By E. Kumar Sharma

Act I. June, 1999. ITC Agro-Tech becomes the first Indian company to launch and market a consumer product on the Web.

Act II. February, 2000. The Hyderabad-based company unveils its strategy to sell its other products, like Sundrop sunflower oil and Healthy World wheat flour, on the Net. ITC Agro-Tech does not have a Website to its name.

Net-Net, there's no contradiction at all. ITC Agro-Tech's reaction to the b2c equation on the Net mirrors the strategic choice facing e-nabled Fast Moving Consumer Goods (FMCG) companies. Assuming that these companies want to sell their products on-line-be they soap, toothpaste, branded food, or luggage-what route should they follow to reach the customer? A company-owned Website? Or the plethora of e-Commerce shopping sites? The latter win by a knockout.

ITC Agro-Tech stared at these issues in June, 1999, when it launched microwave popcorn on the Net. The product was completely new and untested in Indian markets although it did have all the right credentials. After all, branded Act II, the microwave popcorn was imported from a division of ConAgra Inc., US. Says S. Madan, 42, Vice-President, ITC Agro-Tech: ''When we did our research, we found that 50 per cent of the households that own a microwave have a computer too. It was estimated that there are 500,000 such households in the country.''

The choice of horizontal portal Satyamonline.com to sell Act II was a practical one. ITC Agro-Tech did not have the resources, or the inclination, to build the Net experience around a leisure product. Meanwhile, Satyamonline had all the ingredients that horizontal portals offer, from chat to horoscopes. So why create your own store when there's a readymade one? All that you need to do is e-market the product. Realising that it would be a waste to use national television, ITC Agro-Tech has initiated advertising on other Websites, including indiatimes.com, times ofindia.com, economictimes.com, and tweentimes.com.

The ordering and buying process is a simple click-and-credit-card operation. When a customer places an order, Satyamonline verifies the credit card details and intimates ITC Agro-Tech, which then couriers the order-although it only covers 8 cities at present. The delivery process takes between 3 and 5 days. In all, the company spent Rs 10 lakh on page design and advertising, before launching the product through traditional channels in August, 1999.

According to Ravi Shankar, 37, Head (Business Operations), Satyamonline.com: ''When the product was launched, it attracted close to 1,000 hits per day, and this was good. However, the hits have fallen thereafter, mainly because the product is today available at ordinary retail stores also.'' ITC Agro-Tech claims that 1 of every 4 products purchased via Satyamonline.com was an Act II. However, only 1 of every 10 visitors to Act II-the page that takes its name after the microwave popcorn-places an order.

But then, this was really a pilot project. So, Utpal Sen Gupta, 50, President, ITC Agro-Tech, is happy about the experience: ''It gave us a learning opportunity as all indications are that, in times to come, the Web is going to have a profound impact on the way we do business.'' Agrees Shankar: ''The launch of popcorn on the Net benefited ITC Agro-Tech since it was like test-marketing. Based on the response, the company then launched the product nationally.''

As a sequel to the first experiment, the corporation has now tied up with a customer-feedback site, planetcustomer.com. ITC Agro-Tech soon plans to include other products, such as Sundrop and Healthyworld, on this site. Elaborates Manoj K. Garga, 40, CFO & Vice-President (Finance), ITC Agro-Tech: ''We feel that customers would prefer to go to a single e-com site or an e-retail site rather than checking on individual company sites for picking products of their choice. This is typically so because a single site, which has on offer a cross-spectrum of goods in a particular product category, is more like a shop.''

This is particularly relevant in the case of low-value, commodity items. Says Darshan Bijur, 32, Head (Business Development), KPMG India: ''Net shoppers know what they want, and need to get a transaction done quickly. This makes it important to form alliances which, in turn, reduce the power and flexibility enjoyed by a single-product company, but equally enhance the overall potential of the group of companies who list their products on the site.''

Of course, it still makes sense for companies selling high-value products, like cars or luxury items, to retail directly on the Net. For one, this imparts exclusivity to the brand, as well as the dissemination of product information. However, unlike these consumer categories, distributing low value-added products is an enormous task. By selling via e-tailing sites, companies can piggyback on the Websites' distribution systems. Rediff, for instance, couriers all the products offered on its site.

Warns ITC Agro-Tech's Madan: ''Replicating the Act-II experience will take time. Popcorn is a small product that can be couriered anywhere, but try doing that with a 5 kg Sundrop oil container. More importantly, e-tailers have not yet come of age as they have their limitations in terms of territorial spread.'' e-Tailers will need a brick-and-mortar supply backbone. While ITC Agro-Tech could help here, it does not have the resources to co-ordinate with the numerous, and growing, e-retailers in the marketplace today.

Of course, that will change when there is consolidation among the e-tailers. ''Sooner or later, most sales will move on to the Web and, instead of 10 retail outlets in a city, one could work with just one major stocking-point to supply the customers through the Net,'' says Madan. While this would help cut the margins that go to existing retail channels, the latter are being placated by either being made part of the distribution process to the customer, or are given a percentage of the margin for region-specific purchases via the Net.

That's why ITC Agro-Tech is trying to create a Net-enabled distribution chain too. ''Selling to our redistribution stockists, getting information from them, and such other transactions are going to happen on the Net within the next 12 months,'' says Sen Gupta. No wonder the company is gearing up its infotech department and has also started recruiting people to effectively manage this space. But if its model for third party e-tailing works, that could set the template for FMCGs in the Netspace.

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