A year after the dot-com boom rocked the world, B2Cs e-commerce companies are much sub-dued. Revenues are drying up, profits are rare, marketing and advertising spends have been cut. Even share prices of the few such dot-coms listed at the NYSE and Nasdaq are near all-time lows.

Now the figures: Estimates of retail sales on the Internet in 2000 vary from Forrester Research’s $31.4 billion to Boston Consulting’s $48.6 billion: an average growth of 84% over 1999. Also, Forrester projects Net retail to be worth $185 billion in 2004.

Then, why have B2C dot-coms become such untouchables? Why are they finding it hard to get investors? And why are B2C stocks on a constant slide? Has suddenly the whole business model become unsustainable?

Blame the chaos on start-ups not following the simple business basics. Start-ups made mistakes in running their businesses, like entering markets that had too many competitors, bad investment and lack of planning.

It is not that investors have suddenly lost interest in the B2Cs. The stock slide has been happening for quite some time, starting March 2000. Says Anand Sudarshan, co-CEO, Planetasia.com, says, "B2C stocks had been overvalued as a sector. What we are seeing is a steep correction." Sudarshan refers to the stocks listed on the Nasdaq—Amazon.com, Ebay.com, Satyam Infoway and Rediff.com (India doesn’t have any of them listed) He says, "Investors are looking for basics again—revenues, profits, a strong and sustainable business model, differentiators. A B2C can certainly stop the slide of its scrip value, if it is able to demonstrate basics." VS Sudhakar, MD, Fabmart, says, "While it is true that most B2C stock prices have crashed, we should see if their valuation was right in the first place. When the B2C dot-coms started, the method of valuation was based entirely on future lifetime values of possible customer acquisitions. After a while, people realized that it made sense to treat the valuations as you would for normal companies." There are B2Cs who have a good revenue model and are making profits, like Amazon. Valuations of such companies are lower than their early highs but are still good.

India has followed the global pattern. New dot-coms saw such splashy launches as full-page ads in leading dailies, painting bus stands with their trademarks and handing out free gifts. No more do we see such frenzied promotions. Launches these days are as drab as hurriedly put-together press conferences.

In India, many dot-coms followed the models adopted by the US-based dot-coms. They did not reckon that the infrastructure-reach, penetration levels and consumers’ buying culture in the US were far more advanced than at home. That led to a path to closures.