Business

How Does iBotta Make Money? The iBotta Business Model.

iBotta is a smartphone application and browser extension that automatically credits your iBotta account with cashback when you shop online. However, how does iBotta generate revenue?

The iBotta Business Model is similar to that of Nearbuy, another cashback app, and savings website.

What is the iBotta Business Model?

iBotta generates revenue from partner commissions. Each time an iBotta app user makes a purchase, the company partners with retailers and receives a percentage of the selling value.

Revenue Model of iBotta

iBotta distributes a portion of the fee to its customers in the form of cashback and loyalty points to entice them to make additional purchases.

We’ll now look at the iBotta business model in detail to see how it operates and earns money.

How Does iBotta Make Money?

Consider the last time you purchased anything. Have you spent time searching for coupon codes? To put it simply, iBotta rewards you for any purchase you make through the app.

iBotta is a shopping app that eliminates the need to clip coupons and check for promotional codes. Later in the post, we’ll discuss how they make money and distribute this cashback.

Now, the amount of cashback you receive varies by product and store, but major retailers such as Walmart advertise their goods inside the app.

Given that you already shop at these stores, iBotta saves you hundreds, if not thousands, of dollars depending on your shopping frequency.

The only additional move is to make a payment via the app or to upload the receipt for an offline purchase.

iBotta is a United States-based company founded in 2012 in Dever, Colorado. In 2016, Brian Leach partnered with Jim Clark and other investors to finance iBotta with $73 million!

This was just the start. iBotta became a unicorn firm with a $1 billion valuation within three years of its initial investment.

Users of the iBotta application and browser extension will receive rebates when they shop at participating online and brick-and-mortar stores, including:

  • Pharmacies
  • grocery store
  • book stores
  • sporting goods stores
  • home improvement
  • pet supply stores
  • clothing and beauty shops

Initially, iBotta dealt exclusively with grocery stores. However, after their funding round, they have grown into various online and offline purchasing categories.

How is iBotta Profitable?

iBotta’s market and sales model are very straightforward. Thousands of retailers across the country are trying to increase foot traffic in their stores or eyeballs on their online items, and the iBotta app currently has over 35 million users.

Revenue Model of iBotta

Retailers are willing to pay commissions in exchange for increased brand awareness.

iBotta’s business model is composed of three main components:

Retailers in need of new customers

Users looking for discounts

iBotta is a company that partners with retailers and rewards customers with cashback.

Though the above points make it clear how they make money, I’ll go into greater detail to demonstrate how each of them works together to build the ideal revenue model.

The iBotta Business Model

iBotta is addressing two critical “needs” here. Retailers want to increase their customer base, and consumers want to save money.

As a result, iBotta starts by partnering with retailers from a variety of sectors and industries. They strike a contract with the retailer in which the retailer pays iBotta a small portion of the selling value as a fee if an iBotta consumer makes a purchase.

However, why would a consumer use iBotta to buy a product?

Since the iBotta software reimburses users for a portion of the commission.

Consider the following…

You’re planning a trip to Walmart this weekend and decide to search around for coupon codes. You print out the coupon and bring it to the store to complete your order and receive the discount. Doing this action once might be appropriate. However, it becomes tedious when you have to repeat the procedure every time.

Thus, you opt for the iBotta app instead.

Revenue Model of iBotta

Rather than searching for discounts, you can now easily visit Walmart and make your purchase as normal. After that, you simply upload a copy of the receipt to iBotta and earn cashback on all qualifying purchases.

You can also do the same thing with a large number of online items! If you shop exclusively via the iBotta app, you can immediately see which items give the highest cashback.

Additionally, the more you use the app to shop, the more cashback you’ll get.

1. Merchants compensate iBotta for advertising their goods.

Retailers are the first component of iBotta’s business model. Retailers pay iBotta a percentage of the selling value to facilitate the transaction.

Commissions are charged to retailers only when a transaction is completed. In this scenario, the retailer incurs no loss.

