NEW DELHI: Flipkart.com is in the process of filing more than a dozen cases against various companies to recover dues worth crores of rupees from them for allegedly not paying for placing advertisements on the country’s largest ecommerce company’s platform.
“There are about 20 Indian and foreign companies which haven’t paid and the dues are in the range of Rs 90,000 to crores of rupees each,” said a person familiar with the development, asking not to be named.
Last month, Flipkart filed first such case in the Delhi High Court against a US-based computer data storage company Western Digital for allegedly not paying more than Rs 1 crore for placing ads on Flipkart, according to people familiar with the matter.
While media buyers say Amazon generally follows a prepaid system for advertising on its website, where brands are required to make payment in advance for the inventory that they purchase, most of the indigenous websites do not have such systems in place. For instance at Amazon, most of the smaller companies must pre-pay for buying advertising space while the company would raise invoices for many of the big media buyers to make payments later.
While Flipkart did not respond to email seeking comments on the issue, media buyers say that Flipkart does not have a pre-payment system in place for digital advertisers on its platform and the Bengaluru-based company rely on getting payments later and thus arising such non-payment issues. A Western Digital spokesperson in Hong Kong did not respond to email and text messages sent on her mobile phone. In a bid to tap the growing online advertising business, Flipkart last year had offered its platform for other brands and sellers to advertise by paying certain fees. Such advertising banners and popups would lead consumers to offers from sellers within Flipkart’s network as well as directly to the pages of those brands. Another source said defaulters include Tikona Digital, My-Popcorn among others.
Media buyers say such non-payment practices are rampant in digital advertising in India.
“The digital industry is suffering because there have been several cases where advertisers default on payment,” said Amar Deep Singh, CEO, Interactive Avenues, a unit of IPG Mediabrands. “We do not have a strong industry body in terms of payment collection yet. Payments for digital are cleared much after the payments of print and television.”
Internet and Mobile Association of India, of which several digital firms are members, is currently setting up a committee to develop a payment mechanism system on behalf of the digital industry, media buyers say. The committee will follow up on payments and defaults with advertisers and digital networks on a regular basis.
While Amazon also allows companies to advertise on its India platform but unlike the US site, the local marketplace ads are restricted to its sellers and some external service providers such as insurance, housing and automobile sectors.