|
|
|
|
|
            
|
BT DOTCOM: COVER STORY Battle For The Cities Despite the doom time, companies big and small running metro sites soldier on. Unfortunately, very little of their meagre revenues actually comes from the Net. By Vinod Mahanta
The Satya Premas were disturbed. It was hard leaving their seven-year-old with grandparents in Bangalore and moving to San Jose, California. It was harder now that his first birthday away from them was coming up. Then, of course, there was the Net. Mr Satya Prema logged on to koramangala.com, and for Rs 2,000, ordered a birthday party for his son. Most Indian cities have one. But, did they survive the dot bomb? Read on. Balbir Singh of koramangala.com got that Rs 2,000 cake order, went shopping, for a cake, masks, pizzas, and all the attendant trivia. He then delivered it to the grandparents, and the boy and his 12 friends had a ball. Singh's profit on the entire deal: Rs 100. Singh, like so many city sites-online meeting points, shopping centres, gossip corners-around India, has survived the dot bomb, but only just. City sites may be fun, but making money at what is essentially an online cottage industry is a hard task. Worse, even if they do make money, much of it does not come from online operations. At one end of the spectrum are garage operations like koramangala.com and at the other are multi-city biggies like explocity.com and indias-best.com. Among the notable mom-and-pop sites that survived the bloodbath are ahmedabad.com, clickcalcutta.com, reachouthyderabad.com, and punecity.com, apart from koramangala. The multi-city players have started to see some of their properties breaking even. Explocity.com has eight city channels on a single site; every channel is a profit centre, but only the Bangalore one has managed to break even. Indias-best.com has 13 sites and its Bangalore, Hyderabad, Chennai, and Mumbai channels have broken even on a month-to-month basis. Here's the catch. Almost all the sites make more than half their revenue from offline activities. Some do web development work for local businesses and companies. Others run e-commerce services and advertising. Even ICICI-funded indias-best.com earns about 85 per cent of its revenues from offline activities: selling a city magazine, CD-ROMs, and directories. ''We need a parallel source of income till we get sustainable revenue streams.'' says Manjunath Bijjahalli, CEO, indias-best.com. Let's Meet In My Bedroom The humble origins help the Davids scrape by. ''For ten months I ran my site from my bedroom,'' says Sandeep Aggarwal of ahmedabad.com. Koramangala.com is run by a husband and wife team, reachouthyderabad.com has two people and one room, and punecity.com is manned by just six people. The operations are very lean, expenses low, low, low. ''My small scale of operation is the only reason why I have managed to stay afloat,'' says Maju Kuriakose, CEO, reachouthyderabad.com.
Content is cheap and easily available. Most hire freelancers or have an exchange arrangement with local newspapers. Reachouthyderabad.com's 100 MB of disk space has been given by Tata Cellular in exchange for city-specific SMS information. Even grocery sites keep going: webrishi.com in Mumbai, and bababazaar.com in Delhi. Bababazaar has managed to survive for three years, with average daily orders of Rs 2,000. Its CEO-the ultra-patriotic India Bharat Saxena-has two vans to service clients and fulfill orders. Far from scaling back, Saxena is revamping his site and plans a larger scale of operations. ''If you can sell trust and provide value for money, you can sell anything on the net'' says Saxena. Fabmart has tried online veggie-selling in three cities. In the last two months, it has averaged between 100-120 orders per day in Bangalore, and claims a positive cash flow on a month-on-month basis. Chennai currently averages 50-60 orders per day; Hyderabad is just a month old, but they are already running at 25 orders per day. Break even: 80 orders a day. Listings are a major revenue stream for city portals. News Corp-and ICF-funded explocity is one portal which relies heavily on listings. ''We have a revenue model based on relationships with retailers.'' says Ramjee Chandran, CEO, explocity. His revenue streams revolve around local retail: listings with retailers, advertisements by retailers, and finally bring retailers online for e-commerce. Reachouthyderabad will do a listing for just Rs 250 (they list even milk sellers). Advertising also forms some part of revenues-mainly from banks, mobile players, and software companies who want a local footprint. Punecity always has the top banner taken by either Citibank or ICICI who want to the tap the rich NRI community. Festival time is a major cash earner. Koramangala did business worth Rs 1 lakh in three days during Diwali. Ahmedabad.com witnessed a 600-per-cent growth during Diwali, and they webcast Navratri in association with rediff.com. On Ganesh Chaturthi punecity got 60 orders for the sweet dumplings called modaks. Cities with notable NRI populations witness some sort of e-commerce. Punecity gets orders between $500-800 in a week. Its NRIs apart, Pune also has the highest per capita pc rate in India (26 per cent). The Long Road Ahead
The bigger players have the advantage of deep pockets and spending power. The smaller players stay afloat largely because they are so small. Like bababazar, ahmedabad.com, and punecity have survived for three years. Explocity has been around for only 15 months and Indias-best since the last quarter of 1999. ''We need to develop and maintain a site for at least two years before thinking of making any money,'' says India-best's Bijjahalli, who was initially partnered by Intel. The smaller sites don't have to bear huge staff costs, like explocity.com, which has 100 people and Indias-best, which employs 300. In gurgaonindia.com, everybody including the proprietor works part time. Not surprisingly, the investment that has gone into an ahmedabad.com is Rs 4 lakh. Compare that with Rs 5 crore invested in Indias-best. Of course, that doesn't mean that the Davids struggle any less to stay afloat. If anything, they need to constantly innovate. If Balbir Singh is making a delivery to ailing parents, he will charge on 15 per cent of cost. He does not accept credit cards; instead people send deposits by cheques, against which he adjusts transactions. Punecity even conducted an online beauty contest, sponsored by Kodak, BPL Mobile and Aptech. The crucial question: is there a critical mass that can sustain city sites? Sites like chennaionline.com and chalomumbai.com (2.2 million page views monthly) are reasonably popular with locals. Chalomumbai.com managed to garner revenues worth Rs 70 lakhs in nine months till March, 2001. ''We will double revenues next year,'' predicts its coo Neville Taraporewalla. Today, 72 per cent of Net connections are
in the metros, so theoretically, the portents should be good. Cities like
Hyderabad and Pune boast more than 50,000 connections and grow at an
annual rate of 20 per cent. If city sites hang in there, be lean, nimble
and determined, they can make a living, but probably not much more. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Issue Contents Write to us Subscription Syndication INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY |
TEENS TODAY
© Living Media India Ltd |
 |
 |
