Wednesday 2 March 2016

Affiliates upset as Snapdeal reduces commission payouts

Affiliate marketing companies have played a major role in generating traffic for online marketplaces such as Flipkart, Amazon, and Snapdeal. The year 2015 was a great example of how couponing and affiliate marketing have contributed significantly to the Indian ecommerce industry’s growth.
Therefore Snapdeal’s decision to reduce commission on its highest selling category (mobile phones) hasn’t gone down well with affiliate marketers, and rightly so.

Affiliates are earning as low as 0.1% commission from Snapdeal

While Amazon India offers 4% commission on consumer electronics, Flipkart gives 2% for existing customers and 4% for sales via app with no cap on number of monthly transactions.
On the other hand Snapdeal’s commission in the mobiles & tablets category for existing customers is 1% (upto 2,500 transactions) and 0.1% for transactions above 2,500. The more orders the affiliates bring, the lesser the commission!
Simple maths tells us that coupon companies end up earning way more from Amazon andFlipkart as compared to Snapdeal.

Is this Snapdeal’s way to increase profits?

IOS had earlier discussed how popularity of coupons is preventing etailers from curbing deep discounts. Ecommerce leaders want to reach profitability as soon as they can and discount is one of the major hindrances.
So is this Snapdeal’s strategy to gradually phase out discounts by reducing affiliate commissions and increase profit margins?

Will Amazon and Flipkart gain from it?

Of course, they will!
We have already talked about couponing and affiliate marketing’s contribution to ecommerce sales. With the discount-centric ecommerce industry that we have, it will continue to be relevant at least for the next few years.
As of now owners of coupon sites are trying to amicably resolve the situation by talking, discussing and negotiating with Snapdeal. If talks fail, then affiliates won’t mind focusing their energies on Snapdeal’s arch rivals Flipkart and Amazon.  

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