Israeli-based cashback startup Boom25 has been live for only three months, yet it’s already talking about plans for international expansion.
Chief executive Giora Mandel, told Verdict that though the company is only in the UK at the moment, he wants to expand into Australia in 2018, with plans for South Africa afterward.
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“We’re looking at places that speak English, love e-commerce and we think, seem to fit the idea of Boom25,” said Mandel.
The startup, which has offices in Tel Aviv and London, has broken into the cashback scene in a big way. Instead of the usual cashback formula, where people shop through cashback sites to get one or two percent back from their purchase, Boom25 offers the 25th customer a full refund.
“I looked at how the cashback companies worked and it was fairly miserable for the customer. You need to buy and buy and after six or nine months, you get £20 back. Its peanuts, and it’s a lot of work for the customer,” said Mandel.
After watching his three children playing an app named 7 Boom on holiday, Mandel says he had a eureka moment. “Why pay two percent or one percent for one buy. Why not give the customer the chance to get 100 percent of the refund? Never mind if they buy a holiday to Thailand or a t-shirt.”
How can Boom25 offer rewards?
How it works is: Boom25 takes all the commission it earns from transactions and puts it into a pool. Once the 25th person makes a purchase, they will receive the full refund from this pool.
“We have more than 600 retailers that work with us and the average commission of the retailer is around four percent,” explained Mandel.
The UK retailers on board are largely household names. It includes fashion brands like Boohoo and M&S, food delivery company Ocado, and holiday booking site Booking.com.
Its customers are usually female, aged between 25 and 45, with children. However, Boom25 has noticed that young, savvy male buyers are using the site, probably attracted to brands such as PC World.
Mandel says it is this new traffic which retailers are interested in. “We’re bringing new traffic, not just the regular cashback traffic. And retailers were excited for a new name in the neighbourhood.”
As well, it probably helps that at the moment Boom25 is offering retailers a 50 percent chance of conversion. “Out of every two people who visit a retailer from Boom25, one will buy. This is numbers that no one else works with.”
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So far, Boom25 has awarded refunds to 3,976 people and aims to give away £1m before the end of the year.
Plans for expansion and beyond
Mandel is serious why he says he wants to take on the big cashback brands like Quidco and Top Cashback. However, there are regulatory issues that the company will come up against in different countries.
“We need the regulation to fit with Boom25. It’s not a lottery but you can look at it like that,” said Mandel. “In the UK they understand it isn’t a lottery as in a lottery you buy a ticket and have a chance to win. With Boom25, you buy something you want and have a chance to win.
“Not all countries think like this. In Israel, only the government has the permission to set up lotteries.”
This is why Australia and South Africa are next on the hit list for Boom25. To make this successful, they need some native brands to work with.
“We’re working hard to have as many popular brands as possible. We believe we would have the same amount of retailers [in Australia],” he said.
And the most popular retailer on the site? In the UK, Mandel says that JustEat ranks up there for the top brands.
“You buy your pizza through JustEat. And within one or two hours, [if you’re the 25th person] you get an email saying your pizza is free,” he said.
“I also love the holiday companies. Nobody can understand how it feels to go to New York for six days, for free. It’s the best thing you can imagine.”