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Finance > Venture Capital > Features
> e-Business...
e-Business :
Strategies for Success
[Excerpts from the presentation made by Anurag Khanna, CEO, banknetindia.com,
at the symposium organised by NITIE , Mumbai on 4th March 2000]
Without going into the technical aspects of E-business, I will try to touch on the various business models available for the internet start ups. Internet is one of the most independent, fiercely competitive domain where ideas reign supreme. There is no consistent business model which can be followed by all net ventures and obsolescence rate even for business models is high. There are a number of business models which are being tried independently or in combination of one or more models. Permutations and combination of the basic models to arrive at something new is, of course, the order of the day. To mention some of them;
1. Content Business Model: This model makes accurate, updated and analytical information available to visitors at a price. Here the visitors with specialised requirements are allowed access the information at a cost like Crisil. OR the additional information as requested by visitor is provided at a cost. With proliferation of vertical portals and freely available information on the internet, this model is fast becoming obsolete. It can be used by established large Institutions supplying analytical information like Crisil. However, it is no longer economically viable and hence can no longer be the sole business model. For example, in case of banknetindia, the access to all information is free. Even helpline at banknetindia, which provides additional information and clarifications is mostly free. This model is thus be regarded as only one of the revenue models for a portal. In coming days the revenue from this model is expected to further decline.
2. Ad revenue Model: This model is suitable for vertical portals run by highly skilled teams, which can attract and retain visitors effectively through its focussed content and other services. It must target a loyal user base and keep renewing itself to ensure a steady inflow of visitors to the site, ensuring good returns in the long run. This model leads to dedicated eyeballs, which should attract advertisers. Unfortunately, the level of maturity of internet advertisements is not high enough. Most of the advertisers still flock to the top few general portals, little realising the quality of eyeballs they are hitting. They do not realise that they can get more locked eyeballs by advertising on vertical portals from different areas at much lesser cost. With increased maturity of internet advertising, this model is expected to become the target model for vertical portals like banknetindia.
3. E-Commerce model: This is the most publicized model at present. This model envisages completion of transaction (except delivery) while still on net. Best example of this model today is Amazon.com. In India, however, the success of this model is some time off as it requires regulations to be in place. While cyber laws are still being discussed some portals have started business on half-baked models. While the ordering takes place on the net, actual payment and delivery is by physical means. Even in ordering, there is no accountability. Fake orders and defective goods are most important enemies here. At best, it can be said that this model has cut down the costs for the suppliers. Such virtual shops may need to have multiple tie-ups with major content based vertical portals like banknetindia to attract traffic.
4. Brand model: This involves building up a distinct brand with a virtual community of loyal visitors and members with the help of interesting, updated content and features on regular basis. Once the brand is established, it can be leveraged for induction of large funds for expanding the horizon and promoting multiple but related products. As a pure business model, this has its limitation. Not every internet start up can expect to become India World, India Info with large valuations.
In a nutshell, the prime requirement of all models is to build up a steady stream of visitors/ members in their own way. It is a business with a long term perspective with customer base as the prime objective.
A word of caution here for internet start ups. No business model is a formula for success. Every venture will have to conduct a SWOT analysis of its own, decide a USP for itself and devise its own model suitable for the USP. It is easy to get initial response for your website with some heavy visibility. The crunch, however, is to sustain this interest. This means that you will need to have a combination of Interaction (email & chat), content (useful, relevant and updated), competitions, prizes and rewards etc.