As the rush for profitability in the ecommerce market grows, e-retailers are increasingly shifting focus from commissions to other revenue streams. Advertising is the first proven step towards that. Globally, Alibaba generates more than 50% of its revenues from advertising. “Alibaba’s share of commission revenues is just 30% for its retail marketplaces, a factor that ranges up to 80 – 90% for other marketplaces,” says Abhishek Goyal, founder, Tracxn, a start-up data analytic provider. Amazon.com also earns close to $1 billion in ad revenues. No wonder then that major etailers such as Flipkart, Snapdeal and Amazon India are focusing on ad platforms to boost revenues.
Flipkart, which ventured into the online advertising space last year with product listing ads, launched its commerce advertising platform (Brand Story Ads) in March to deliver a holistic view of the consumer’s purchase journey post ad interactions. The Brand Story Ads was launched initially with 50 brands such as Intel and Microsoft. The number has touched 120 brands now.
Consider Snapdeal. It recently unveiled its next generation advertising platform, which enables sharper targeting for sellers based on customers’ browsing behaviour, geo-location and purchase history. Snapdeal sellers will now be able to curate ad campaigns for specific customer groups through targeted advertising. Sellers can even participate in auction-based buying of ad inventory, view detailed reports and simultaneously promote products through a range of different ad campaigns. “It has been close to one year since we launched the platform. Now it is available to our entire three lakh seller base. There are changes in terms of targeting and data-specific aspects. It is important for advertisers (brands and sellers) to know who are they targeting and from which geography customers are coming,” says Tony Navin, senior vice-president, partnerships & strategic initiatives, Snapdeal.
At Amazon India, advertising is a core part of the business strategy. “We do not see advertising as only a margin booster, but as a service that we offer to our sellers and brands to help improve their product discoverability and aid brand creation,” says an Amazon India spokesperson.
“For gross profit to be zero or positive in the near future, ecommerce players need to generate additional revenues from the current infrastructure in place. There have to be multiple revenue streams such as logistics or advertising,” says Ashish Jhalani, founder, eTailing India. “By introducing other services, ecommerce companies are, in fact, building a stronger ecosystem and increasing touch points with the ecosystem.”
In BrandWagon this Tuesday: Stepping up the VAS Game
