During the company’s conference call announcing its Q1-FY13 results, Rediff CEO, Ajit Balakrishnan informed that Rediff’s India online advertising business was negatively affected by the continued weakness in the the banking, financial services, insurance and consumer electronic segments, however its e-commerce segment witnessed good traction with increased transaction volumes and improved margins.
– On Reduction in Advertisement revenues: Balakrishnan stated that advertisers in India have cut down their overall advertising spent, especially in the banking, financial services, insurance, media and consumer electronics categories, which negatively impacted its ad revenues. Further, rupee depreciation against the U.S dollar, further hurt its ad revenues resulting in a 6% decline QoQ. Balakrishnan said that the company is continuously making changes to its offerings and pricing models for its key market clients in the FMCG, Auto and Consumer Electronics sectors and it plans to roll out these changes for all their clients across 23 Indian cities it currently serves, over the coming quarters. The company believes that it can level off some of its weakness through these changes based on the initial feedback from its advertising partners.
– E-commerce: Rediff has increased its vendors by 28% to 510 vendors from 400 vendors in the previous quarter and increased its product range by 38% to 138,000 SKUs from 100,000 SKUs in the previous quarter. The segment revenue has increased by 32% and the number of orders delivered has increased by 20% QoQ. The company’s margins have also slightly increased to 12% from 11% in the previous quarter while its e-commerce revenue, which includes margin and shipping recovery has increased 138% YoY.
Balakrishnan said that the company recently introduced several enhancements to its online shopping portal, which include offering product recommendations, providing better ranking of its products and fine-tuning its search results based on user actions. It also introduced an enhanced rendered panel for merchants allowing them to make corrective actions like updating their catalogues with new products and offers in real-time. Going forward, Rediff intends to further improve the discovery part of its online shopping portal.
– VuBites: Balakrishnan said that the company has made good progress in its local TV advertising service and the service is currently available on two national channels including NDTV Good Times and Zoom, and in the local markets of cities like Delhi, Bombay, Pune, Ahmedabad, Baroda, Surat, Mysore and Bangalore. The company plans to introduce these services to six additional metropolitan regions like Indore, Nagpur, Jaipur, Chandigarh, Amritsar and Ludhiana in the next two or three quarters.
– India revenues: Rediff CFO, Swasti Bhowmick, informed that Rediff’s revenues from India Online decreased 37%(in dollar terms) closing at $2.79 million. This includes $1.86 million online advertising revenues and $0.93 million fee-based revenues. While online advertising revenues declined by 45% YoY, the fee-based revenues declined by 8% YoY.
– Fee-based Revenues: The fee-based revenues includes revenues from its local deals offering which increased by 109% in rupee terms, and revenues from its Mobile VAS which declined by 49% due to TRAI’s guidelines on Spam SMS.