Online Indian Media business Rediff.com has reported its 19th straight quarter of losses, despite India Advertising revenues increasing 9% quarter on quarter to $2.33 million, a third consecutive quarter of increase.
The increase was att...
Online Indian Media business Rediff.com has reported its 19th straight quarter of losses, despite India Advertising revenues increasing 9% quarter on quarter to $2.33 million, a third consecutive quarter of increase.
The increase was attributed largely to an increase in spends by clients in the Banking, Financial Services and Insurance industries (BFSI) segment – which is normal in Q4 because the insurance sector increases advertises to target Indian taxpayers who buy insurance to reduce tax at the end of the fiscal year; Telecom, Education, Tourism and Real Estate sectors apparently increased spends as well, but “The auto industry have not been visible at all in the last six months,” Ajit Balakrishnan, Chairman and CEO of Rediff told MediaNama. Rediff had 207 advertisers, he said, adding that advertising rates have been stable during the quarter. Advertising levels, though “are still lower than pre-recession days.”
Ecommerce
Rediff reported net ecommerce revenues (i.e. not value of goods sold) of $0.6 million for the quarter, up 19% quarter on quarter, and 105% year on year. The year on year growth in net revenues the previous quarter was 95%. Some back of the envelope calculations that we did:
- Gross revenues should have been $5 million for Q4-FY13 (since gross margin = net revenue/gross revenue).
- Net revenue for Q3-FY13 should have been $0.5 million.
- Net revenue for Q4-FY12 should have been $0.29 million.
- Net revenue for Q3-FY12 should have been $0.26 million.
Other notes related to E-Commerce
- Merchants: The total number of merchants in our online marketplace increased from 620 to 701 over the past two quarters
- SKU range has increased from 172,000 to 184,000 to 213,000 over the same period which indicates a 24% increase in our vendor base and 13% growth in SKUs in the past six months.
- “During 2011, there was irrational exhuberance in the Indian ecommerce market. People were selling consistently below cost, and giving away deliveries for free, apart from massive returns. I’ve hear return figures of 30-40%. It took a great amount of self discipline to make sure we didn’t enter into that game. We kept a positive margin, obviously clearly lost marketshare during that period, but our returns were in the 2-3% region right through this period. We have positive margins – 12 percent gross margins on a weighted average basis across all that we do. It took a great amount of courage not to lose out heads. It makes us look like a dull company. Many people told us – you guys were the pioneers of ecommerce in India, why are you not outspending the others. I think it’s important to maintain the discipline in business.”
- “What everybody calls ecommerce, in my head it is not ecommerce. Most people view this as ecommerce. Ecommerce are the people who stock and sell. Some years ago, people asked Meg Whitman, when she was CEO of eBay, and Meg’s answer was we’re a media company, and everyone was astonished. Similarly, our ecommerce execution, people call it a marketplace. But if you’re a small merchant anywhere in India, we’re a platform where you can pay us money and sell your goods. We view this as part of the classifieds and advertising business.”
Financials
- Overall revenues (which include India Online and US Publishing) were $4.18 million for the quarter, down 10% from $4.64 million reported the corresponding quarter last fiscal year, ended March 31, 2012.
- India Online revenues (including advertising) declined 5% to $3.54 million from $3.73 million in Q4 last year. For the full year FY13, Rediff reported India Online revenues of $12.53 million, down 22.45% from $16.22 million in FY12.
- Diversification: Rediff says it is trying to diversify its revenue streams and lessen its dependence on advertising, which has led to an improvement in its India Online business.
- Cost Control: Rediff has controlled costs, resulting i