The Economic Times,
Jack Welch is said to have called the Internet the ‘Viagra of Big Business’. If that’s the case, Flipkart.com, the country’s first billion-dollar-valued Internet company, is surely in a state of perpetual excitement. With 2500 people, daily sales touching a crore rupees with ten products being sold every minute (seven of them books), Flipkart has become synonymous with online book retail and large-scale e-commerce in India. And the key to the company’s success lies in its payment-on-delivery model, which helped overcome the average Indian consumer’s misgivings and built trust.
“When we started, the customer experience offered by existing e-commerce sites was below average. Our main aim was to address this. This focus on taking ownership of the customer experience has worked in our favour,” says Sachin Bansal, CEO, Flipkart.
The Great Indian Dotcom Story that began nearly two decades ago is still being scripted today and Flipkart is one of the privileged firms whose growth is beginning to take on magic beanstalk-like proportions. The last few years have seen a tremendous uptick in online buying among India’s 100 million Internet users, thanks to rising broadband penetration, acceptance of online payment gateways, deeper penetration of smarter mobile devices and some great deals being offered online.
The dotcoms that have succeeded clearly followed the commandments ‘understand thy customer’ and ‘don’t ever commit the sacrilege of taking your eye off them’. Ashish Hemrajani, who started Bookmyshow, a ticket delivery company, affirms, “Indians are the most demanding customers in the world. They want a high quality of service and want it at a reasonable price.” Today, the market may be teeming with dotcoms in every imaginable category – education, travel, ecommerce, real estate, entertainment – but it’s important not to forget where it all started – simple information aggregation.
Take Shaadi.com, which claims a 40% share of the Rs 200 crore online matrimony market, and is one of the bona fide success stories of the Indian online marketplace. Started by Anupam Mittal, son of a textile manufacturer, the site was originally called Sagaai.com and turned out to a bit of a flop. So Mittal spent $25,000 (out of his $35,000 savings) on buying the domain ‘Shaadi’ from its erstwhile owner and painstakingly set about developing the market . He set up kiosks across the country to get profiles of eligible grooms and brides.
Photos would come in the post, be scanned and put up on the site. “For people looking for a partner, things weren’t easy – and the local pundit wasn’t doing a good enough job,” he says. Mittal aggregated the demand by creating a platform that allowed matching of aspirations of thousands of potential brides and grooms. The users were only too willing to pay for the service.
wwwizards of the web
Ditto for Sanjeev Bikhchandani, who started Naukri.com in 1997 when the Internet was still in its infancy: India had about 14,000 email accounts in all. Though it had a rocky start, last fiscal, Info Edge, the portal’s parent company, turned in Rs 83 crore in net profits and now boasts of a portfolio of subsidiaries operating in various sectors – Jeevansathi, 99 acres, Shiksha and Quadrangle, an offline executive search service.
Naukri, like others of its era, pulled through with sheer grit surviving on a couple of revenue streams; its employer branding tool, along with resume database access services that was launched the following year. “Our sales staff did an excellent job of getting us back on track,” says Bikhchandani. Naukri has since launched many new features, including resume writing services and a mobile WAP site. It has also integrated services with sister portal Shiksha for executives keen on further studies.
While the earliest Internet companies in India were built around the idea of aggregating useful content that was scattered and hard to find, the newer lot is different. Now it’s not about generating eyeballs, or clickthroughs, or accruing lakhs of registered users. Indians have now become used to buying on the Web; dotcoms are now focused on introducing buyers to new products or markets, providing greater levels of customisation, and ensuring a better overall user experience.
Take JustDial, which started as an offline directory of local businesses called AskMe, which tanked in 1992. Four years later, armed with the 888-8888 number, it re-emerged in a new avatar, as a local search business in Mumbai under its present name. Founder VSS Mani credits JustDial’s progress to its philosophy of being completely flexible. “Our credo was not to change the market, but to change with it,” he says.
