Swagbucks is riding its rare Amazon affiliate partnership to a record quarter

By Michael Carney , written on December 17, 2012

From The News Desk

Economic indicators alone might suggest that the US exited the “Great Recession” long ago, but many consumers have found it hard to forget the bad times. Rather than dollars returning to traditional retailers that were flush with business before the downturn, coupon, daily deal, and incentivized ecommerce sites have been increasingly popular. The takeaway is that there’s been a fundamental shift in consumers’ relationship with spending.

In short, Americans are all about the deal. And Swagbucks, which claims to be the largest rewards and loyalty shopping site on the Web with 6.7 million users, is having the highest traffic quarter in its four-year history.

Swagbucks launched its Shop & Earn platform in early November, allowing consumers to earn rewards redeemable for ecommerce gift cards by shopping at popular online retailers like Target, WalMart, Nordstrom, Disney, and OpenSky. There’s a reason I previously called it the “Housewife Currency,” as the new rewards experience was extremely popular with this core demographic, leading in part to the recent uptick in traffic.

This said, there was initially a big hole in the Swagbucks offering. Members of the site overwhelmingly chose to redeem their Swag Bucks for Amazon gift cards, yet they had to leave the site in order to redeem them – if they alternatively chose to receive Target or WalMart gift cards, those could be spent within the respective SwagBucks affiliate stores, earning more rewards while doing so. But as of hours before Black Friday, this all changed.

On the eve of the biggest shopping day of the year, Swagbucks became just the fourth Amazon cash-back affiliate partner anywhere. As a bonus, the company doubled its standard rewards offering, giving consumers six Swag Bucks for every $1 spent in the Amazon affiliate store (through the end of 2012). With 450 Swag Bucks equating to a $5 Amazon gift card, this translates to 6.67 percent cash back on every purchase. It may not seem like a lot, but for shopping that would happen anyway, it’s a solid incentive.

By comparison to Amazon’s current 6:1 “Swag Bucks earned to dollars spent” ratio, the current ratio in the Target Shop & Earn store is 3:1, WalMart’s is 4:1, and OpenSky is a whopping 40:1. The company regularly adjusts these ratios to manage the transactional volume sent to each of its partners and to capitalize on the different partnership economics with each.

Currently, Swagbucks members can redeem coupons and earn rewards for shopping in six product categories on Amazon’s site: Jewelry, Clothing, Watches, Handbags, Shoes, and designer clothing and home goods market MyHabit. Noticeably absent is consumer electronics, but the category mix is likely to change on a regular basis – as is the Swagbucks reward ratio. Now, with the new partnership, loyal Amazon shoppers can create a viral loop, using their rewards to buy gift cards that can then be spent to earn more rewards. Swagbucks is notably the only Amazon affiliate partner that can offer this virtual shopping and rewards-earning cycle.

Shopping isn’t the only way to earn Swag Bucks. The startup also rewards users for every day online activity such as searching the Web, watching videos, taking surveys, or playing games. Users can even trade in new or used merchandise, such as clothing, books, or video games, for additional Swag Bucks, all of which can be redeemed at any of the company’s Shop & Earn partners and many other offline retailers.

There are endless retailers vying for consumer attention online. Between daily deals giants Groupon and LivingSocial, competing rewards platforms such as eBates, and direct to consumer promotions from the brands and retailers themselves, mindshare is at a premium. What few of these competitors can offer, however, are incentives at the world’s most popular ecommerce marketplace, let alone the ability to earn additional rewards while spending. This alone is likely to keep the site near the top of consumers’ list of favorite money-saving destinations.

When Swagbucks launched Shop & Earn on November 1 – pre Amazon – the site had already issued 5 million total rewards worth more than $30 million since 2008. Given that this is reportedly the largest quarter in its history, in no small part due to the “Amazon effect,” expect that number to jump significantly by the new year.

[Image courtesy wikimedia]