E-COMMERCE FIRMS LOOK TO ADS FOR REVENUE

To generate additional revenues, e-comm giants such as Flipkart and Snapdeal have turned to advertising

MOBIKWIK, which started soliciting advertisements in September last year, claims to be making monthly advertising revenue of R20 lakh. The company has tied up with Google and InMobi as its advertising partners. MobiKwik sells space to merchants and third-party sellers too.

“We expect advertising to contribute an annual is ed income of R2.4 crore this financial year and are looking at a four-fold increase by FY17-18,” Upasana Taku, co-founder of MobiKwik told FE.

The traditional revenue model for e-commerce companies is the commission they earn on a transaction made on the platform. However, the lower than anticipated revenues has prompted companies to explore alternate revenue streams. In FY15, the top three e-commerce companies - Flipkart, Snapdeal and Amazon India — reported total losses of about R5,000 crore.

To generate additional revenues, e-commerce marketplaces such as Flipkart and Snapdeal have turned to advertising and other promotional activities. Industry experts expect advertising to contribute 4-5% to total revenues.

In March Flipkart launched its in-house advertising platform – Brand Story Ads with 50 brands on board that include Yes Bank, Intel, L'Oreal, and Micromax, among others. The interactive ad platform allows sellers to use images and product guide for marketing their products. The service is available for the e-retailer's vendors and third-party sellers too. According to industry estimates, monthly advertising revenues are close to R5-7 crore.

Snapdeal which unveiled its ad platform – Snapdeal Ads in May — exclusively for vendors, claims that about 30,000 sellers are using the platform. Snapdeal Ads is expected to generate monthly revenues of R1-1.5 cr ore, people aware of the matter told FE.

Food discovery and delivery player Zomato had launched advertisement space as one of its core business offerings. Zomato Media clocked R96 crore as advertising revenue for FY15, according to RoC. Of the total revenues of R113 crore, 85% was derived from advertisements. “In FY16, Zomato's advertising business is growing 11% monthon-month,” Deepinder Goyal, founder and CEO of Zomato told analysts during a conference call. “We have about 70,000 restaurants listed in India right now and the paid listings are going to be a roughly close to about 6%,” he added.

Google and Facebook dominate the online advertising space but in the e -commerce domain, Alibaba and Amazon are not far behind. Alibaba is generating 30% of its revenues from commission while advertising fetches 55%, according to Tracxn's Abhishek Goyal.

Amazon.com doesn't disclose its advertising revenues but market research com pan ye Market er has projected this will grow 33.5%. The company estimated the advertising revenue for 2014 close of $1 billion.