Jul 9, 2008

Business - From Clicks to Bricks

In the late 1990s, the dotcom boom saw every second company jump for the online model. Now a decade later, the reverse seems to be happening. Many online companies are finding it necessary to have an offline presence to expand their business. Today, Makemytrip.com, the travel portal, has brick and mortar outlets in 23 cities. Another travel portal, Cleartrip, less than a year after its launch, set up kiosks in select Big Bazaar outlets. Yatra.com has set up what it calls Holiday Lounges in 10 cities, apart from setting up travel desks in Reliance World outlets and Hughes’ NetFusion centres. It has plans to launch 15 more Holiday Lounges this year. Another travel portal, Travelguru.com, has six retail stores called Travelguru Holidays. This phenomenon is not restricted to travel sites. Matrimonial services, movie rental firms and gaming players, which started their journey online, have all hit the ground. Why? Time to go offline
According to the Internet and Mobile Association of India (IAMAI), the Indian online travel industry – including air, rail and hotel reservations, car rentals and tour packages – is estimated to be Rs 7,000 crore. But online travel sites have put serious money into offline ventures or are considering it. Yatra.com, whose investors include Norwest Venture Partners, Reliance Capital and Network18, is targeting business worth Rs 20 crore a month from its outlets, according to Ashish Kishore, head, hotels and retail business. Makemytrip.com has outlets where customers can walk in and purchase travel products. The website had earlier launched booking counters at Spencer’s and Subhiksha stores. Ezeego1 is another travel site that has started a retail outlet in Mumbai. Take matrimonial sites. Shaadi, Bharatmatrimony and Jeevansathi have all launched their offline presence as well. Or look at job sites. Jeevansathi’s parent company, Info Edge, which owns Naukri, also offers offline Candidate Services through centres across its network of 61 offices in 41 cities, where candidates can walk in to get their resume written by experts on paying a fee. Meanwhile, Cine Sprite, an online DVD rental firm, founded in July 2006, has launched walk-in Express Counters in shopping malls. Reliance ADAG’s online movie rental site, BigFlix.com, also branched off the web to launch 50 DVD rental stores in 10 cities. It plans to launch 150 more by March 2009. The group, which also owns gaming site Zapak, has launched Zapak Gameplexes, which allow gamers to come in, play games and compete. Touch and feelFinding offline travel agents, marriage bureaus, movie rentals and employment agencies is not surprising; years before the Internet came along, these businesses were thick on the ground anyway. But what’s pushing online firms to go offline? Kamal Gianchandani, chief operating officer, BigFlix.com, says, “The landscape in the domestic market requires an offline presence. Pure online play is plagued by market penetration issues.” According to the India Online 2008 survey report released in May by JuxtConsult, only about 13 per cent of the 300 million urban population actively use the Internet, though this figure grew by 33 per cent over last year. Adds Stuart Crighton, founder and COO, Cleartrip.com, “In India, only about 10 per cent of the $20 billion annual market of travel products is transacted online. The majority is offline because of limited Internet penetration and adoption of e-commerce, the existence of a cash economy and loyalty to offline travel agents.”
India is not the only country facing problems of Internet penetration. With only about 21 per cent of China’s urban population having access to the Internet (according to the China Internet Network Information Center), more and more online travel service providers in China are turning to offline services. One travel site, Travoo.com.cn, took the lead by tying up with C-Store, a convenience store chain. Under the agreement, the parties will jointly launch travel service booking locations in more than 220 C-Stores across the country to provide 24 hour travel booking services for customers. Low Internet penetration is not the only reason. Each category has some other reasons to go offline. In travel, decisions on products like domestic and international holidays are more involved, and personal interaction with customers is required to help them select the package that best suits their requirements. Thus, personal attention and advice from agents are desired by customers. Keeping it private
Personal attention is also a big reason for matrimonial sites – a market that is estimated at Rs 140 crore – to launch on-ground centres. Incidentally, this category has a high number of offline outlets with Shaadi launching 155 centres and Bharatmatrimony, 102. What happens in the offline store? Says Sumeet Singh, national head, marketing, Info Edge India (which owns Jeevansathi), “We have counsellors who are trained and thus bring in a one-to-one personal touch to the service. We help users in registering the profile and filling in information about themselves. We find the right profiles based on criteria given by the member – age, religion, caste, profession, location. Post that, registered members receive the best matched profiles on a regular basis.” Also, many Indian parents are part of the bride – or bridegroom – hunting process. Most of them are unable to benefit from the technology that the online matrimonial segment offers. That was the reasoning behind Shaadi.com’s offline foray, too. “Parents, who form key decision makers, are usually not as Internet savvy as their children,” says Vibhas Mehta, business head, Shaadi. Building communitiesGaming cafes, according to Zapak, are where the action is. As a result, it went ahead and launched Gameplexes. Says Rohit Sharma, COO, Zapak Digital Entertainment, “Gaming is at the inflection point in India and poised to become one of the biggest digital entertainment options in the country.” According to him, worldwide, and especially in China and Korea, the gaming industry has been fuelled by gaming cafés. These are dedicated online gaming zones where youngsters come and spend hours playing games. It also is a big community building destination for the gamers. In South Korea, for example, despite the 95 per cent broadband penetration at home, more than 50 per cent of gaming revenue comes through offline gaming cafés. In India, according to Sharma, more than 70 per cent of gaming happens from cafés, but most of these are unorganised mom and pop stores with very low PC specifications, bad connections and an ambience that is nothing to write home about. An average Zapak Gameplex has a floor space of 1,500 square feet and is equipped with top-end infrastructure, high broadband speeds and world class content

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