The company, which has recently filed for an IPO, launched its website launch in 2007 and today receives over half of all search queries for local businesses on the Web (including mobile Internet). This has prompted JustDial to invest heavily in its technology back-end and Mani is now planning to get into the deal/discount space and allow clients to sell their surplus inventory across its platforms. “Better content, richer visuals – maybe videos of places…there’s a lot more we can do. The main thing is to popularise the concept of ‘reverse auctions’ – letting vendors bid for your business across multiple platforms,” he says.
Like JustDial, online B2B marketplace IndiaMart, made its millions by creating a meeting platform for SMEs, but with one difference: it focused on the B2B segment. Known as the largest online B2B transaction market for small and medium enterprises in India, IndiaMart’s model is quite unlike anything else seen in its space before.
Strangely though, it owes its uniqueness to its origins as a web development company, that Dinesh Agarwal started in the late nineties. Since Internet penetration within India was low, Agarwal focused on building websites for Indian exporters trying to reach overseas buyers. “We soon realised that web development wasn’t rocket science and that space would be commoditised. That’s when we decided to create a directory of our clients on the India-Mart website,” Agarwal says.
Eventually, India-Mart would accept listings of companies that weren’t their clients, but the web development clients always got better listings. Even today, a sizeable chunk of IndiaMart’s listings come from web development clients, in addition to revenues from premium listings and lead/transaction fees. Agarwal says the road forward lies in creating a self-service model that will enable IndiaMart to employ fewer sales staff and improve overheads.
The click-brick model that IndiaMart follows – physically encouraging adoption of the online medium with an on-field sales force – has been used by many dotcoms. The online success stories built the market step by step – a lesson many of the newer Internet businesses would do well to learn. Deep Kalra says, “In the dotcom space, things in India typically take longer to succeed than in the West. You can’t be impatient to make money.”
The founder of the pioneering on-line travel portal MakeMyTrip.com, Kalra knows what he’s talking about. Today, MakeMyTrip’s challenge comes from an extremely competitive ticketing market milling with niche players, where the usability experience has become very important. “We constantly keep exposing 1%-2 % of our users to changed features on the website, which gives us immense data on their likes and dislikes,” Kalra says, adding, “It is the small things that help a transaction go off without a hitch. And the size we’re at today, we can’t afford even a minute of downtime.”
Internet remains a very competitive, narrow-bend business and just missing one step can cost a firm very dearly. And size matters even in the virtual world. With a plethora of niche players around, the consensus is that in the long run, the e-commerce arena will see consolidation . Kanwaljit Singh, senior managing director,Helion Venture Partners says, “India will see a large and growing ecommerce sector like it happened in the online travel space a few years back. It’s a matter of time before some clear winners will emerge.”
Kunal Bahl, founder, Snapdeal, a product and service deal consolidating website, says that Indian online marketplace will soon start following Pareto’s principle where 80% of money will go to the top 20% of companies. Of course, he hopes Snapdeal will top the charts. “We’re 17 months old, but the sheer speed at which we’ve grown surprises even us. From 25 people last February, we’re up to 500 today. Could we have built a Snapdeal 10 years ago? No way,” he says. The deal site, which offers large discounts on services and products across the country, hit the market at the right time.
Snapdeal never competed on the price parameter though there were many online catalogue companies ( Ebay, for example ) already operational. As a pure deal site, Bahl says it operates on margins of 30% as opposed to 10%-15 % for catalogue sites. “Yes , there are many e-commerce sites and it may get a bit confusing. But customers should be happy because these sites are bleeding VC money to get their business,” he says.
According to figures from Venture Intelligence, a research service focused on Private Equity & M&A, Jasper Infotech (which owns Snapdeal.com) has raised $53 million to date, over three rounds of funding. It is a really happy situation for the company that pops up first on a Google India search for ‘deal’. “Even if the markets tank, we’ve raised enough money to grow for the next 2-3 years,” Bahl says.
Meanwhile, customers of online services are getting more demanding and every CEO here has stories to tell. Hemrajani of Bookmyshow recalls a customer in Delhi, who was a particularly bad headache: “Each time our delivery boys went for handing over tickets, he would either grab the tickets and slam the door, or if he liked him, would insist on the delivery boy coming in and having a lassi or cold drink – delaying our deliveries further.” Now that’s a customer experience for you.