Despite recording a good rate of sales, most of the leading ecommerce companies in India are running on losses. In an attempt to offset this, companies are resorting to different means. Some companies have introduced sponsored ads. Flipkart has its native ads, and Snapdeal has also followed suit.
Sponsored ads are the way to go
Amazon also reportedly runs sponsored ads where the company earns money based on the number of clicks. Snapdeal has recently launched Sherpalo, a platform for its sellers to record their experiences. Sherpalo will give its sellers single window access to on boarding, training, inventory, returns management, advertising and other services.
Shopclues provides value added services to its sellers. This contributes to 10% of its total income. Radhika Agarwal, chief business officer of Shopclues, elaborates, “Value added services include the micro site that we provide to our merchants, digital catalogue services, invoices, photo shoot services, market place to provide working capital, and marketing services.”
Attempts to regain traction through various means
International names like Amazon and Alibaba have their own practises in place to ensure sustainability in the midst of ensuring customer friendly practises. For instance, Amazon has a practise of charging $100 annually for special services. Alibaba has a B2B segment that provides close to 40% of its income.
It appears as though desperate times have called for desperate measures. The question remains whether running paid ads will help ecommerce companies break even. This measure is coming in the midst of losses that are running up to several crores.