A team of top managers gather around the conference table for
an emergency meeting. The one-point agenda: How to save their company from
collapsing. A number of solutions are offered–change in business strategy,
alternate revenue options or worse, huge salary-cuts and layoffs.
Desperation is clearly written all over their faces. Sounds
familiar? Of course. It’s the way most dot-com dreams have ended up. Though it
is difficult to put an exact number to the dot-coms that crashed, worldwide
estimates indicate that dot-com layoffs in the second half of 2000 increased by
600% in comparison to the first half.
"I quit my job in that ‘stinking’ conventional
industry to do ‘something on my own’. And the Net seemed tailor-made for my
fantasies. The next Sabeer Bhatia in the making… with stakes worth millions of
dollars," remembers Pankaj Aggarwal, a young B-school graduate, who like
most others had also wanted to explore his entrepreneurial capabilities.
Alas, that wasn’t meant to be. As dreams got shattered and
reality set in, the euphoria was taken over by a struggle to survive. Dot-com,
aka ‘the shortest route to success’, was replaced by ‘urgency to sustain’.
It was time to go back to business basics. No room for short-cuts, please.
Back to business basics
Plush hi-tech offices, slick managers paid astronomical salaries, not to
mention ESOPs, the popular choice amongst employees who didn’t even understand
the term. Everything seemed in place. But there was a problem: No one was quite
sure from where the revenues would flow in. So, the inadvertent had to happen.
After all, how long could you endlessly spend investors’ funds over
extravagant ad campaigns and those so-called creative pursuits? Money that was
spent less on value creation and more on keeping pace with the hype had to run
out some day.
Says Dinesh Agarwal, CEO of Indiamart.com: "They overlooked the ground
rules of business and marketing. Building brands rather than valuable products
or services; Getting into valuation games rather than keeping an eye on
costs." Most companies did not realize that a dot-com is also like any
another business and needs to demonstrate profits or at least the path to it.
"Dot- coms lived out of capital and expected that profits would
automatically follow, which unfortunately never happened," adds Kasi
Viswanath, COO of financial e-marketplace, Apnaloan.com.
Profitability is the key to sustain any business, and a dot-com is no
exception. As most dot-coms today realize this fact, their focus is shifting. A
‘strong revenue model’ is considered the most important ingredient for any
successful dot-com. This is clearly reflected in the fact that it emerged the No
1 success factor in a random dot-com poll conducted by Dataquest.
Top Ten Success Factors |
A quick survey reveals |
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"Do(n)t-com", cry investors
There was a time when VCs and angel funding entities were gung-ho about ‘big-ideas’,
big brands investing heavily to ‘get there’ (most still don’t know where).
Stock markets for dot-com surged to an all time high, ad-budgets of ‘mom &
pop’ dotcoms soared and then it all faded out… All this only left the
investors and customers with a notion of disbelief regarding dot-com name-games
and virtual brands.
For some time, investors may have been bewitched by the more than lucrative
returns from the likes of Indiaworld.coms and Sabeer Bhatias of the game that
were not justified by any ROIs or PE. But they have already burnt their hands so
much so that they do not intend to even look at anything that is spells close to
‘dot-com’. No more crazy ideas in the name of innovation, they plead, as
dot-coms turn into don’t coms. Unless the idea is backed by some real
knowledge, it does not hold value for the funding agencies anymore.
"Earlier dot-coms had a short-sighted vision. Even the teams was
constituted of people from all walks of life, whether they had the domain
knowledge or not," says Mani Sam, Executive Vice-President,
Auctionindia.com
"The market size and medium itself was over-valued. Therefore too much
money was spent in creating excess capacity, which became financially impossible
to maintain," says Sunjeev Swaroop, Senior Manager, 123india.com. Now the
focus is high on deliverables as ‘quality of content and delivery (No 2)’
comes before an ‘innovative idea or concept’ (No 3), according to the DQ
dot-com poll. "In the long run it is your delivery which matters most. If
you can clearly specify the deliverables and consistently provide them to your
customer, your site has greater chances of success," says Mani Sam.
Catch me if you can: Customer
For all practical (non-virtual) purposes, the customer is still loyal to his
conventional buying habits. No matter how hard you try to delight him, he is
tough to crack. And yet, in this entire game, he is still the most important
entity. How much can you please him with virtual services, virtual brands or
virtual security? The money he has to pay is real after all. As of now, he wants
to have fun… surfing, gaming or even learning. But is he willing to pay for
all this?
What Makes them Click? | |
While others vanished from the scene, some sites managed to pull through even under adverse market conditions. Here are some factors that helped |
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Note: Based on feedback from industry observers and experts, we have randomly selected names of some sites that are going strong. The list is not exhaustive and does not claim to cover all dot-coms |
Pay the customer to see your sites, pamper him with freebies and attractive
road shows and he would be happy for sometime. But dare you send any spam-mails,
sales or promos, for his mailbox is far too precious to be filled with your
junk. And when it comes to making a purchase... catch ’em if u can! ‘Brand
loyalty’ did you say? Yes of course!…For all ‘virtual’ purposes
customers are loyal to the dot-com brand that offers the most freebies and asks
the least number of questions. (Dot-coms think they have created the largest
customer database by making customers fill their registration forms. The fact is
that they forget passwords to their registrations by dozen every week!)."
That’s your customer and he’s much smarter than you think. And cautious, of
course!
Reaching out to the target audience, thus, becomes extremely pertinent (No
5), and brand building (No 6) comes along with it. There are some sites that
cater to specific sectors like Automart for automobiles, Clickforsteel for the
steel industry. But by and large, most sites are not very clear about their
focus and this would naturally come in the way of reaching out. Unless you
clearly know where to make an impact, you are most likely to be lost in an
attempt to please everyone. Value-added services also form also forms a crucial
part of the whole exercise. "Customer service has not been given the
importance it deserves. Internet is a tool, not an end in itself. It can be used
effectively to communicate with your customer," says Jai Raj Gupta, CEO,
Shaadionline.com.
Reality Bites
You’ve got your business model in place, the customers like your content
and your brand building process is also going fine. But is that enough to ensure
success. What will you do with the @#$*&# net connection? Poor ISP services,<br />
low bandwidth and other infrastructure issues are also real. You can’t ignore<br />
them. "Internet is just another medium for dissemination of information.<br />
One should understand the strengths and limitations of the medium and use it as<br />
effectively as possible within the given constraints," says Sidharth Gupta,<br />
Chief Operating Officer, Asianvendors.com.</p></p>
<p>So, in the end what determines success? There is no single golden rule.<br />
"I strongly feel that it is a combination of factors which is responsible<br />
for the success of any venture. This would vary depending on the objective of<br />
the respective models. It is important to effectively integrate the model to<br />
complement your main line of business," says Gupta.</p></p>
<p>Still, the hard fact is that no business can remain<br />
unaffected from this phenomenon. Whether it is in the form of a pure dot-com or<br />
the e-enabled enterprise, the Net is gradually creeping in everywhere. It will<br />
have to go through its ups and downs, until it finally takes shape. The question<br />
at this stage is not B2B or B2C, but how keep going through this phase of<br />
evolution.</p></p>
<p><b>Shweta Verma–Dataquest</b></p></p>