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Building The Foundations of e-Business

Asian dotcoms should target region's consumers and build on a solid idea. Many entrepreneurs harbour dreams of dabbling in the Internet, building a brand to a scale that allows them to list their company and then sell it for an unspeakable sum. The successes of the young e-entrepreneurs in Silicon Valley, continue to fuel this dream.

After all, Sabeer Bhatia, creator of Hotmail, did it. And when he sold Hotmail to Microsoft, cashing in on his concept, he remained the company's top executive and led it to further growth.

The recent meltdown of the dotcom industry has somehow tarnished the dream. Fund managers and Internet analysts are unanimous: venture capitalists and the dotcom angel investors are now being prudent. Listing an e-business on the stock exchange is no longer a sure bet, since dotcom valuations are more in line with real business value.

E-entrepreneurs in Asia must, like Mr. Bhatia, have a compelling idea if they want to harness the earning power of the Internet. But they have to do more than that.

Strategic planning and manoeuvring are required for an e-business to get on the path of profit. Established dotcoms demonstrate that plotting the right revenue streams, capitalising on niche markets, and making wise partnerships and acquisitions represent a few more ways to gain an edge.

How To Succeed In Dotcoms

E-business consultants in the U.S. issue sober warnings about the difficulties of the e-business industry, mainly because most failure involves implementation. Experts concede that it is hard to get a Web site right, and even harder to get one smoothly functioning that makes money too. The problem is that many Web sites are just taking up space on the Net; they don't really do anything.

Quite a few entrepreneurs in Asia understand this and have taken measures to achieve success in their business.

But as it is with almost any business, it is a constant struggle: whether you are an e-commerce company, or you are a brick and mortar company trying to leverage your business on the World Wide Web.

While the current market favours the Business-to-Business model more than the Business-to-Consumer model, every case has to contend with basic questions. Where will the profit come from? Is your business a genuine Internet business?

Entrepreneurs on the Net should plan for profit two or three years down the line rather than five or ten years. Traditionally, e-businesses gave themselves ample time to make a profit. Now, they no longer have this luxury. Start-ups should try to turn profits more quickly-or not start at all. Experts project the market will streamline as funding becomes more limited, so essentially, your e-business must make sense, in the traditional brick and mortar manner. The path to profit must be clear.

Industry experts predict that those who will achieve moderate success will be ventures that have a sound revenue model as more users begin to transact online. E-businesses that count solely on online advertising must tap more revenue streams if they want to survive, since online ad spend is a minuscule amount in the larger scheme of things.

Other points to consider are whether you will succeed in drawing traffic to your Web site and whether you are able to manage the business issues of privacy and security to the satisfaction of contemporary Internet users as well as your target market.

It's easy to see why entrepreneurs are attracted to doing business on the Net. Since the backend of a Web site allows entrepreneurs full view of consumer traffic, they have access to consumer behaviour on their site.

Entrepreneurs can tell when users log on, how long they stay at which page, and even where they went next. This is valuable information that's measurable in real time, and it takes away the guesswork that traditional marketers grapple with.

It's also very useful in helping to develop a stickier site. From a user's perspective, however, it does present some privacy issues. All Web sites should have a proper privacy policy that lets users know how personal information is going to be used. In the U.S., the absence of a proper privacy spells doom for many Web sites.

CASE STUDIES

A Royal Revenue Stream

The Royal Sporting House (RSH) Group, which established its foray into the Internet in the 4th quarter of 1999, announced its public listing just last October under Royal Clicks. This is testimony to the financial community's confidence in the new company, which has done its homework. The RSH Group identified the right revenue streams for their e-business.

The e-division will distribute over 3O major brand names in sports, golf and active lifestyle products in over 29 countries. According to the company's executives, the slowdown in the sporting good's industry has led to flat sales, which makes it ideal for Web-based services.

Apart from the sale of sports and lifestyle products, Royal Clicks will also launch a B2B site in that it offers U.S. vendors access to the sporting goods community in Asia and the Middle East.

Small and medium U.S. vendors will minimise their costs by availing of Royal Clicks B2B site, and they will have instant access to information as well as more convenient online procurement.

Taking The Upscale Route

Known worldwide for its luxurious spa resorts, Banyan tree established a corporate Web site, Banyantree.com, three years ago. Initially, the site was simply an online company brochure. Last year, however, the company launched its e-business unit. Banyantravel.com was born in October of 2000. Banyantree.com remains to provide online inventory and reservations facilities.

But Banyantravel.com leverages the brand to go into related business in the niche, exclusive travel market. The niche: the free and independent travellers aged 30 and above. Customers will no longer be able to walk into their tour agency to book a Banyan Tree hotel, they will have to do it online.

As a pure Web venture, the unit will offer potential customers 700 luxury boutique hotels in over 50 countries. These sophisticated consumers are unlikely to be captured by traditional mass marketing, but they are mobilised by the Internet.

The Bonus Of A Brand Name

Similarly, an e-trading company that markets Asian products to the West previously known as Asia21.com made a strategic acquisition, designed to give them the edge of a solid brand name. Asia21.com acquired Gnomadic Publishing's East Magazine.

Yeo Han Yong , CEO for what's now known as East Lifestyle Corporation, also saw that like his company, East had a regional focus and not merely a local one. With this move, the business gained not only a new name, but a slick, powerful new media image, driven by East Magazine.

Essentially a B2B site, East.com sells Asian goods and products, furniture, and accessories to distributors and retailers in the U.S. But it's also a B2C site as customers will be able to log in and look at products they may want to buy. The magazine will do stories on the products and the Web site will match the magazine's look and style.

Why E-Businesses Fail

Experts say that one chief reason for the failure of many e-businesses is under-capitalisation. When businesses simply do not budget enough money to build a successful, smoothly functional site, they are destined to fail.

Establishing a professional quality e-commerce site is not a Do-It-Yourself project. Few entrepreneurs have the knowledge and the time it requires. Furthermore, Web talent can be very expensive, which makes hiring right critical.

However, if you make your site work on a basic nuts and bolts level, and are prepared to make investments for a site that accommodates increases in traffic, this is a good beginning. Many Web sites aren't built with the growth of traffic in mind so while a site may work fine with 100 users, it begins to show strain at 1000 users. This is why e businesses must have strong technical staff to solve problems and prevent outages.

The management and operation of an E-business is no different from traditional business, but it does require more. Asian e-businesses should focus on the unique opportunities in the region and they should not attempt to mimic their counterparts in the U.S. or Europe.

Asian dotcoms have to target Asian consumers and cater to local requirements and business practices. They should also have the potential to expand globally by internationalising service offerings. But predominantly, they should be built upon a solid idea.



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