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Introduction

Shopping in Australia has evolved. We used to buy from shops and malls made of bricks and mortar, now we shop on the Internet because it saves us money. But are we really paying best possible prices?

Unfortunately the answer is a resounding 'No'. In this article I'd like to introduce you to online cash back shopping, explain how it works and why it is much cheaper than buying from online stores directly.

While the Australian Bureau of Statistics suggests millions of Aussies shop online, it would seem that very few currently take advantage of the huge savings offered by cash back shopping and are hemorrhaging huge amounts of cash as a result.

I suggest that the savings which we made by switching from buying on the street to buying on the Internet are probably at least equaled by the savings we could archive by cash back shopping rather than buying from online stores directly.

What is Cash Back Shopping?

Cash back shopping means you buy an item from an online store and are later refunded part of the price you paid for it. For example, you might buy an exercise bike for $200 from xyzstore.com.au and later be paid back $20, thus reducing the price you paid to $180.

To achieve this you need to join one of the cash back sites on the Internet and shop through them rather than visiting the shop's website directly. (Kindly see the resources section at the bottom of this article for an example cash back site.)

When you visit the cash back site you'll search for store or product that you are interested in and you'll be presented with links to matching stores. Clicking on a link will direct you to the store's website where you can proceed to buy the item you want. When you return to the cash back site you'll notice that the purchase you made has shown up on your account, along with the refund that you are due. A little while later you will be refunded the money by one of various means such as PayPal.

It is important to note that you shop on the same website whether you arrive via the cash back site or otherwise. If you arrive by typing in the address directly into your browser or by clicking a result from a web search you won't get any money back, but if you click the link on the cash back site you will.

It really is that simple and it really does work.

How does Cash Back Shopping Work?

So why does it work? How does the cash back site give you money for shopping at someone else's site? It's all down to sales commission.

Traditionally when we shop online we probably surf the web for a while to find what we are looking for at the best possible price. We use various websites to aid us in this process including search engines, shopping comparison sites and shopping directories. In one way or another these sites are all driven by advertising, stores are prepared to pay a great deal of money to advertise their goods.

The Internet is such a huge place the risk is that stores can pay a lot of money for advertising and still not reach the right people, let alone make sales. These risks are reduced using affiliate marketing. 'Affiliate marketing' can basically be read as 'sales commission'; stores get to advertise for free but instead pay commission on any sales they make as a result of those adverts. Thus stores only pay for adverts which actually bring them sales and because of this they often offer very generous commissions.

Most shopping directories display affiliate adverts. When you visit a shopping directory and click a link to a store from which you buy something, that store pays commission to the directory which you found them in. In the same way cash back sites get paid commission by the stores they advertise. The difference is that cash back sites pass some of that commission back to you.

Conclusion

In conclusion, we are currently paying too much for our shopping because we are not taking advantage of cash back sites. In essence we all have a choice when we buy online. We can either:

1 - Arrive at our preferred store's website via a search engine or shopping directory and let them have the sales commission on whatever we buy.

or

2 - Arrive at our preferred store's website via a cash back site and take that sales commission ourselves, saving us money.

As neither of these methods involves more or less effort than the other, I am sure you will choose to save money.

Resources

A great Aussie cashback site:
Cashloop Australia

About the Author:
Nikolai Larrea has a general interest in all things money saving.