_1582.jpg)
Can you make money online? The short answer to the question is “Yes!” And the long answer is “Yeah, well, hmmm, Yes!” Really, there are no two ways about this. But there are several reasons why this question persists in people’s mind. Firstly, it’s because most people view Internet businesses through lenses coloured by the dotcom bust. Remember, not all dotcoms that closed down in 2001 necessarily had flawed business models.
The second reason is that size is impressive. When people see a spanking new shopping mall they are able to “see” investments and expect the business to break even in 5-7 years. But when they see a website on a computer screen they can’t visualise the hi-tech investments that go into it and hence feel that this is a low investment business which should break even in a year’s time.
There are two types of Internet business—those that add and those that subtract. If you are looking to change your job, you would probably circulate your CV to some close contacts, e-mail it to consultants and upload it on several job sites—all at the same time. Similarly, if you wish to find an alliance for your daughter, you would send her horoscope to match-making groups, drop in a word to friends and family and also upload her profile on matrimonial sites. In both cases, you are looking to increase options by adding to existing mediums.
But if you are looking to buy a copy of The Da Vinci Code, you may check out prices at retail outlets, compare them with the pricing on several websites and finally buy from just one place. This is an example of subtraction because websites selling books need to take business away from physical outlets to grow. This model is obviously more challenging because it forces the customer to change strongly ingrained habits of shopping, not to mention concerns like shipping charges, delivery times, online security, etc. So, it takes time for customers to try this new shopping medium a few times before they can appreciate the convenience of online purchases and then shift some of their shopping to the Net.
All this makes e-commerce the most difficult Internet business to make money out of. The good news is that after eight years in the e-commerce space, we are not only seeing a remarkable growth but also profits. In the early nineties when the Indian Web economy took off, the Internet base was too small to build profitable businesses. The bust just made it worse. But the massive jump in the Internet penetration (from 3 million in 2000 to almost 40 million today), surge in broadband homes (around 10 million by end 2007), increasing comfort and usage of Net banking and credit cards, graduation of early adopters from e-mails to transactions and standardisation of products mean that now it is possible to build scalable and profitable e-commerce companies.
When we chose the online shopping model in 1999, we knew we were in for a marathon. We also knew that there would be other business models on the web that would be easier to crack. But in the long run, we also felt that a model based on paying online customers would create for us a more long lasting and loyal customer franchise. And it is this base of loyal customers that is helping us scale this business to new levels and also make some money online.
(By K. Vaitheeswaran, Co-founder and COO of Indiaplaza.in (formerly fabmall.com)
