Ibotta is a nifty cashback rewards app that many shoppers love.
It’s free to use, and some might call it the future of couponing.
With Ibotta, you can get cash back for shopping through the app, linking a loyalty account, and taking photos of your receipts.
You also have the option to boost your Ibotta earnings by taking advantage of partner offers.
If you look at it superficially, it gives its users free money.
It’ll even give you a $10 signup bonus when you spend your first $30.
So, with all this value it provides its users, how does Ibotta make money as a company?
Good question.
That’s what I’ll be answering in this post.
Now, let’s put Ibotta’s business model under the microscope.
What is Ibotta?
If you’re not an Ibotta user yet, you might wonder what the hype is about.
Well, it’s a simple browser extension and app that earns you cash back on all sorts of purchases.
It’s been around since 2012.
According to its About page, it has doled out more than $1.2 billion to its 40 million users.
While it’s primarily used for grocery stores, you can save on everyday purchases like medicine, gas, electronics, clothes, and even gift cards.
How Does Ibotta Work?
Before anything else, users need to claim offers to their saved offers lists.
One of the pain points of using Ibotta is planning your purchases.
The app even goes so far as to recommend local deals from its affiliate brands and shops.
This shows that the Ibotta app uses location tracking.
After you shop at a physical store, you must upload a photo of your receipt to earn cash back from Ibotta.
You get seven days to submit this proof of your in-store purchases.
You might even be able to link your loyalty card to Ibotta at your preferred retailer.
If so, you won’t need to upload a receipt.
You may also use Ibotta for your online shopping.
These offers have their section within the app.
Just tap the “shop” button once you find a deal you like. You will then be redirected to the merchant’s website from the app interface.
Then, you can shop online as you usually would.
To ensure you receive your rewards from your online purchases, don’t navigate away from the app as you shop.
How Does Ibotta Make Money?
Ibotta generates revenue by charging affiliate commission fees, providing advertising services, and selling anonymized, aggregated data to other companies.
We’ll explore each of these below.
Affiliate Commissions
Affiliate fees paid out by Ibotta’s partner brands are the company’s primary source of income.
Every time you purchase a product from Ibotta’s partner brands, like Walmart or Sephora, they get paid.
The two sides pre-negotiate the total sum to be exchanged.
Essentially, Ibotta takes a cut of the total purchase amount, which usually falls between 3%-10%.
Ibotta’s rivals (Rakute, Fetch, Upside, etc.) monetize their networks similarly.
Now, why would these merchants work with Ibotta anyway?
Couldn’t they promote their products themselves?
Well, Ibotta only serves as an additional sales channel for its customers.
Ibotta’s user group is targeted at a young demographic earning between $50,000 to $100,000 annually, primarily female.
Most of Ibotta’s affiliates are targeting customers in that user demographic.
And thanks to Ibotta’s deep linking technology, these brands can monitor their transactions more closely.
This lets companies accurately determine how much money they spend to bring in a customer.
This also helps them figure out which specific goods are the most profitable to market.
And since there is both an Ibotta browser extension and mobile app, their affiliates can reach customers via multiple avenues in various stages of the buying process.
These affiliate program posts are a must-bookmark for your binge-reading list!
The Best Recurring Affiliate Program.
The Best Tier – 2 Affiliate Programs.
Whether new to affiliate marketing or just curious, check out the video below or catch it HERE!
Advertising
The Ibotta program periodically displays videos or other advertising content to users.
If you’ve done shopping online, you’re most likely familiar with these ads meant to promote specific products or brands.
Companies are willing to pay Ibotta for this extra visibility on a fixed-fee basis or per ad view.
Ibotta’s continuously growing user base makes this an attractive deal to companies looking to boost sales.
And the more users sign up and actively use the site, the more ad views and affiliate earnings Ibotta will get.
Get enlightened on earning through Ads with this post—it’s a must-read!
Selling Data
According to Ibotta’s privacy policy, aggregated data sales account for a part of the company’s earnings.
What does this mean?
They sell compiled customer data made anonymous to brands that need analytics.
Examples of data points include the average sales price of a particular product group or the times of day those certain products sell the most.
Typically, these sales are one-time offers that the company initially requested.
Pricing is based on the volume and kind of collected information.
Note:
Ibotta also earns from account maintenance fees.
If an Ibotta account is dormant for over six months, Ibotta levies a fee.
This fee usually comes from the inactive users’ “rewards” balance.
Until this balance is emptied or the user becomes active again, this works out to $3.99 monthly.
Ibotta Funding and Valuation
Ibotta has secured venture capital financing in six rounds totaling $92.9 million, according to Crunchbase.
Prominent backers of the business include
Final Thoughts Koch Disruptive Technologies, Teamworthy Ventures, and Harbor Spring Capital.
Final Thoughts
It makes sense why Ibotta has several million members and has surpassed the $1 billion mark.
It’s a fantastic app for saving money.
We can attribute it to its wealth of app features, alluring cashback and discount offers, and diverse ecosystem of merchants.
Although they have only used their business strategy in the US, it is conceivable that it could function in other countries.
Ibotta has the potential to join new markets and quickly establish itself as a top competitor thanks to experience and success in the States.
As you wrap up this read, here’s a collection of posts perfect for your coffee break enjoyment.
