the "buy it now" deals on ebay. Perhaps ebay signed up because MSFT allowed paypal as one of the means of paying the cashback.

Also, the only items that AMZN would now be able to sell easily are those that are priced lower than live cashback. That should kill their margins.

One potential issue here could be the reliability of the merchant, but I don't see any b&m retailer or etailer winning here. It sounds like a "race to the bottom" in terms of pricing for those guys.
Just as travel sites like are killing the traditional airlines ticketing model and travel agencies, this would have a negative effect on the overall retailing business.

How much of a dent it make to GOOG is debatable, because the value proposition there is not just cost but overall quality of results. And a significant component of the clicks that GOOG gets are from folks that are not specifically looking to buy, but click on an impulse and some of which gets converted to actual sale. So until MSFT succeeds in getting the eyeballs, its not going to have any material effect on GOOG. This explains why MSFT is anxious to get more eyeballs.

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