Snapdeal has abruptly suspended an incentive programme for customers that it employs through affiliates, highlighting the online marketplace’s struggles to conserve cash as fresh investments get tougher to secure.
The company, which is negotiating with existing investor SoftBank for more money, informed its affiliate partners early Friday that it will not be able to pay for orders and additional installations of its mobile application routed through them, effective immediately.
Snapdeal’s affiliate network comprises coupons, deal and cashback channels as well as blogs that bring in potential customers to website and mobile app. It pays commissions to affiliates based on the number of people who end up transacting on the marketplace.
“The Snapdeal affiliate programme is being recast to make it more effective and to drive higher (return on investment),” a Snapdeal spokesperson said. “… New plans will be shared over the next few days.” Snapdeal’s budget for affiliates is conservative compared to other marketplaces.
Typically, large online retailers allocate 15-20% of overall marketing budgets for such incentive schemes, which tend to peak during the festival season around Diwali in the final quarter of the calendar year. As for Snapdeal, according to its industry partners, the company spent Rs 4-5 crore on its affiliate channels around Diwali in October out of an estimated Rs 200 crore it spent for marketing centred on the festival.
According to industry data collated from various agencies and publishers, Jasper Infotech, Snapdeal’s parent company, was the second-highest spender on print and television advertising in the same period, next only to Amazon India.
“It is something routine that marketplaces do ahead of the close of the financial year or when the marketing budget for the channel is exhausted during the end of the month,” said Swati Bhargava, co-founder of deals and cashback provider CashKaro, which is a Snapdeal affiliate partner. “Freecharge (Snapdeal’s digital payments arm) has also paused its affiliate programme with us.”