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.  

Investor Morgan Stanley devalues Flipkart to only $11bn

Leading ecommerce company, Flipkart has landed itself in boiling water. Morgan Stanley, one of its main investors, has devalued its investment in Flipkart. The US based financial services company has cut down the value of its investment in Flipkart by nearly 27%.
Morgan Stanley has put the value of each Flipkart share at $103.97 per share, down from $142 per share in the previous year. Thanks to this move, Flipkart’s total valuation now stands at $11 billion. The company was earlier claiming to be valued at $ 15.2 billion.
‘An accident waiting to happen’
According to Haresh Chawla, a partner at venture capital company India Value Fund, the devaluation was bound to happen because of inflated valuation.

He says, “That these valuations were hyperinflated was known and it was a matter of time before reality struck.”

Mohandas Pai, who was a part of Infosys, and is currently juggling multiple roles including chairman of Aarin Capital Partners, concurs with this view.

His thoughts are grim, “These downgrades will happen in e-commerce till there is proper business model. The euphoria of fundraising at high valuations have to come to some reality and the current model of business is unviable because of the discount led model and high returns.”

Why this devaluation?
Debabarat Mishra, director at Hay Group says that there could be three reasons for Morgan Stanley’s move:

• Increasing losses
• Limited capital
• Revision of the outlook for the Indian economy

In its report, Morgan Stanley states, “The e-commerce market was dominated by the three large general merchandise companies in 2015, with a combined GMV market share of 83 per cent. Snapdeal, Amazon and Paytm have all raised their competitive intensity to close the gap with Flipkart.”

Surprisingly, the company had stated in a report that the combined GMV of the three leading ecommerce companies (Snapdeal, Amazon, and Flipkart) is higher than the ten leading offline retailers.
Morgan Stanley however, maintains that while the three companies have more business than offline retailers, they face stiff competition from niche players online.
‘Not putting up a fight’

Haresh Chawla feels that Flipkart is not fighting hard enough for its turf. He says, “Flipkart is an A-class act, but somehow seems to have wandered off the path over the last couple of years and has yielded market share to Amazon without putting up a major fight.” Chawla also points out that funding is now going to be a problem, “the issue is whether venture capitalists have the appetite and patience or will these companies have to go hunting for capital elsewhere.”

Craftsvilla acquires ethnic food etailer; regional competition heats up

Online marketplace for ethnic products, Craftsvilla has added a new category to its product portfolio- Ethnic Food. It has managed to do this by acquiring food etailer Place of Origin.
The food start-up was founded by Ashish Nichani and Sudarsan Metla in 2014. It sources Indian sweets, confectioneries and other food items from across the country, such as Moddys Ooty’s Chocolates & Pune’s famous Chitale Bandhu Bhakarwadi and ship the orders to buyers.

Craftsvilla wants to be one-stop-shop for everything ethnic

The acquisition is aligned with Craftsvilla’s aim of becoming a one-stop shopping destination, with respect to traditional Indian produce, be it clothes, jewellery or food.

“Craftsvilla’s vision is to build a one stop destination for consumers to buy everything ethnic. We believe that ethnic foods is as big a category as ethnic wear with upwards of Rs. 50,000 Cr. market size and we are looking at ethnic foods as another frontier of growth in ethnic space. Ethnic foods category is very unique with lots of regional variety and is very unstructured,” reiterated Manoj Gupta, co-founder & CEO of Craftsvilla

While explaining how the food etailer will help it to increase its market share in the online ethnic segment, Gupta said,

“Place of origin has been working in this category for last two years and has been able to bring lot of regional varieties online and address key logistics challenges in this space. We look forward to utilizing their experience and our reach to make this a huge category of Craftsvilla.”

How much this equity deal cost Craftsvilla has not been revealed nor it is clear if Place Of Origin will continue to function independently or will get merged in the online marketplace platform.

Online regional stores gaining pace

Migration and globalization has led to huge demand for regional/cultural products and ecommerce is helping to bridge that gap.
Besides Bangalore-based Place Of Origin, there are other players too like Giskaa that sells North-east products, Kashmirbox for Kashmiri products, Gujarati snacks etailer Farsankart and curated online shop, Jaypore.
However, Craftsvilla remains the leader of the ethnic ecommerce market. In the past one year, the marketplace has managed to secure $52 million funding ($18 million in April 2015 and $34 million in November 2015), has started off Image Search feature, rolled out experience stores and offered loans to sellers.
Therefore, it’s quite possible that regional players may have to collaborate with ethnic leaders like the Craftsvilla-Place Of Origin merger, in order to sustain in the highly competitive ecommerce industry.

