Media coverage

THE big dotcom party or the new economy companies was over sometime back. Now the mess is being cleared up and it is perceived as the second phase or the consolidation phase of the Internet companies. Industry watchers say serious business has finally begun. Internet companies are currently facing big challenges to chart out their road map for the future in the new scenario, after the dotcom fever swept the country last year.

The new generation companies which were launched with much fanfare with the hope to cash in on the net boom, are currently reworking on their business plans, strategies, revenue models and building brands among other aspects. The Internet companies, particularly the B2C ones, are facing tough times these days, primarily, due to lack of revenue generation. And new concepts and theories are being evolved for revenue generation with emphasis laid on partnerships. Traditional business houses have embraced click-and-mortar model to survive in the new world.

"There are many concepts floating in the air about the net business but we still don’t know whether they will work or not. But, the whole e-business is still at its infancy," says K Vaitheeswaran, Vice President, Fabmart, an e-tailing firm and one of the co-founders. Adds he, "It is a myth that the failure of the dotcom companies is the end of the Internet as the Net is just a medium to carry out business."

The industry feels that there was a need for the shake-out as many people who did not have a sound business plan entered with one intention to make a quick buck. Indya.com Chief Executive officer Sunil Lulla notes, "What we are witnessing today is a corrective phase in the dotcom industry which may see the end of players who did not build their businesses with a long-term vision." Adds Vaitheeswaran, "it has separated men from the boys."

Deccan Herald caught up with some of the Bangalore-based net companies on their current and long-term plans and business approach in the evolving business in the second phase of the Internet industry. Now, internet companies are vouching for good business strategies. While Indiamarkets.com, a B2B portal, is trying to create space on the net with strong support from the Brick and Mortar network for training and development, Fabmart.com is totally focussed on ‘pure Internet play’ and branding itself as e-tailing company.

Indya.com, a horizontal portal that arrived with a bang, is looking at aggregating the widest possible user-base by offering everyday usefulness through its vast gamut of channels and services. Mr Lulla who made waves by successfully relaunching MTV in India, says, "Success in the Internet is driven by unique brand building and Indya.com has the essence of a great brand as it usually relates to the ethnicity of Indianess and has its own vibrant attitude." Another horizontal and B2C portal Indiainfo.com which hit the Indian scene with all the ad blitzkrieg to take on rediff.com, is concentrating on the regional channels. Its chairman Raj Koneru says that company has tied up with Baazee.com, Indiacar.com, Filemyreturns, Myiris.com and others to provide the best content. Though the internet companies have been providing good content, there is no significant revenue generation to sustain themselves. Therefore, sound business plan or revenue model is the new buzzword among the Venture Capitalists and the investors who bank rolled the net companies without giving a second thought before the stock market crashed on Nasdaq.

Many Net companies which had received first round of funding from the VCs, found it difficult to raise funds for expansion, especially the B2C companies. It also upset the plans for IPOs of several companies. "Yes, it is difficult to raise funds from the market for the B2C kind of companies currently," admits Vaitheeswaran. But, he was quick to add that his company is not facing any such problems. All the Net companies are looking for multiple revenue streams. The days of generating traffic to attract advertisements and sponsorship have been a thing of the past. Portals like Indya.com and Indiainfo.com are looking at advertising, sponsorships, e-commerce and portal partnerships. Mr Lulla says, "We expect to grow at the same rate or better than the growth of the Indian Internet industry."

Indiamarkets CEO Rohan Ajila says, ‘’being a B2B portal, our company has different revenue stream like Web-based Business Catalogues, e-buy and e-sell solutions, interactive web based events such as TradeZone (a mega virtual trade fair spanning thirteen industry verticals) apart from advertisements. But, Fabmart, which is extremely focused on e-tailing as the only source of revenue, does not accept advertisements. "We don’t want to spoil the shopping experience of a user," Mr Vaitheeswaran says.
One of the primary reason for the failure of the dotcoms is the lack of the critical mass of Internet users (about 2-3 million now) in India which is ranked well below several countries in Net access. However, the industry is confident that the country will soon get the critical mass and the Internet access will be more through other sources like mobile phones and television other than personal computers. Mr Lulla and Mr Vaitheeswaran say there will be critical mass within two-three years with at least 20-30 million users. "With this, we should be sufficient to build a successful model," they add.
Customer acquisition is an important aspect for the success, felt these companies. It is understood that to get a customer on B2B is much easier than on the B2C portals. Mr Vaitheeswaran observes, "Everyone who visits our site are potential customers and we have develop a habit in them to buy on the Net regularly. It is a challenging job for the B2C portals. Therefore, we need to give a good shopping experience."

Among the innovative ideas to reach out and generate Internet traffic, Indya.com has already tied-up with over 900 Internet Cafés in India on an exclusive basis apart from the access points like TV, print and outdoors. Indiainfo plans to tap customers from India, US, Middle East and Australia and is trying to generate traffic through its offer of 10 MB e-mail space and instant messenger and big marketing campaign. Fabmart has recently introduced grocery store on its e-shopping mall and is soon planning to increase its stores to cover several products.

One thing is beyond any doubt that the Net is here to stay and it will be the new medium to conduct the business besides changing our lifestyles. "The opportunities are mindboggling in the new economy. We have to build our systems and wait to tap the market," Mr Vaitheeswaran says and concludes, "those with good solid and long-term plans will survive."

Rajesh Parishwad
in Bangalore