Tips as a revenue stream - the Sulekha.com way

February 17th, 2009 - 11:17 am ICT by IANS  

Chennai, Feb 17 (IANS) Getting a tip from a satisfied guest is an assured source of income for a hotel employee, but can a corporate firm make tips a revenue stream? That is what Sulekha.com is trying to do.

The Chennai-based company has started requesting ’service tips’ from free classifieds advertisers on its social networking and classifieds ad portal www.sulekha.com.

When people putting up classified ads take them off once they have made their sale, they can tip Rs.250 to Rs.1,000 “if they are happy with the sulekha.com platform”. Anybody can post classified ads on sulekha.com free of cost or for low rates (up to Rs.500), depending on the category.

As compared to the free classifieds, the paid listings will be displayed on the top of the website and Sulekha may also give business leads to the advertisers.

“We feel the site has built a critical mass of satisfied users. On a pilot basis we are studying the response from the users to pay for the service platform offered by us. Based on the response, we may charge for all listings,” Sulekha president and chief executive Satya Prabhakar told IANS.

Company chairman Param Parameswaran said the decision was not because of any financial pressure.

“There is no financial pressure on the company. The decision to test the users’ willingness to pay is based on the business concept - build a critical mass and price the service,” Parameswaran said.

Sulekha derives the bulk of its revenue from small and medium enterprise (SME) display advertisements and a decent portion from paid listings.

Both officials do not think that requesting a service tip would negatively impact the image of the portal.

“There is no compulsion on the part of the user to pay. He has the option not to pay. Perhaps, one can inform about the option to pay if satisfied at the time of posting the ad,” Prabhakar said.

Till date around 50 people have paid a service tip.

V. Ganesh, associate vice-president of IT services company Bahwan CyberTek Ltd, told IANS: “I found a house for rent through sulekha.com and saved around Rs.14,000 as broker commission. Paying Rs.250 to Sulekha is no big deal.”

While the per transaction fee may seem small, Sulekha is expecting to generate huge revenue from tips.

Consider the numbers. At an average, around 50,000 classified ads are posted on the portal every month and around 60 percent of the advertisers take off their ads once the job is done.

The portal’s buy and sell section gets around 10,000 ads that result in around 100,000 interactions and 6,000 transactions, valued around Rs.20 million.

The tip can be paid online through credit or debit cards. Sulekha is also planning to tie up with a third party for collecting the tips if paid through cheques.

The firm is planning to acquire a niche player in the classified portal segment.

(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)

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