E-tail boom: Forget Flipkart and Snapdeal, investors are now wooing affiliates

The e-commerce bandwagon is not just marching ahead full steam, it has spawned several other businesses on the sides. One category, which refers to itself as e-commerce affiliates, has now even begun generating interest among VCs and angel investors as it expands.

We are talking about sites which offer discount coupons to biggies like Flipkart, Snapdeal and Amazon in India. And sites which call themselves comparison sites where price comparisons are made before a buyer goes on to purchase online. Some sites even offer cash back options instead of just discounts.

As e-commerce grows, these sites have started getting multifarious funding offers. The affiliates industry is ripe for consolidation already - the smaller guys will likely be bought over by the big daddies soon.

CouponDuniya.inclaims it is India's most popular coupon code website and helps users find the best offers on over 1800 e-commerce merchants. It has already been acquired by Times Internet Ltd and is now expanding operations overseas to Indonesia, Poland, Brazil and Turkey. It claims 3.5 million visits a month and serves coupons from more than 1800 online brands.

CEO Sameer Parwani says commissions from sales are expected to double to Rs 20 crore in FY15, with a huge boost coming from sales of e-commerce giants like Flipkart's Big Billion Day and now the impending Google Online Sales Festival.

The acquisition of couponduniya is positive for other players in the industry as has put the spotlight on the affiliates business. Rocket Internet, which has investments in Jabong and other e-commerce businesses, already owns couponnation and industry sources tell us it is looking to invest in more affiliates.

PEs like Bessemer Venture Partners, Matrix Partners and Lightspeed Venture Partners are believed to be interested in funding e-commerce affiliate sites and may already be in negotiations with top players in each segment.

In coupons, the top two sites are couponduniya and couponation; price comparison biggies are mysmartprice and Amazon's junglee whereas for cash back sites, the top contender is cashkaro.

Vivek Pahwa, founder of couponmantra and priceraja, says larger affiliates have already reached revenues of Rs 15-20 crore and he expects the affiliates model to gain scale rapidly from here. Pahwa is looking to raise $3-5 million by next year as the market expands and affiliates need to invest in brand building and technology to keep pace.

The coupon sites all work basically on the same principle: the e-commerce sites like Jabong, Flipkart, Snapdeal pay them commissions for each sale that happens through their discount coupons.

Swati Bhargava of cashkaro says Rs 5 crore was raised in the last round of funding from a group of UK-based angel investors and that she is looking to raise more than the last round, in a couple of months. "There is a lot of interest in this sector, we have already been approached by many VCs wanting to invest".

Unlike the coupon sites, the cashback ones claim to give customers better value-addition. Bhargava says her site shares commissions it gets from merchants with the customers and helps them get repeat customers as well as new ones.

Updated Date: Nov 28, 2014 14:49:46 IST