Cash-back sites can help you to save this Christmas

American online retail giant Amazon will launch in Australia in a matter of days, just in time to make a splash in the retail spending frenzy in the lead-up to Christmas.

Amazon could generate $200 million in sales in December alone and drive discounting of prices across Australia's retail market, say analysts at Citigroup Global Markets.

But most Australians are not aware there is already a simple way that big savings can be made on expenditure across almost all kinds of products and services.

Cash-back sites are popular overseas, particularly in the United States, to the point where people will only buy their favourite brands through cash-back websites.

The websites have deals with retailers where, in exchange for delivering customers to the retailer, the retailer pays commissions to the cash-back website, which hands most of it to the purchaser.

The purchases can have the cash-back paid into their bank account or buy a gift card or an e-voucher from one of the website's partner retailers.

To qualify for the cash-back, the purchaser needs to access the retailer's website directly from a link on the cash-back website so that the retailer can keep track of where to pay the commission.

Cash-backs

The level of cash-back depends on the retailer, the type of product and how much of the commission is rebated to the purchaser, but it can be up to 30 per cent of the purchase price.

For most products it's between 2 and 8 per cent.

Despite the potential savings, a poll of 1132 Australians by comparison site Finder reveals one in three respondents have never heard of a cash-back websites.

Of the the 17 per cent who say they have used cash-back websites, about one in three say their experiences are great and they enjoy the savings. A further one in three say receiving the cash back was not always a smooth process. The remainder use the sites infrequently as they don't always like the deals.

It is expected the presence of Amazon in Australia will grow online sales, probably to the benefit of cash-back sites.

Andrew Clarke, founder and chief executive of Cashrewards, a cash-back website, is expecting the launch of Amazon will grow overall online retail sales to 15 per cent within five years from 7 per cent now.

Citi analysts believe Amazon will likely make its Australian debut with a narrow product range, given the timing of the launch, centred on traditional gifts like toys, electronics and clothes.

Cashrewards is the only Australian loyalty-type site to have Amazon.com as a partner.

Clarke is keeping tight lipped on whether Cashrewards will be continuing the partnership following Amazon's Australian debut.

Cashrewards, which has the largest turnover of any Australian cash-back site, and the other half-a-dozen Australian sites pay the cash-backs in addition to any coupons, sales or discounts that already appear on the retailer's website.

As the purchases are made on the retailers' websites, they are subject to the usual terms and conditions of the retailers.

Be aware of risks

Bessie Hassan, money expert at Finder, says shoppers should be aware of some downsides of cash-back sites.

"In some cases, you can wait up to 90 days to receive your cash - it may not seem like a long time, but if you're relying on the money a particular occasion or because you're on a tight budget, it can really put you out," Hassan says.

And she has a warning on gift cards generally, whether taking one in lieu of cash rewards or buying one as a Christmas present.

"The motto is spend it or lose it and there's nothing more frustrating that finding that the gift card has expired," Hassan says.

Ray Ridgeway, the managing director for Australia of WorldFirst, an online money transfer service, says when buying online, check on the delivery times and the costs of delivery, particularly when buying from overseas.

Also watch for the fees and exchange rates when purchasing overseas as, sometimes, whatever discount or cash-back you are receiving could be more than offset by the costs of getting it to Australia, he says.

There are always risks when purchasing from online "retailers" that are not well known.

The Australian Competition and Consumer Commission (ACCC) says in the three months of this year, the latest available data, there were more than 1000 complaints made to the it about fake online shops.

"Scammers set-up fake websites that look like genuine online stores, including professional-looking design, stolen logos, and even a '.com.au' domain name, says Delia Rickard, the deputy chair of the ACCC.

They even use stolen Australian Business Numbers (ABNs).

"The scammers running these sites will advertise goods, often well-known and trusted brands, at unbelievably low prices to lure in unsuspecting consumers shopping around for a good deal." Rickard says.

The ACCC says when using retail websites, find out exactly who you are dealing with. If it is an Australian company, you are in a much better position to sort out the problem if something goes wrong.

Australian Business Numbers can be checked at https://abr.business.gov.au.

The regulator advises that when making online payments, only pay for items using a secure payment service - look for a URL starting with 'https' and a closed padlock symbol, or use a payment provider such as PayPal.

Young family makes big savings

With three young children, Brett and Janette Rowcliff are on the lookout to save money on their shopping and their Christmas spending any way they can.

The family from Glenhaven in north-western Sydney is saving by making purchases though a cash-back website called Retail Rewards Club.

For example, they save $7 each time they fill up their car with petrol and save about $20 each time they do their grocery shopping.

Brett and Janette will be doing some of their Christmas shopping on the cash-back site and will also be buying camping equipment for their upcoming family holiday on the South Coast.

"I will admit I was sceptical at first, thinking there must be a catch," says Brett, a 42-year-old graphic designer.

"It's really easy to use. We log into the website and then it takes us to the website of the retailer.

"With groceries, I can buy a card online and load it with money and then take it to the supermarket."

As all the transacting is done through the retailer, if Brett pays with his rewards credit card he receives rewards points as normal.

Once $10 in cash is accumulated he is able to transfer the money from the site into his account.

Bek Darmody, founder and chief executive of Retail Rewards Club, estimates that on a basic scenario that includes the typical spends on groceries and petrol, families could make savings of at least $2000 a year.

This story Cash-back sites can help you to save this Christmas first appeared on The Sydney Morning Herald.