Amazon and Flipkart nearly monopolize India’s e-commerce advertising market

The growing popularity of online shopping has been a boost for e-commerce giants such as Amazon and Flipkart , which have seen strong revenue growth while becoming important channels for brands and marketers to reach customers .

According to data from business organization Tofler , the online market divisions of Amazon and Flipkart saw a significant increase in revenue from advertising in 2021. The two companies earned 394.02 billion rupees in advertising revenue in fiscal 2021 , compared with 264.58 billion rupees in fiscal 2020 .

Amazon Seller Services revenue from other marketplace-related services , which mainly include advertising , jumped to 25,542 crore in the year ended March 31, 2021 , from just 1,637 crore in the previous fiscal .

Flipkart Internet's advertising service revenue also climbed from Rs 1,386 crore in fiscal 2020 to Rs 10,088 crore in fiscal 2021. Revenue from its advertising business is recognized based on the number of clicks or impressions .

Mirum India co-CEO Hareesh Tibrewala said that the overall advertising expenditure on e-commerce platforms is around Rs 5,000 crore, with Amazon and Flipkart alone accounting for nearly Rs 4,000 crore. The total digital advertising expenditure in India is around Rs 20,000 crore, of which the e-commerce advertising market accounts for about 15%.

According to the data from Flipkart and Amazon , the advertising expenditure of the entire e-commerce market accounts for 20-25% of the total media expenditure on digital channels , and 90% of e-commerce advertising expenditure goes to Flipkart and Amazon.

In this regard, Vivek Bhargava, co-founder of ProfitWheel , said that Amazon and Flipkart’s investment in advertising business has two benefits . While ensuring that their companies can obtain more revenue and commissions , they can also help platform sellers get more exposure opportunities and increase sales .

Bhargava further said that for the FMCG industry , advertising on e-commerce platforms has become a sales cost , and sellers can significantly increase their budgets because it is a sales cost rather than advertising expenditure.

Bhargava also pointed out that Amazon's advertising revenue is growing much faster than Google and Facebook , and Amazon may become the third largest player in the Indian and global digital advertising markets. From a long-term advertising perspective, Amazon will be a strong challenger to Google and Facebook .

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