Surviving The Dotcom Bust: A Lesson Well-learnt

Bangalore | Updated: Jul 30 2004, 04:21am hrs
Several dotcom entrepreneurs believed that the advent of the Internet would change the way business was being done. However, most of them forgot one vital element a business model.

Most entrepreneurs who jumped on to the Internet bandwagon couldnt manage their business and shut their shops. But all did not end the same way. Some managed to get through the rough patch, leaving their mark on the virtual world.

Indiamarkets.com, which started its operations in 2000, saw troubled times during the dotcom bust, but didnt close down its operations. From the beginning, we were playing in the business-to-business (B2B) segment, enabling reverse auctions for companies procuring goods and services. In the bad times, we concentrated only on a few clients and we ensured profitability in all the transactions we did, said Indiamarkets.com chief executive officer Rohan Ajila.

As a next step, Indiamarkets.com looks at itself as a Procurement BPO. Today we do not provide simple reverse auctions for companies. We ensure the contract is fully deployed and we also ensure realisation of cost for the purchaser through that contract, Mr Ajila said.

In case of problems from the supplier end, he adds, contracts sometimes were terminated half way. Today, we ensure such things dont happen. This kind of contract management has helped us get more than 100 customers today.

Meanwhile, Ciol.com, a technology portal and content provider, survived the rough days and the company has been profitable since 2003. During the tough period, we discontinued operations in some of the non-core areas. This helped us a lot. We concentrated only on our core area providing content to the business communities, says Ciol.com president Abraham Mathew.

We have over 6,00,000 unique visitors and we want to further strengthen our community-based programme. We provide relevant content to business communities like manufacturing, banking and retail. By October 2004, we are planning to introduce Small and Medium Business (SMB) services. Such community-based services will enhance the scope for new revenue generation, he adds.

The company has enhanced its revenue base from online advertisements to sponsorships, community programmes, CIO workshops and content publishing.

Jobstreet.com, an online job portal, is another Internet firm that survived the bad days. According to Jobstreet.com managing director N Muralidharan, the company has always charged a fee for its services and there has been no change there. Earlier we had plans to undertake business in other geographies. During the slowdown, we changed this plan and maintained our four existing offices. This helped us in cutting down expenses on new office operations, says Mr Muralidharan.

There is always a demand for jobs. During the slowdown, companies cut down their hiring plans. Today the scene has changed. Internet as a medium has matured. People are finding online recruitment a better method, compared to the newspaper or HR consultants. We are profitable since 2002-03 and for further growth, we are looking at entering the smaller cities in India, he adds.

Similarly Fabmart, which started as an online retail store, took offline methods to survive and became Fabmall. From the begining, we wanted to be in the retail segment. We never changed our focus. We kept our operational overheads under control. We never hired 100 or 200 people. Our strength was 30 and today we have just 35 people in the company,, says Fabmall managing director VS Sudhakar.

Internet as a medium is maturing now. In the next few years, I expect to grow over 100 per cent in my online business. Online doesnt require huge investments like physical stores, he adds.

Recollecting the past, Mr Sudhakar says: The tough year was 2002. Just to keep tight control over our expenses, we rationalised our vendors. Earlier we used to deal with over 200 vendors for our online stores. Today we choose carefully and have around 90 vendors. This helped us to provide quality products over the Web.

The company also plans to increase its physical presence by adding nine more retail outlets in Bangalore and some other cities. Currently, the company has 11 retail outlets in Bangalore.

These Internet companies looked at different methods for their growth while staying focused on their business models.

They became market driven and looked at offline methods also for revenues. Today, these are not the only dotcoms which are surviving in India. Companies like Rediff.com, Naukri.com and Baazee.com have survived. There is also a process of acquisition by major global Internet sites. JobsAhead.com and Baazee.com were gobbled up by Monster.com and eBay. The days of consolidation may have arrived.