Making every penny count when you shop online: The story of Pennyful

Making every penny count when you shop online: The story of Pennyful

Tuesday October 01, 2013,

4 min Read

Recently we carried a story about the trend of entrepreneurship in early twenties, catching up in India. Ravitej Yadalam had started when he was only 23 in 2011, and currently the startup has generated close to $2 million in sales for its affiliate partners. Pennyful allows customers to make the desired purchases by directing them to the online retailer's site and availing of the cashback offer. This is over and above the ongoing discounts and coupon deals.

Evolution and genesis of Pennyful

Yadalam felt in love with entrepreneurship when he was only 13, and by 18 he sold his first product online - a cell phone. The experience resonated with him in three different ways. Firstly, the buyer came from Germany (many miles away from his home in Bangalore, India); secondly, he had never before received a check in the mail. In fact, at that time he didn't have a cell phone to sell! He simply bought one with the money he received from his German customer and shipped it to him. He saved a modest margin for himself and that prescient experience became the inspiration for Pennyful.

“This experience showed me, very early on, how the internet breaks all barriers of geography, and that there is an immense opportunity on the web for creative and innovative business strategies,” says Yadalam . Following his first internet sale, Ravitej began tinkering with the e-commerce model. Over time, he discovered that affiliate marketing – selling top online retailers’ products through a third-party platform like Pennyful, has huge opportunity when tied to an established brand because it eliminated any lingering concerns customers may experience.


In the beginning, Yadalam came up with the idea of launching a cashback portal in March 2010, after graduating from the RV College of Engineering in Bangalore. However, he also registered a subsidiary company - Pennyful in the US. Yadalam bootstrapped with a seed capital of Rs 3-4 lakh, helped along by his business-oriented family.

Initially, bagged only 50 partners, but collaborations with the likes of Sony, Barnes & Noble, Adidas, Banana Republic and Air France followed soon. Currently, it boasts over 4,000 partners and a turnover of around Rs. 7 crore. Pennyful offers real cash back to shoppers who shop through its site. ‘Quite simply, we pay our shoppers to shop at any of our online partner stores by going through Pennyful,” adds Yadalam.

Traction and so far challenges

Traction on both platforms, has been really significant, says Yadalam . “As of now, Rs.71, 41, 787 has been earned by our customers as cash back and we have generated close to $2 million in sales for our affiliate partners this 2012-2013 period,” adds Yadalam. The company had recently launched Medicash, which provides cash back on medical services, aiming to tap mostly those customers who do not have a medical insurance.

The company is now present across 11 cities and has partnered with 80 companies including the likes of Apollo Hospitals and Fortis. “Growing at a rate of 60% month-on-month - is the only healthcare program in India to have the Top 5 corporate hospitals on board (Fortis, Apollo, Manipal, Cloudnine & Sparsh) as partners offering cash back to its users,” adds Yadalam .

Presently, almost 75% of the medical spend happen out of the pocket, which essentially means, most of the people don’t have a medical insurance (big opportunity for Medicash). Also, for the ones who do have medical insurance, Medicash could prove beneficial as services like pharmacy, fertility, weight loss as these services are not included under insurance cover. Medicash typically offers cashback ranging between 4% to 35%. It’s free for users but charges the healthcare partner that it has tied up with based on every transaction and shares it with end users as cashback.

Ecommerce in India is in nascent stage points out Yadalam, “While an average Pennyful consumer spent $1,200 in the US and an average Indian consumer’s spending was at $200 last year and the frequency of transactions in the US during a given period of one year, however, remained almost the same as his Indian counterpart,” concludes Yadalam.

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