Trend of cash back on online bus booking, hotel and air ticket

Trend of cash back on online bus booking, hotel and air ticket
Highlights

Suresh Chawla of Mumbai decided to go for a vacation and bought four air tickets from Jet Airways and paid Rs 24,000 from their Paytm wallet. After three weeks they were shocked to find Rs 5000 coming back as cash back in their e-wallet of Paytm. They again used that money to buy groceries for 2 months and again got Rs 500 as cash back from Paytm. 

Introduction
Suresh Chawla of Mumbai decided to go for a vacation and bought four air tickets from Jet Airways and paid Rs 24,000 from their Paytm wallet. After three weeks they were shocked to find Rs 5000 coming back as cash back in their e-wallet of Paytm. They again used that money to buy groceries for 2 months and again got Rs 500 as cash back from Paytm.

What is cash back and its present effect on travel industry?
According to a report published by Google, by the end of the year 2016 about 8.4 million Indians will book hotels through online, helping to generate revenue of around $1.8 billion. Between the year 2011 to 2015, search queries about hotel bookings through smart phones have grown by almost 30 times.

Cash back is an incentive program offered by online marketing sites where a portion of the money spent is send back to the e-wallet of the account holder. He or she can use that amount for his next purchase. The increase in global cash back trend in online purchases can be seen from the huge growing size of the industry. In the year 2015, global cash back amounted to $84 billion plus and many companies offering cash back have come up in different countries. In India, there are 35 such sites, the leading one among them being Paytm and Freecharge.

That’s why the fastest growing mobile wallet sites like PayTm besides selling mobiles, computer accessories, automotive, apparel, shoes, home decor and health care items, stepped in the huge market of services like booking of hotels, air tickets and other travel related products.

Having a registered Paytm wallet can offer you loads of other benefits as well. If you upgrade you Paytm wallet this will ensure you cash-backs you get by buying air tickets or hotel bookings using Paytm coupons. A portion of the money spent will be sent back to your e-wallet so that you can come back again for repurchase.

What are the customer benefits?
As a result, these websites are fast becoming popular these days mostly due to its unbeatable cash back offers. Getting cash back using the Paytm coupons is attracting large number of customers going for travel bookings. Regular travelers can save a lot of money with the help of the amount deposited in their e-wallet from cash back offers.

Indeed, to save some money on train tickets, or air ticket bookings Paytm has partnered with some travel websites to offer you up to 15% cash back. You can also book your vacation destination through Paytm wallet and enjoy the cash back amount in making other necessary household purchases. You need not have to fight with the vendors making unnecessary arguments in order to get some reduced price.

After booking six air tickets, you can get the seventh ticket free by spending the amount accumulated in the e-wallet from cash backs.
This is also a huge benefit to the customers also as travelling is becoming costly now-a-days, in whatever mode you do so. Hence a survey report says that 71% of the online purchasers using Freecharge coupons look for cash back offers and 64% of the online consumers prefer to stay loyal to a site which offers cash back rewards program. An online purchaser said that it is like an icing on the cake and the funniest part here is that the ice never melts.

How is the industry benefitted?
The company has started getting the fruits as 50-60% of the customers of PayTm are repeat customers. With their aggressive online marketing strategy, the company wants to increase this percentage further. As a result, these companies are shifting from daily deals and discount coupons to cash back offers as the consumers booking hotels and train tickets are finding the latter to be more lucrative.
From the company’s point of view, giving cash back offers is the easiest customer retention strategy. In fact the deals which the different airlines used to give once upon a time are not attracting customers, but they are being taken away by the cash back options given by PayTm or Freecharge coupons.

Last year Paytm spend around Rs 600 crores on cash backs and this helped to get prepayment on 95% of their booked orders. This has reduced the cash on delivery risk exposure to only 5%. Company is planning to increase it to 99% in the next year.

Keeping this rising trend in view, Snapdeal acquired FreeCharge which is another online cash back site last April at a whopping price of Rs 2400 crores. It has partnered with ePaisa that will offer consumers a direct access to more than 1000 hotels across India. You can choose the hotel within your budget and enjoy your stay at a lesser price.

Chief Operating Officer of FreeCharge Mr. Govind Rajan, claims their initiatives are aimed in order to enable consumers make payments everywhere, both offline and online through Freecharge coupons.

Ecommerce sites like Paytm and Freecharge are revolutionizing the travel industry using internet and mobile apps. The total revenue earned from bus travel industry in India (both organised and unorganised) is approximate more than Rs 61,000 crores whereas the private bus travel market is nearly Rs 17,000 crore with only 10% online penetration.

These sites have also tapped the middle class segment offering cash back on bus booking for long distance travel. With the rising trend of online bus ticket booking among present generation travellers Mobile wallet sites are expecting this will grow up to 40% by 2018. Whereas state-run bus travel market approximately earns Rs 44,000 crores with just 5% online penetration and this is also expected to increase up to 20% by 2018.

According to media reports Paytm which has entered the online bus booking segment in recent times, claims their cash back Paytm coupons are drawing nearly 20,000 bus bookings every day on the e-commerce platform and the trend is still showing an upward trend.

Conclusion
Approximately Rs 81,525 crore values of online transactions took place in India during 2014, out of which more than Rs 50,000 crore worth revenue was generated in the online travel segment, according to the IMAI. As Paytm and Freecharge join their hands with the offering of lucrative cash back deals, it is easy to predict their consumer reach and how much the revenue is going to jump in the coming years.

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