Online shopping marketplace, Flipkart has hiked affiliate payout fees to marketers on all categories that it offers. The timing cannot be missed – Last month, Amazon launched Associates, its affiliate program for marketers that pays 10% commission when visitors follow affiliated links from marketer’s website to Amazon.in and make a purchase.
Note that Flipkart mentions that the new affiliate payout is only for the month of July. It’s offering 10% payout on books as opposed to 6% that it offered previously. In comparison, Amazon offers 10% and Infibeam offers 5% affiliate payout fees on books. Flipkart has increased the affiliate payout up to 10% on all of the categories that it is currently offering on its marketplace. Note that, Flipkart affiliate pays out to marketers via gift card or EFT.
While the increase in higher affiliate payout must be taxing on Flipkart, we believe it was important for them to do so, specifically after Amazon’s entry in the Indian market. Amazon.in already offers a lot of books for much cheaper than Flipkart. Combine that with lower affiliate payout, website owners are bound to ignore Flipkart for affiliate earnings.
It’s not clear whether Flipkart plans to stick with the higher affiliate payout option after the promotional month. However, we feel if Flipkart wants to stay relevant in the ever competing E-Commerce business, it has to offer competing prices as well, considering that India is a very price conscious market.
Besides marketers, we believe the higher affiliate payout will also benefit price comparison and E-Commerce aggregators. In India alone there are plenty of price comparison engines such as CompareIndia, MySmartPrice, FindYogi, iShopper, CompareRaja, PriceDekho, ShopMania, PriceCheck, Prodsea, BearShop, ShoppingWish.in, and Buyt.in.
Update: Note that, in June 2012 Flipkart had changed their terms and conditions. As an affiliate, price comparison sites cannot feature Flipkart on price comparison, however, it can feature it in an individual deal or as a separate listing, where other players are not listed.
In February 2013, Flipkart launched its marketplace model after being reportedly being probed for FDI norms violation, although Flipkart had denied that any raid took place. Foreign Direct Investment in e-commerce has not been allowed in India, but marketplaces, which merely act as a space for sellers to find buyers for the products that they are supplying, and which don’t retail their own goods, can take foreign direct investment.
In August 2012, Flipkart was said to have raised $150 million from Naspers, ICONIQ Capital and existing investor Tiger Global. South African media conglomerate Naspers had invested 858 million rand (around $102.1 million) in the e-commerce major Flipkart in return for 10% stake bringing the company valuation to around $1.02 billion.