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October, 2001 MASTER FILE |
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Master
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Politics
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Dotcom Survival Guide The war for online revenue has left dotcoms battered and bruised. Or dead. But a few have been doing things right. A look at the success stories, and the rules of engagement we can learn from them. By K. Jayadev and R. Srinivas
Dotcoms went belly-up because too many ignored the rules that have always determined commercial success. Far too many "commercial" enterprises set out with little or no idea of (i) who their customers would be; (ii) how they intended to make money from them, or; (iii) how to retain these paying customers profitably.
The current failure rate is currently higher than industry's average of about 85 per cent, because the lure of easy money allied with a poor understanding of what made commercial sense on the Net and what didn't brought in an unusually large number of ill-equipped entrants. "A lot of dotcoms lacked sustainable business models, and didn't pay attention to business fundamentals," says Microland CEO Pradip Kar. But over time we will probably see the dotcom business success rate settling at around 15 per cent. Just like any other business, there are rules to follow that dramatically improve your chances of being within that 15 per cent. Presenting the Computers Today guide to dotcom survival: Have customers No customers, no earnings, no business. Can it possibly be more obvious than that? Yet despite all the talk about creating communities, how many dotcoms actually provided customers with value? In a report, Web site CreativeGood.com, estimated the revenue loss to dotcoms through poor customer experience at $19 billion in 2000. With customers you have to:
Says paisapower.com CEO P. Austin, "Customers are your most valuable resource; they provide revenues, word-of-mouth publicity for your site, and feedback that helps you improve continually. You can't afford to lose them."
Possess a plan You ain't goin' nowhere without a business plan. And it isn't just about funding; says Satyam Infoway CEO R. Ramraj, "Companies have been failing because their business model consisted only of getting to the next round of funding." There are a number of models you can follow. The choice would depend on the nature of your business and your resources. The critical thing to remember is that as a dotcom, your business model must harness the strengths of the Web (for instance, it's the cheapest way to get a lot of people together to trade), while sidestepping its weaknesses (its anonymity can be a major credibility trap, for example). Yes, lots of very bright people forgot these things. Here's the low-down on the major dotcom models: Brokerage model: Brokers bring buyers and sellers together and facilitate online transactions. The major models include:
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The trouble
with global economic downturns: they divert attention from specifics.
That's why it has been easy to make sweeping generalisations about the
failure of the dotcom as commercial entity. We think otherwise. Lets say
e-myths are like any other myth; it can be profitable to strip them away.
