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 Financial Daily from THE HINDU group of publications Saturday, Dec 25, 2004 |
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The online hammer... Anjali Prayag
 When Ashwin Bopanna wanted to buy a mobile handset, he decided to go the unconventional way and bid for it on the Net. "Believe it or not, I got a Samsung C100 model for just Rs 3,800 and that too in just 48 hours," he says excitedly. Is the Net netting a good deal of B2C and B2B businesses in the country? Says Suvir Sujan, Country Manager, Baazee.com, "As e-commerce transactions and Internet penetration have increased in India, the concept of online auctions has caught the imagination of Indians. Baazee.com actually offers a healthy mix of online auctions and fixed price items." Baazee.com, a 100 per cent subsidiary of eBay.com, has more than a million registered users. According to Sujan, in November 2004, the site had an average of 66,641 unique visitors and 7,02,893 page visits every day. The Web site has a list of over 1,500 product categories. According to Sujan, the site facilitates the purchase of 19 rings including 7 diamond rings, 192 watches and 48 home tools and appliances every day. The most popular are mobiles, computers, jewellery and books, lifestyle products, movies and music. Sneha Shankar, a 14-year-old, logs onto the Net everyday to scan the list of products on sale. "Though I don't do much buying, I keep track of what's available and when I have to buy something I'll know what price to bid for." In fact, the Shankar family has greatly benefited because of Sneha's interest in Net auctions. "When my brother wanted to buy some original art, we just had to ask Sneha," says her mother. The big players Baazee, India's biggest online auction place has created a lot of excitement and changes in the way people buy things. Then there are the B2B sites like 01 markets, Indiamarkets and Indiamart. Indiamart is a Web services company with B2B focus that caters to small and medium enterprises (SMEs). According to Amit Jain, Head, e-Business, Indiamart Intermesh Ltd., the site has over 6,000 clients and runs an online directory, trade auction, tender-notification related services and also provides design, development and promotion services. Wipro's 01 markets is a B2B Web site that helps organisations procure better through reverse auction process. The price of a particular material comes down as suppliers start bidding online. The site has facilitated more than 800 reverse auctions. Then there are specialised sites such as rosebazar.com, a flower auction site, which is a wholly owned subsidiary of Karuturi Networks, Bangalore. Ramakrishna Karuturi, its managing director, says the site trades in Rs 5 crore worth of products annually in categories such as roses, carnations, gerberas, chrysanthemums, gladiolas, bird of paradise, etc. The site has over 500 registered buyers and at least 75 people participating on a given auction day. Bid and buy Currently air tickets, hotel rooms and holiday packages are being auctioned or bid online in India. Says Gurjit Singh Ahuja, Executive Director, JourneyMart.com, an online travel marketplace, "When online auctions were launched it was an instant hit as there was a cost advantage. However, with the advent of the competitive Advance Purchase (APEX) fares, this advantage seems to have diminished to a great extent." The auction fares, like APEX fares, are open to Indian nationals only. Airlines and hotels put up their inventory and indicate a minimum reserve price. Opening and closing dates are also specified and the highest bidder wins. Here, providers can effectively use the bid `n' buy module to sell surplus inventory or as a yield management tool and even in certain cases as a marketing tool to arouse interest in their products. The `right' business model What kind of business models do these sites follow? How do they make money? Karuturi says they make a commission of five per cent ongross sale."We charge for services like logistics separately at cost plus 10 per cent." 01 markets charges a fixed fee for reverse auctions. Baazee.com charges sellers a transaction fee for successful transactions. However, there is no charge for listing a product online. The site also offers professionals an opportunity to list their services in the classified sections. Tackling safety issues Another issue that Indian auction sites face is that of security. According to Sujan, Baazee has instituted a variety of processes to ensure online marketplace security. The site is VeriSign-protected and all user information is digitally encrypted, he says. Nobody from Baazee can see the users' credit card information. Only the issuing bank is privy to the user information. The site also offers sellers an online payment gateway — wherein it accepts both online bank transfers and credit card processing, and also payment on behalf of the sellers. Jain of Indiamart says the site has won customer trust through its payment gateways. We have not received complaints from any credit card holder, so far, he adds. Rosebazar, on the other hand, works on a pre-deposit system because customers are still vary of online debit dealings, Karuturi says. Baazee has also instituted a dispute resolution department that facilitates communication and understanding between buyers and sellers, in case of any misunderstanding. It has a community watch programme too, where it monitors listings for any conflict with Indian laws. Picture by G.R.N. Somashekar |