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Google CEO Eric Schmidt has predicted that India, and not China, is poised to become the world's biggest Internet market in five to 10 years from now, based on current trends. With the number of users expected to rise from around 40 mn currently to 110 mn by 2010, the heat seems to be back in the dotcom space as a number of online portals mushroom to cater to this burgeoning online population.

Increased Internet penetration and cheaper connectivity have contributed to the growth of e-commerce in India. “E-commerce and the Internet are becoming more and more a part of Indian society, both as a mass medium and a standard channel for shopping, travel bookings, jobs search and matrimonials,” says Gautam Thakar, marketplace country manager, eBay India. Thakar attributes the phenomenon to increased media exposure and word-of-mouth publicity as first time users “gain confidence in the medium.”

According to Murugavel Janakiraman, founder-CEO of BharatMatrimony.com, the growing popularity of the Internet over the traditional medium is because of  “advantages like quick reach, convenience and comfort over other methods and also 100% privacy when it comes to sharing personal information”. It is this advantage that has fuelled the boom in the jobs and matrimonial market in the consumer segment in India. E-portals attracting the maximum traffic include jobs, matrimony and travel.

Services Galore
Portals like Monster, Shaadi, MakeMyTrip, BharatMatrimony and Naukri have not just survived the bust, but are doing roaring business today. While the portals still continue to follow their original business models, which are completely driven by online revenues, minor aberrations have happened in the form of introduction of new services and introducing an offline component in some cases.

For India's leading job portal Naukri.com, launched in 1997 by Sanjeev Bikchandani, the original business model was driven by recruiters paying as little as Rs 350 for a basic listing on the portal.  This translated into revenues of around Rs 2-3 lakh per month for Naukri. While 2001 was a gloomy year for most Internet start-ups, Naukri managed to stay afloat and invested in setting up sales force, customer service cell and product development. In 2002, the portal was back in business and currently charges a listing fee to Rs 500. It has also introduced new services including database services, SMS hiring and resume-maker services under its new business model. Says Hitesh Oberoi, COO, Naukri, “We try to create value for customers and have products for every price point and this is our USP.” 

Monster can be referred to as the father of the online job market for its idea of providing free searches to job seekers and creating a revenue model that is recruiter and ad-driven, way back in 1994. Today most successful job portals worldwide replicate this basic business model. Says Arun Tadanki, president and MD, Monster India, “Our USP lies in the way we execute ideas and create out-of-the box solutions for the target audience.”

Today, Monster's pioneering business model is still relevant in advanced markets like US despite very high Internet penetration levels, “We believe there is scope for investment in the original business model and we are going to invest in it,” adds Tadanki. However, the giant is also looking at an alternative revenue model to bring more stability into the existing one. “India can learn from an evolved mobile market like Korea in identifying new applications for our business,” Tadanki adds.

One of the areas where investment is being considered in India is in the mobile application space as mobile users outnumber Internet users in the country. However, Monster is still experimenting with the hit-and-trial method to identify the form of Internet business that can be transported to mobile. Relatively newer initiatives like job alerts on SMS have failed to generate the desired results so far.

Virtual Shopping: The ever-fattening wallets and the benefits of online shopping have made eBay India (earlier known as Baazee, before eBay acquired it in August 2004, focus completely on its online business. Says Thakar, “eBay has created the largest online bazaar that is free of middlemen.”

The unique business model implemented on eBay India (quite similar to the business model of Baazee, which too concentrated on the online business) provides a platform for entrepreneurial opportunities for Indian sellers as it allows local products to be sold across the country and to buyers across the world. Sellers can also use the eBay opportunity to extend an offline business to online with zero upfront investment. Profitable since launch, eBay Inc net revenues totaled $4.6 bn for the year ended 2005, a 39% increase over the $3.3 bn in 2004, which speaks of the success of the model.

Online Travel: While online job and shopping portals have traditionally been successful, it is the online travel that is creating a buzz in e-commerce in the recent past. Online travel in India was worth $368 mn this year with online travel agents and suppliers (including airlines and hotels selling tickets) directly garnering 30% of that market. The market is expected to grow to $523 mn next year, with OTAs increasing their share to 24% and online air ticket penetration touching 23%.

MakeMyTrip.com, brainchild of Deep Kalra, was one of the early movers to get in to the online travel space, and is the second-most preferred online travel company in India today after irctc.com as per Juxt Consult research. Under its original business model, the portal catered to the NRI traffic but, over time, the model has undergone changes and MakeMyTrip now concentrates both incoming and outbound traffic in India. “The focus is still on the online business as 90% of the revenues come from this and only 10% from offline,” says the MakeMyTrip founder & CEO, Deep Kalra.

Playing Matchmaker: Matrimonial portals too had a fair amount of success in the e-biz space. The Internet and Mobile Association of India (IAMAI) undertook a study to track the demographics of the online matrimonial seekers and the results were surprising. Defying all odds, online matrimonial search services have sky-rocketed in the last two years and websites are continuing on the path of high trajectory growth garnering Rs 58 crore in 2005-06; and expected to cross Rs 98 crore in 2006-07. There has been a surge in the number of users: from 4 mn in 2004-05 to 5.5 mn in 2005-06; and is estimated to grow to 7 mn by 2006-07 according to the IAMAI report.