Additionally, since they deal with a large number of customers who complete their transactions through the iBotta app, the slight decrease in profit margins does not affect their overall net profits.

2. Shoppers save money by using the iBotta app.

Shoppers who previously spent hours looking for discount codes and coupons through multiple sites can now access anything they need via a single app.

Revenue Model of iBotta

The additional cashback on each purchase incentivizes users to complete the transaction through the iBotta app.

Additionally, users receive a $10 cash referral bonus if they recommend anyone to use the iBotta app using their iBotta referral code.

Thus, what does this mean for iBotta? It increases the platform’s user base!

3. With a larger consumer base, iBotta can negotiate better prices with retailers.

If more users enter the application, iBotta’s popularity among consumers increases and more customers expect retailers to be accessible via the app.

Consumer behavior continues to change, and consumers tend to shop only at stores that offer cash incentives.

This, in turn, encourages merchants to advertise on iBotta.

Additionally, the business gains an advantage in negotiating better deals with retailers when giving consumers higher cash incentives.

How Does iBotta Work?

To begin, follow these steps:

  • Sign up to iBotta.com
  • Select a category of purchase – Groceries, Lifestyle, or Online
  • Choose the retailer from which you want to make the order.
  • Now, choose the rebate you want to use.
  • Scan the receipt or barcode to establish the date of purchase.
  • Within 48 hours of order receipt, the rebate is applied.

All rebates and cashback earned via the app are directly credited to your PayPal or Venmo account as cash.

How Does The iBotta App Work?

Revenue Model of iBotta

You can earn money with iBotta by shopping in-store, online, completing specific tasks, or referring users to the platform.

1. Make routine online and offline purchases via the app.

The simplest method of earning money with the iBotta app is to use it. Maintain constant access to the iBotta app and browser extension on your phone and device. This keeps the sales in one convenient place for when you’re out shopping.

2. Complete the App’s tasks and activities

iBotta rewards users for completing small tasks such as watching an advertisement, viewing a print advertisement, reading through a recipe, answering a question, or reaching a milestone. Additionally, users receive a signup/welcome bonus.

The more tasks and goals you accomplish in the app, the more rewards you’ll get. As a result, you’ll save significantly more money!

3. Include Your Friends

iBotta is a highly recommendable app! If you’re saving money, why not assist your friends in doing the same? Simply create an account with iBotta and share your referral code with mates.

And for each new user you refer, you earn $10 in cash rewards! Additionally, you should give an iBotta gift card to friends and relatives!

That is yet another excuse to shop with iBotta.

They have a comprehensive guide to increasing your rewards and rebates when using the app on their blog.

Final Thoughts

iBotta is a legitimate rewards app that enables you to scan a QR code or barcode at a store to win money on your everyday purchases.

The best thing about shopping with the iBotta app is that I can use my credit card to make transactions and receive extra cash in addition to my credit card reward points!

Additionally, there is no catch. Simply make a purchase, confirm it in the app, and earn cash!

Frequently Asked Questions about iBotta

How does iBotta Generate Revenue?

iBotta works with retailers as an affiliate and receives a commission on all purchases made via the app. A portion of the commission is credited directly to the user’s Paypal or Venmo account as a refund.

Is iBotta really a money-making machine?

Yes, iBotta will credit your PayPal or Venmo account with rebates. iBotta users earn an average of $30+ a month, according to use discussions on their subreddit. Since they started using the app, one user has received over $13,000!

Is iBotta a better alternative to Checkout 51?

While iBotta rewards are automatically deposited into your PayPal account, Checkout 51 rebates are not. However, checkout 51 can be used at any store, which might be something worth considering. If you shop at a limited number of stores, iBotta can be an excellent app.

.If you enjoyed reading this article, please checkout Revenue Model of Gmail.

About the author

Madhav

Hey Folks, I am Madhav! I lead a team of Marketers at Tech Startup based in Australia. In my free time, I dissect the business models of various businesses. And if there's any free time, I cook some new Dish!