Microsoft offers online shopping cash back

May 21, 2008 7:27:51 PM PDT
Stores use sales to attract shoppers. Microsoft will use cash back to lure online shoppers. It's a move designed to take business away from the internet's dominant site, Google.

It's an economic incentive Microsoft hopes will win over a lot of shoppers -- cash back ranging from two to 30 percent.

"This is giving you a reason why you should use a particular search, and you get some extra value back," said Microsoft chairman Bill Gates.

Microsoft has lined up 700 retailers, including some of the nation's best known, covering a wide range of products.

"In this particular economic climate, that's a great idea because that's what people really want right now is to save money," said Golden Gate University consumer psychologist Kit Yarrow, Ph.D.

Sandeep Aggarwal is an Internet tech analyst at Collins Stewart. He says Microsoft is mounting a major assault on the Internet's biggest shopping portal.

"This program is clearly designed to basically hurt Google. It's a very competitive move by Microsoft to really gain market share, and that market share will come at Google's expense," said Aggarwal.

Google currently has three times the market share of Microsoft, and 10 times more advertisers.

"Everybody's in the habit of shopping on Google, so Microsoft has to do something that gets people in the habit of at least considering that as an alternative site," said Yarrow.

Google could copy Microsoft's cash-back program, but that would be a radical change from its current model.

"They basically concentrate emphasis on producing the best quality search result, and Microsoft is basically putting economic incentive to basically ask people to use their platform to search," said Aggarwal.

There's a lot of money at stake. Online retail sales are expected to hit $335 billion in the next four years.

Internet users make close to four billion shopping related queries per month.


Load Comments