The business model of online matrimonial sites is very straightforward and most follow a subscription-based model. A large database is created where individuals can post their details including ideas on preferred partners. “While surfing is cost-free, a subscription or membership is required if one wishes to contact a person listed in the database,” says Vibhas Mehta, business head, shaadi.com. While members have the option to accept or decline a request, subscription to a premium membership is required for further communication. However, what makes Shaadi different from most competitors is that a shaadi.com member pays only after finding a potential partner. “This makes shaadi.com a value-oriented and cost-effective proposition,” adds Mehta.

The subscription fee model is a huge revenue-spinner for matrimonial portals, if one were to consider the fact that most portals claim to have hundreds of thousands of subscribers.

While revenues are primarily subscription driven, online advertising too contributes to the overall online revenues of most portals. Portals like BharatMatrimony earn 90% of their revenue from member subscription and advertising is restricted to only certain pages or specific positions on the website. Says Janakiraman, “Being a customer driven model, we have intentionally restricted ads on the site as we would not like to disturb members while using the site.”

Online, Offline 
The portals, besides offering the usual online services, have also ventured into providing offline services. The offline component gained prominence primarily due the dotcom bust. A need was felt for portals to look at an alternative revenue models. Naukri, for example, acquired Quadrangle in 2000, a search company operational as more than a traditional placement consultant, and operates on large volume in addition to value-based searches.

A new entrant in the online travel space, Yatra Online's business model is a “healthy 60:40 mix of both online and offline components,” according to Yatra Online's co-founder Dhruv Shringi. The portal is targeting the mass market unlike MakeMyTrip, which is targeted at the high-end segment and is looking at becoming a strong player in the online travel space in the next three to six months. Shaadi on the other hand started setting up 'Shaadi Points' one-and-a-half years back, which are offline centers of shaadi.com. The brick and mortar centers offer matchmaking and related services to a not so tech savvy audience and, as these centers are networked, they offer a national database of eligible profiles.

Matrimonial portals like BharatMatrimony and Shaadi provide members the option to place newspaper advertisements under their offline services. To teach how to sell online, eBay runs academies, which comprises seller-training programs that inform participants about the benefits, opportunities and the processes of selling on eBay. However, Monster and MakeMyTrip remain exceptions with both catering only to online traffic.

VCs love Dotcoms
Resurgence of the excitement in the dotcom industry in India and the strength of these established business models can be gauged from the sudden rise in VC fundings in most ventures. In February 2006, the world's largest venture capital firm, Kleiner Perkins Caufield and Byers (KPCB), announced its first investment in India. KPCB is putting its fund behind yet-to-be launched Cleartrip.com, an online travel portal for India. That's not the only one. Ram Shriram's Sherpalo VC fund is also expected to be a co-investor in the company. The first round of funding is likely to be in the $2.7-3 mn range. The travel site is still at the construction stage. The funding, though small at this point of time, is likely to increase, according to industry sources.

In January 2006, Pramod Haque's Norwest Venture Partners teamed up with Reliance Capital and Television 18, the broadcaster of satellite television channels like CNBC and IBN, to form Yatra Online. The NVP press release issued to make the announcement said: “the move is driven by the tremendous boom India is witnessing in both business, and family and leisure related travel”. NVP estimates the Indian travel market to reach $40 bn by the end of 2006 and close to $50 bn by the close of 2009.

February also saw another big-ticket investment. WestBridge Capital Partners, a leading Mauritius-based Indian venture capital fund, announced its decision to back Travelguru. The objective is to help Travelguru emerge as market leader in the online travel industry.

People Interactive, which owns Shaadi apart from Fropper, Shaaditimes and Astrolife, received an investment of $18 mn from Sequoia Capital India and Intel Capital in March this year.

The Road Ahead
E-commerce in India is gathering momentum as Internet usage becomes popular and industry professionals believe India to be the fastest growing e-commerce market in the world. The portals too would want to use the opportunity to expand and grow their business. Leading job portal, Naukri.com has conclusive plans of floating an IPO and has already filed the draft prospectus with Sebi. Its counterpart, Monster meanwhile plans to focus on creation of new markets and would bring in new customers to the fold. The portal would announce significant investments and expand the sales force in order to move to a new layer of customers and teach them how to use the Internet.

After the success of Shaadi.com, People Interactive has gone ahead and launched Fropper.com, a relationships and social networking portal catering to the Asians worldwide. It has also launched a wedding planning and relationship portal, ShaadiTimes.com. Besides, Astrolife.com, its astrology portal launched in association with leading astrologers Marjorie Orr and Bejan Daruwala, is currently powering astrology services for Shaadi.com.

In the 1980's industry, one just needed ideas to launch portals. No more. Proven business models, involving a mix of online and offline services, are now powering the reincarnation of the dotcom industry in India. And that is good news for everyone.

Team DQ
maildqindia@cybermedia.co.in

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