Building links with a new medium

Says Indranil Ghosh, Regional Manager, Delhi, Rediff Communications Limited, a company that promotes e-business. “Till the last financial year, Web-savvy companies were basically testing waters. This time on, companies are making their presence on the Web with well-defined strategies and a vision on what they are expecting from their site or page.”

Atpresent, mostly banking and finance companies, information technology companies and small shops are advertising on the Web. Consumer electronics, human resource development and recruitment firms, infrastructure companies and automobiles companies are beginning to see ample benefits of being on the Net. Yet, there are companies that have set up sites because it’s fashionable and many PSUs, for instance, don’t know what to do with them.

The Web has certain core characteristics. For one, the audience is literate and affluent. The netizen surfs into the site pro-actively. Secondly, the company has greater attention span of this audience. And finally, on the Internet, the company can quantify the response.

Moreover, it works out much cheaper to advertise on the Net. It cost anywhere between Rs 1 lakh and Rs 3 lakh to have a banner advertisement on a site for a month.

If the medium is cheaper, its reach is also quite small. According to estimates, only around 5 lakh people out of a total population of over 90crore are actually aware of the Internet. At present, VSNL accounts for more than 1.2 lakh accounts in the country, out of around 2 lakh subscribers. The Department of Telecommunications has some 20,000 accounts, ERNET accounts for 35,000 subscribers while NICNET has 15,000 users.

The site — rediff.com — has over 30 advertisers. “Keeping the profile of the audience in mind, advertising on the Net can be very useful for brand building, HRD, corporate communications, channel communication and in corporate image building. Hindustan Lever Limited, Citibank, Hewlett Packard, Opel, Maxtouch and Ranbaxy are some cases in point,” adds Ghosh.

Just a year ago, buying vegetables on the Internet was almost unheard of in the country. Today, there are at least half-a-dozen sites that hawk books, cassettes and CDs, vegetables and groceries on the Web and deliver them to the buyer’s doorstep.

India has not made cash transactions on the Web legal, but companies like Rediff-on-the-Net, I.B. Saxena DesignLabs and Annet Communications have found the means to sell wares on the Web.

By the end of this year, the country should have a new Information Technology (IT) law, that would pave the way for legal e-commerce transactions in the country. According to Ravindra Gupta, Secretary, Department of Electronics, the draft IT Bill has been referred to the standing committee and is likely to be passed in the coming session of Parliament.

The monopoly of the VSNL has already been challenged. Companies are gearing up to become Internet Service Providers or ISPs. According to reports, more than 120 companies have already shown interest in operating services in the country.

World-wide, ISPs do not make money by simply providing Internet connections. It is the value-added services that make businesses viable. E-commerce is one such important service. The ISPs also offer specialised information and provide localised search engines to the subscribers.

Dishnet Limited, a Sterling Group Company, is working towardsbecoming India’s first private ISP. The product would be called eth.net. “We hope to begin operations within two months of getting the ISP licence. Eth.net will begin with six cities and expand to 44 cities across the country within two years,” says Prakash Arya of Dishnet Limited.

The more the Web expands, the more the business. Globally, e-commerce has recorded a 300 per cent growth rate, per annum, and according to Gupta “electronic commerce is expected to account for about US $ 200 billion industry by 2000 globally.” At present, more than 2.5 lakh businesses are said to be selling goods and services on the Internet. Since cash transactions are not legal, companies have opted for the cash-on-delivery route.

According to Rohan Bulchandani, Chief Executive, Annet Communications, a company that had set up indiabookshop.com (a book store on the Net) in June this year: “At present, it is quite difficult for a company to implement a credit card acceptance system.” Through this system, thenetizen can enter the credit card number and pay online for the transactions.

“Our credit card acceptance system should be functional by Diwali. It will accept major credit cards including Visa and Mastercard,” says Bulchandani.

Annet Communications receives anywhere between 50-100 orders per day. “We do approximately Rs 3 lakh worth of business per month,” he adds.

But some like I.B. Saxena, Chairman, I.B. Saxena Design Labs — known more as the man behind Baba Bazaar are apprehensive about on-line payments on the Net. “Even though we are in a position to accept payments by foreign credit cards through secure servers, but due to our apprehensions we have decided against the decision.”

Rediff-On-The-Net was the first to provide a credit card acceptance system and is undoubtedly the most talked about e-commerce site. “We receive more than 1.5 million hits per day, 40 per cent of which are from India and 50 per cent are from North America,” says Ghosh. He feels that e-commerce is bound to be apart of our life in the next one year or so.

The company’s credit card-based payment method accepts both rupee-based as well as international credit cards. It has tied up with Intel, IBM, FedEx, Hongkong Bank, VISA and Verisign for e-commerce.

Baba Bazaar is incurring a minimum loss of Rs 2,000 to Rs 3,000 a day, but that hasn’t deterred their expansion plans. The company would begin operations in Mumbai this month. “Even though we are making losses, when we look at the future, it all seems worth it,” says Saxena.

The Internet may have caught everyone’s attention, but it will be a while before it receives large ad spends.

According to Sanjay Trehan, a Delhi-based advertising consultant, “less than 1 per cent of the Indian ad spend goes to advertising on the Net.”

As the Internet’s penetration in the Indian society increases, so will the advertising on it. And if laws are changed soon enough, e-commerce could soon rule the lives of companies and consumers alike.