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Clicking In Style

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Last year, Anisha Singh gave birth to a baby girl. Though the baby is the centre of her world, Singh will not part with her first love, Mydala — a group-buying website she started with her husband Arjun Basu in August 2009.

Her dedication and love for Mydala can be well imagined by the fact that she took a sales call within four hours of delivering her baby girl and started attending office within 10 days. "I can't ignore Mydala. This is also my baby," says the 33-year-old.

New-age Internet is changing fast, and many startups are growing rapidly, clocking revenues in crores. The space is bustling with high energy. Group buying, local search engines and education are the new mantras of success on the Web. What's more, there is huge interest from investors. "Group and private buying clubs are seeing new investments," says Pradeep Tagare, director at Intel's VC arm Intel Capital.

Group buying sites offer deals at heavy discounts, getting mass volume for them. Though it is new to India, group buying has been growing in the US for some time. For instance, US website GroupOn started by offering 50-90 per cent discount. Some of the prominent group-buying websites in India are Mydala, Koovs, Snapdeal and Dealsforyou. For Mydala, discounts go up to 70 per cent.

For instance, one merchant gave a 93 per cent discount for a tattoo. Undoubtedly, a great deal for the customers, but what does the merchant gain? Simple. He gets hundreds of customers in a matter of days.

Verticals that have picked up a lot of traction are highly popular among the younger generation. Think restaurants, salons and recreation such as weekend getaways. "One weekend, we had a cruise package as a deal and it sold so much that we had to do multiple cruise bookings," says Kunal Bahl, founder and CEO of Snapdeal.

The portal has about 30,000 retail tie-ups and has a traffic of 250,000 visitors a day. Operating at a profit margin of 30 per cent, Bahl says the revenues are in double digits.

Similarly, Koovs, which started in late 2009, has overcome its initial hiccups. It had issues in selling even 25 coupons per deal, but now deals sell over 100 coupons and discounts go up to 75 per cent. Koovs focuses on merchants who can't afford expensive marketing. "This is about finding out experiences that have not been marketed," says Rajesh Kamra, founder and managing director of Koovs.

While primarily Mydala, Snapdeal and Koovs offer the same kind of services, there are a few differences in the way they operate. Mydala takes the whole amount (price of the deal) in one go. After keeping a certain amount (20-30 per cent) as fees, it passes the rest to the merchant. Snapdeal, on the other hand, collects a marketing fee or a token amount, while the customer pays the rest on visiting the shop.

Bahl says the Indian e-commerce market isn't fully developed for high transaction deals. Koovs follows both models. For low-ticket deals, it collects the entire amount online; for higher amounts, the customers pay the merchants.

From Textbooks To Computers
Cut to Kavita Iyer in Bangalore. Iyer with her IIT batchmates — Sanjay Agarwal and Sushma Abburi — founded Bangalore-based Minglebox in August 2006. Iyer says education as a business model has huge potential in the dotcom space. Minglebox provides a platform to students to interact with institutes and form an opinion about the institute of their choice.
Currently, it helps connect 8,000 institutes with over four million students. "We help students make decisions, whether it is for primary education or for MBA or to study abroad," says Iyer.

An institute can pay a minimum of Rs 25,000 to Rs 30,000 and get itself listed on the website. When a student searches for a particular category, the institute's name shows up. Iyer feels it is a smart and easy way to save marketing expenses and get straight to the desired list of candidates.

For better visibility and access to the database, one has to pay more. "Subscription goes up to as high as Rs 3-4 lakh," says Iyer. A higher subscription amount allows the institute to directly interact with the student.

Minglebox not only acts as an enabling platform to connect institutes with students, but also as a marketing and branding partner. Though Iyer does not want to reveal Minglebox's revenues, she talks of third-party investments. Two rounds of funding worth $8 million have been made by Trident Capital, Sequoia Capital and Silicon Valley Bank.

If Minglebox links institutes and students, K. Ganesh's TutorVista provides online tutorials. TutorVista, which has been bought by publishing giant Pearson for Rs 577 crore, was started about five years ago with the aim of cashing in on India's cheap, but intelligent, workforce.

Personal education in the US costs $40-60 an hour. TutorVista hires and trains teachers in India to provide online tutorials to US students at half the cost. It pays teachers upwards of Rs 8,000 a month and provides unlimited tutorials at $100 a month. "We wanted to adopt the Netflix model of a flat rate throughout the month," says Ganesh.

TutorVista employs more than 2,000 teachers, of which 90 per cent are in India and the rest in the US. TutorVista has more than 20,000 active students, and in a peak month, it gets about 6 million unique visitors.

Ganesh feels there is space for micro-transactions in education; students might pay to get only a single doubt cleared. E-learning on mobiles is what he expects to follow "with tablets and other mobility devices making inroads".

While Minglebox and TutorVista have managed to create a niche, the online education sector is a difficult nut to crack. For instance, NIIT has been there for long, but it has not been able to create any path-breaking ventures.

Besides, in India, where personal tuitions are still cheap, students might prefer studying from a local tutor. But if companies such as Minglebox and TutorVista come together and start working with each other, things might change.

Apart from education and group buying, areas seeing a market pull are home shopping and local search. In Bangalore and a few other metros, Asklaila has built a strong base. "There is lack of local information in India, while cities are growing significantly," says Sriram Adukoorie, CEO and founder of Fourint (which offers Asklaila).

Adukoorie says the business has been growing 100 per cent year-on-year and there is huge scope for investment. The firm has raised two rounds of funding worth $12 million (about Rs 54 crore) from Matrix Partners, Lightspeed Ventures and Silicon Valley Bank. Sulekha, another such website, is also growing fast.

Though new generations of dotcom entrepreneurs are creating a mark for themselves in the online space, they still lack investment. Over the past year, there have been only around a thousand angel investments in India, against 125,000 in the US.

There are many hurdles ahead for the new age dotcoms, before they become as big as the Naukris and Makemytrips. But with the space growing and a slow, but steady, trickle of investors coming in, it won't be long before we see a group of emerging young entrepreneurs from this side.


(This story was published in Businessworld Issue Dated 31-01-2011)