BuyWithMe acquires Edhance for cash-back rewards

The daily deal site is now getting into more specific, targeted purchases

Has the daily deal industry been satisfactorily sapped dry of any novelty or fun yet?  Quite possibly (unless you start getting into niche sites, like Exotic Deals, the “sexy Groupon”).  But one once-major Groupon competitor that has since fallen from glory, BuyWithMe, is taking an interesting new approach to staying relevant.  The daily deal site announced Monday that it has acquired Edhance.com, a cash-back rewards program for college students.  The terms of the deal were not disclosed.

Founded in 2009, the Cambridge, Mass.-based Edhance is a loyalty platform that allows users to register their debit or credit cards and get cash back when they make purchases at participating merchant’s stores.  Interestingly, one of those “merchants” was Groupon, which had a link displayed on the front page.  However, when you click on the link, it takes you to a cash-back program for BuyWithMe instead (because apparently BuyWithMe isn’t interested in promoting the competition).

A few weeks ago, we covered a similar cash-back startup called Zestii.  What the two have in common is the fact that the focus is not so much on deals and discounts (which have been thoroughly played out by now), but on cash-back rewards that give a small percentage of a customer’s transaction back to the customer’s account.  In Edhance’s case, you register your card and then when you make purchases online or in-store, your transaction is tracked and your rewards are automatically transferred to your Edhance account, which you can cash out when you reach $10 or $25 (whichever you choose).

In Zestii’s case, you register at the Zestii website and then shop through the website so that your purchases are tracked.  When I talked to founders Brian Quinn and Jonathan Wu back in June, I asked why customers will bother with the site when it’s a given that you’re going to have to spend a large chunk of money if you’re going to get any meaningful token prize back.  Why not just shop at a daily deals site and spend less in the first place?  Quinn and Wu pointed out that unlike daily deal sites, Zestii isn’t necessarily about discovery. It’s about shopping at your favorite brands’ sites and getting real cash back with minimal effort.

So it looks like BuyWithMe is looking to get in on that edge.  Daily deal sites are great when you want a deal on mani-pedis or pizza, but they’re pretty irrelevant when it comes to shopping at your favorite brands’ sites.  If I actually want something specific, like a pair of jeans from 7 For All Mankind, I’m not going to go to a daily deal site—I’m going to go to the 7 For All Mankind website (first, I’m going to go to a clothing consignment shop to see if I can find them at a cheaper price.  Then if that fails, I’m going to go to their website).

“This acquisition fundamentally changes the daily deal industry and is a true win for our merchants and consumers alike,” said Jim Crowley, CEO of BuyWithMe. “The daily deal model is an incredible demand generation tool for merchants, but until today the industry has failed to provide merchants a means to create, manage and measure not just deal results but ongoing customer loyalty, reward and engagement programs post the initial promotion.”