Unable to make their websites pay, dotcoms are starting to hire out their proprietary domain expertise, and just about anything else that will sell.

By Vinod Mahanta

Avuncular and phlegmatic, Kumud Goel isn't the kind who'd let the gyrations of the virtual world get to him. Or so he thought. One-and-a-half years and Rs 10 crore in investments later, Goel-promoter of online retailer, Jaldi.com-is willing to do anything but rob a bank to see some black in the bottomline.

It's not hard to figure out why. Online sales at Jaldi.com are wallowing at Rs 3 crore against the projected Rs 15 crore. The cashburn, however, is clipping at Rs 35 lakh a month. Goel now has two options: shut shop, or grit teeth and wait out for a day when e-commerce actually takes off in India. Goel is a brave man, so he's chosen the latter. But more than that, he's a businessman. So, recently, he went around the e-tailer's Delhi office looking for something to sell. Tucked away in a virtual corner, he found 'Jaldi In A Box'-an e-commerce solution that Jaldi had custom built for itself one-and-a-half years ago. Today, tatanova.com, rediff.com, gharapna.com, and namaste.com all use the Jaldi shopping engine, and Britannica.com even uses Jaldi for its e-commerce platform. The asking price for 'Jaldi In A Box'? Rs 10,000 per user and a yearly subscription fee. ''We did not realise that we were sitting on a pot of gold,'' says R.K. Caprihan, CEO, Jaldi.com.

Show Me The Money

A pot of gold or not, the fact is that dotcoms like Jaldi have finally woken up to the need to give their business a strategic shake and hawk anything that will sell. For one, almost all of them have either used up their funds or don't have enough to last until the cows come home. Besides, impoverished venture capital firms have sharply cut back on investments. So, what the dotcoms are staring at is a doomsday scenario: only those that generate revenue will survive. ''The cash flow is simply not happening,'' admits Goel. ''Our technological expertise is the only thing we can sell until e-commerce takes off.''

A silverlining to the otherwise dark clouds is that there does seem to be a market willing to buy technical expertise from doddering dotcoms. Brick-n-mortar companies clamouring for a web presence are one. LTTrade.com-part of the L&T group-is essentially a B2C trading portal, which is now renting out its expertise in setting up trading platforms to help organisations such as UTI Bank and Bajaj Capital go online. In addition it offers to set up 'broker plazas', where it will not only build and maintain the site, but also provide content and hook up banks and stock exchanges. ''The broker can focus on core business activities and leave the technical part to us,'' says Harsh Naidu, Head (Business Development), LTTrade.com.

Verticals seem to have an advantage over plain vanilla horizontals in finding takers for their services. Reason? The kind of domain knowledge they have is not easily available, or at least not replicable at low costs. Take Indiabulls.com, for instance. The finance portal-whose team of 35 comprises engineers mostly from the IIT-has developed a trading engine, which it now plans to sell to other portals. But won't the portal be losing its uniqueness by sharing the tool with others? Apparently not. The basic model of the trading engine will soon become a commodity, and Indiabulls wants to cash in on the product before that happens.

Similarly, pczoneindia.com is renting out its procurement engine, which took 14 people, 220 man months, and Rs 6 crore in investments to build. Partly because of that new web ventures find it cost-effective to either buy or rent specific web components. Explains Simarpreet Singh, CEO, Allwonders.com: ''I have 20 people working on my e-greetings card site, and I have economies of scale. Therefore, ours is a cheaper alternative for any portal.'' Besides developing e-greetings for clients, Singh's company provides map-based technologies for portals such as HCL infinet, gurgaon.com, 123kerala.com, mangalore.com, and apnapunjab.com.

The measure of saleability of a product or service is, of course, its uniqueness. Apnaloan.com wants to hawk its online calculator to all interested, besides which it is getting into the asp business. Cholaonline.com, part of the Chennai-based Cholamandalam Finance, now outsources its car loans using the application from Apnaloan.com. In the coming months, Apnaloan actually wants to sell its planner to dotcoms outside India.

Not A Panacea, Though

Selling everything from web technologies to content to backend services is making a substantial impact on the revenue mix of the dotcoms. Jaldi generated Rs 3 crore worth of e-commerce on its site in fiscal 2001. It expects to rake in as much from services in 2002. Apnaloan already gets a third of its revenue from its asp and technologies business. Even a content portal such as myiris.com racks up a third from selling content. ''We made huge investments in the initial years, and now it's pay back time,'' says S. Swaminathan, CEO of Iris.com.

"Our tech expertise is the only thing  we can sell" Kumud Goel, Promoter, Jaldi.com

Even horizontals that have no apparent expertise are figuring out something to hire out. Rediff, for instance, is designing integrated marketing solutions for corporates including Samsung, Electrolux, Panasonic, Dominos, and NIIT. Rediff has also designed microsites like Hungry Kya (for Dominos), Metrohappenings and Desidine (for Electrolux), besides product sites for Electrolux. ''If by putting in 20 per cent more effort a portal can make extra money, then why not hire out services?'' asks Harsh Roongta, CEO, Apnaonline.com.

But not all dotcoms will manage such a diversification in revenue. For, most of them are stepping into areas where competition already exists. Neither do they have the kind of expertise or experience required to evoke customer confidence. Besides, the customer's choice of vendor will depend not so much on price as the criticality of the service outsourced. For instance, a brick-n-mortar company looking to build its web presence or create a virtual supply chain system would likely opt for an integrated e-consultant such as Mindtree, Satyam Infoway, or Intercept Consulting. That leaves a narrow, low-price segment open for the dotcoms-turned-asps. Agrees Anurab Das Sharma, President, Intercept Consulting: ''Web technology can be bought off-the-shelf, where as we offer a whole gamut of services besides technology.''

With more and more portals coming up with such me-too strategies, price realisations for the dotcoms-turned-asps will fall. For the cash-starved dotcoms, then the current diversification is only a breather. Not an antidote to what eventually awaits most of them: a virtual death.

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