BT dot.com/e-ntrepreneurs

e-ENTREPRENEURS
Poly-Verty Play

A petrochem vet's virtual exchange for downstream polyester companies to do business with one another is a test-case for vertical portals.

By Hasnain Zaheer

Sanjiv Khandelwal has a pretty simple business plan. He'd like Dhirubhai Ambani, Nusli Wadia, O.P Lohia, Kumaramangalam Birla, B.K. Birla... all right, let's keep it simple: he'd like everyone whose company operates somewhere on the petrochemical value-chain-manufacturing PTA, MEG, polyester filament yarn and staple fibre, nylon yarn, viscose filament yarn or textiles-to use his services to locate customers and suppliers. Because that is the Net-based service that Khandelwal's start-up, polyesteronline.com, is planning to convert to revenues and, eventually, profits.

In setting up an on-line mart for buyers and sellers of a particular category of products to meet and transact business with one another, the 34-year-old Khandelwal-the CEO of the start-up Ez-comm Trade Technologies-is simply following the e-trend of cashing in on info-mediation. All over the Net, sector-specific e-xchanges are springing up, enabling buyers and sellers of a particular genre of products to find one another.

The benefit of operating through such a platform for companies? Simple: it allows the organisations to do business with customers and suppliers whom they would never have been able to locate by operating in the real world alone. How on earth, for instance, would a hot-rolled coil-maker in South Korea find a buyer in the form of a cold-rolled coil-maker in the UK without having to market itself at great expense in that country? And yet, that is just the kind of business partnership that is being forged thanks to e-steel (www.e-steel.com), an on-line exchange that does for steel what polyesteronline wants to do for downstream petrochem products-enable companies operating at different points of the value-chain to do business with one another as suppliers and customers.

Launched on November 1, 1999, polyesteronline is targeting producers, traders, and customers of man-made fibres and affiliate industries. Says Khandelwal: ''Our first aim is to build a community of industry players. And then to facilitate e-commerce within members. In short, to provide community, content, and commerce for the industry.''

SYNTHESISING A STRATEGY

Perhaps it's his own association with synthetic fibres that has prompted Khandelwal's choice: between 1986 and 1998, he promoted and ran a small-scale unit manufacturing and marketing polyester yarn, choosing to relinquish management control last year. But his choice is a smart one. For, intermediaries have a crucial role to play in the synthetic fibres industry given the varying sizes of producers and consumers and the lack of standardisation. Large fibre-producers cater to small spinning-mills who, in turn, sell to smaller weaving- and knitting-firms. So, transactions along the value chain are critical.

And that's where polyesteronline will serve a sore need. Avers Khandelwal: ''The wide geography, narrow distribution channels, and seasonality in this business offer a strategic opportunity to polyesteronline.'' Approves Sanjiv Bikchandani, 36, CEO, Infoedge India, and the creator of the on-line employment exchange, naukri.com: ''The next big wave is going to be the B2B Websites and industry portals and, to that extent, the polyesteronline concept is good.'' Besides, Khandelwal's domain knowledge will give him an obvious advantage over his rivals. Says Hemant Sharma, 30, the CEO of Trisoft Design: ''The developer's experience in the industry is useful since credibility in the target industry is important in this category.''

SPINNING A REVENUE PLAN

While commissions from transactions will, eventually, form a source of revenues for polyesteronline, Khandelwal isn't betting on that alone. Primarily because it's difficult to conclude a complete sale on-line in this sector. For, the lack of standardisation of products and the huge gap in size of transactions rules out full-fledged e-commerce. As Bikchandani points out: ''After all, you cannot buy a few $100,000 worth of yarn on your credit-card.'' Agrees Pawan Rallabandi, 25, Business Development Manager, Compare Infobase, a Delhi-based Web-development company: ''The products in this industry do not fit in with the Net since buyers insist on looking at and feeling the samples, which requires one-to-one interaction. But the B2B model can facilitate this interaction.''

So, what Khandelwal is looking at in the short run is revenues for the data component of the e-commerce transactions that his portal expects to trigger. Although they can enjoy free membership for a trial-period, companies that want to use his exchange will have to pay to have their data made available: $80 (Rs 3,488) for a single page, and $270 (Rs 11,772) for a 5-page package. For that, they will also be added to a global directory listing.

Money will also come from fees paid by companies to have their names come up in searches using the engine on the site. And Khandelwal expects any other company that wants to talk to companies operating in this segment to pay for advertisements. ``No advertiser would think twice before putting his money into the site because of the focused audience,'' he asserts. There are other possibilities too: listing fees for yellow pages, paid industry reports and databases, and pay-to-view sections.

To attract traffic, polysteronline includes sections for international and regional industry news, price trends, and statistics. In the works are a database on all companies connected to the industry, discussion for a, trade shows, links to trade associations, and the facility to buy books and periodicals. Obviously, the global reach that polyesteronline can provide its customers will be a selling proposition. Tellingly, of the 215 companies that had registered by January, 2000, as many as 100 are global players. Says a Synthetic & Rayon Trade Promotion Council representative: ''Polyesteronline. com is the best site in this category, and is getting richer in content by the day.''

For now, Khandelwal is furiously innovating to meet his March, 2000, deadline for building a large enough base of users to start charging for his services. Future value-additions include connectivity with mobile telephones, so that members can receive information on their mobile itself. Adds Khandelwal: ''We are also planning to put in place a dispute-resolution mechanism once we go on-line with the information exchange.''

While the success of polyesteronline will, ultimately, ride on more than just its fit with the industry whose vertical portal it has chosen to be-Khandelwal must, for instance, find venture capital funding to keep his business booming till profits roll in-its focus on B2B deals and on depth rather than width have certainly given the portal a better platform for profitability than many of its peers in the Netspace. And that's not synthetic logic.

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