IndiaMART.com's successful
business model featured on CNBC as analysed by McKinsey.
 
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 CNBC:
It seems that not all dotcoms have been affected by the slowdown.
Strange as it may sound, a few websites are actually making profits!
Namarata Tandon caught up with one such dotcom-
IndiaMART, and found out what makes it tick.
Intrading is a small export house that specializes in wooden furniture.
In 1996 they set up a website to attract overseas buyers. It was a
wasted investment because not one customer came to their site. In 1999
they were approached by IndiaMART.com
with the promise of a redesigned website, a listing on IndiaMART's
online directory and guaranteed response from importers.
Vikram Jain (Proprietor, Intrading- a client of Indiamart.com):
The result was that we went from not having any traffic at all to
getting a yahoo registration approved within a year. We also got,
possibly, I think about 20 emails a day coming in from no emails coming.
(From) Enquiries that we generated, we completed orders. We started
doing business on the Internet which we never earlier thought possible.
CNBC: IndiaMART.com is an online directory of Indian exporters
and manufacturers. The site lists nearly 70,000 Indian firms under 450
categories.  There
are other Indian B2B directories on the Net, but what makes IndiaMART
more successful is their strategy of getting high visibility on search
engines.
Dinesh Agarwal (Founder & CEO, IndiaMART): (Thinking of)
Internet as a medium, the first and foremost thing that comes to one's
mind is going on to online directories, or online search engines for
searching any product. We thought if we are able to do some promotion on
Internet search engines, most of the worldwide buyers would be able to
find us immediately through the search engines.
CNBC: This strategy allows IndiaMART to guarantee buyer queries
every month. This combined with the fact that listing on the site is
free of cost makes IndiaMART a very attractive option even for those who
are not actively seeking to promote their business on Internet. Once
business from the Net starts pouring in, clients are encouraged to
develop online catalogs- their own webpages linked to IndiaMART's site.
The prices are steep but customers still come to them in the hope of
getting of being part of a highly visible B2B site.
 Ashutosh
Padhi (Associate Principal, McKinsey): There is nothing distinctive
in the strategy that they are pursuing. Many other companies have tried
to follow a strategy that is very similar to what IndiaMART has done.
Where I think IndiaMART has done an extremely good job is that they have
managed to match cost to revenues. Therefore, despite that fact that
their revenues have not grown dramatically, and are still at US$1million
level, their costs are actually much lower than that and as a result the
company is showing a profit.
 CNBC:
From three people in 1996, the company has grown to 170 people
spread over offices in three cities. Revenues in 1999 were 135 lakh
rupees. In 2000 they rose to 287 lakh rupees- a rise of 112%. Profits
during the same period doubled from 6 lakh to 14 lakh rupees, and the
operating profit margin from 9.97% to 12.09%. It was the only dotcom
which showed any profits in the Netsense-Business World Survey conducted
in May this year. IndiaMART has recently launched B2B auctions on its
site and is hoping this would be a major revenue earner two years from
now.
Ashutosh Padhi: I see this as a company that will continue to
be a very interesting player within a certain niche. Today I am
hard-presed to visualize a scenario in which this would be a 50-100
million dollar company five years out, but I would argue that with the
cautious approach that the management of this company seems to have,
they would probably be continuing to make profits and they would
continue to have made progress and acquiring more revenues and customers
within the space in which they operate. 
IndiaMART has combined sound business practices with an understanding
of the new economy. It has grown slowly and steadily, away from media
hype and hopes to leverage on its solid Net presence in the years to
come. Namarata tando, CNBC India, New delhi.
CNBC: Well, hype doesn't always ensure success...
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