Place Of Origin founders are quite pumped up post-acquisition exclaimed, “We believe there is an online demand potential of $5 Billion which is waiting to be tapped. We are excited to work with Manoj and disrupt the specialty food market, thereby providing genuine value & happiness to consumers and producers alike.”

Reliance to launch fashion portal AJIO.com; roping in 1,50,000 sellers for its online marketplace

A fashion ecommerce portal and an online marketplace are soon going to be added to the list of companies Reliance Industries owns in India. Chairman of the company Mukesh Ambani expressed that several ecommerce initiatives are in store for its next phase of growth.

Fashion portal AJIO soon to go live

Taking Reliance’s Jio brand further, the company is developing a fashion ecommerce site AJIO.com, according to reports.
Curated fashion labels from across the world besides handpicked local designs will be showcased on AJIO. International brands from Australia, Russia, Singapore, Turkey, the US, and many others nations will get listed on the portal. Some of the rumoured brands which will be made available to buyers are said to be Holster of Australia, Gizia of Turkey and MDS Collections from Singapore.
Reliance’s existing wide retail network will assist its ecommerce platform by handling deliveries and returns.

To sign up 1.5 lakh vendors for its differentiated e-commerce model

Besides launching a fashion site, the company also plans to open a full-fledged online marketplace, just like ecommerce leader Flipkart. For the same, they are looking to onboard 1, 50,000 small and medium sellers.
Right from high-margin fashion products, fast-selling electronics and low-margin-but-growing online grocery segment, Reliance Industries want its presence to be felt in the online retail world.

Ecommerce dream of the Ambani brothers

Last year, Mukesh Ambani had declared how his company is planning a big push in the e-commerce segment. With this fashion site and online marketplace, he is marching towards the ecommerce dream.
On the other hand, his younger brother Anil Ambani has also entered the ecommerce industry but from a different route. In January this year, Reliance Commercial Finance, part of Anil Ambani-owned Reliance Capital tied-up with Snapdeal to provide supply chain financing to e-commerce vendors. The company is also in talks with Flipkart and Amazon for similar business arrangement.
While Mukesh Ambani is planning to compete directly with top etailers Amazon, Flipkart, and Snapdeal, Anil Ambani is collaborating with the existing ecommerce leaders. Whose ecommerce strategy will win and who will fail? Let’s wait to find that out.

Shopclues’ latest ad campaign likens the site to a bazaar; brings in fresh perspective

Funky and new is the order of the day. Shopclues has launched a brand new fun ad campaign titled ‘Mallnahimarket’ (it’s not a mall, it’s a market). The latest ads, created by Enormous Brands, a Mumbai based ad agency, is an attempt to reach out to the bargain-happy Indian shoppers. Shopclues is trying to disassociate with the concept of the online marketplace being a sophisticated mall, and convey that it is more like an Indian bazaar, where bargains are the order of the day.

Ashish Khazanchi, Managing Partner of Enormous Brands says that the campaign is all about speaking in a colloquial manner, “shopping at a market is a more culturally-rooted experience for most Indians. ShopClues has always drawn a parallel to bazaar experiences that appeal to the masses. #MallNahiMarket aims to meet consumer expectations and does so in a relatable and colloquial tone and manner.”

It is a market, and it is good on your pocket

The two taglines that Shopclues is highlighting in this campaign are #good on pocket, and #mall nahi market. The ad’s jingle goes, ‘yeh mall nahi hai, market hai, yeh good for the pocket hai’ (it’s not a mall, it’s a market, and it’s good for the pocket).
Nitin Agarwal, AVP of marketing at Shopclues, says the idea of the campaign is to highlight the company’s Unique Selling Proposition (USP).

He says, “Through the new ad campaign, our key endeavour is to reinstate ShopClues’ brand positioning as the ultimate marketplace for the value-conscious shoppers. We want to emphasize on replicating the bazaar-like familiarity and experience on online and mobile platforms. On our platform customers can expect the biggest product range and price points that remind them of their favourite markets. This USP of our brand is what we wish to drive home through our latest TVCs.”

Creative campaigns to reach out to shoppers

Everybody is trying to reach out to the inherent spirit of the shopper. Amazon is aggressively trying to hit a note in its recent campaign, which uses local phrases to reach the shoppers. Flipkart is also bringing in the human element in its latest campaign, titled ‘#EveryoneOnFlipkart’.
Having a striking element in an ad campaign is more likely to ensure brand recall with the buyers. One such example is the Amul moppet. The idea has been so seamlessly brought together with the brand that it is impossible to think of Amul without the chubby little girl with her witty observations on current affairs.