Join the Dotcoms

Many have been disillusioned by the sinking of the dotcom ship but there are those still jumping on board. We take a look at who’s swimming and who’s sinking.

  • E-Mail
By  Vijaya Cherian Published  February 26, 2003

I|~||~||~|The dot com industry seems to be cracking up all around us. Several online businesses have gone bust and many web sites that won awards in the past year have either folded or downsized their staff to keep afloat. And yet there are others that have emerged on the World Wide Web to live the dotcom dream. Some have managed to break even, some are struggling to keep their heads above water and still others have stepped in to give it a go.

Maktoob.com is a survivor. “We broke even in the last quarter of 2002 and this year, we hope to see profits,” says Samih Toukan, CEO of Maktoob.com. Back in 1998, the Jordan-based internet services company won the Arab crowd over by developing a free Arabic e-mail service.
It was the region’s first and, more importantly, it could even be used by users who did not have an Arabic keyboard or an Arabic operating system — a virtual keyboard was built into the web site for the purpose. Slowly, Maktoob introduced other features such as chat, discussion forums, music and other entertainment sections to develop the Arab online community. Today, the site boasts of three million registered e-mail users, which is one quarter of the region’s entire internet population.

Husni Al Khuffash, regional sales and marketing manager of Maktoob.com has seen the gradual change in people’s attitudes towards online advertising. “By 2000, we had a fairly large database and decided to get clients to advertise online. During Gitex that year, we conducted some test campaigns to check the potential in the market and found very poor customer awareness. Since then, we have come a long way and some of our clients have moved from booking banner ad space to sponsoring specific zones. Companies have come to realise that it is not important for them to have a regional web site of their own. They just need the traffic and we can give that to them. So we got Pepsi music and Twix melodies. Seeing the success of those programmes, we now have Snickers football on board as well,” says Khuffash.

||**||II|~||~||~|Now Maktoob is gradually exploring other methods of e-commerce. It has not just opened an online shop but it has also developed a new prepaid online payment card called CashuCard. This, according to Khuffash, will also benefit people in countries like Libya, Syria, Sudan and Iraq that can’t make online credit card transactions because they are on the embargo list of US credit card companies. Users who register on www.cashucard.com can purchase pre-paid cards and use them to purchase products online. Maktoob has addressed certain issues in this regard. For one, people can choose a cash-on-delivery mode of payment for the card. The company has tied up with Aramex to ensure free delivery of cards to customers.

Secondly, CashuCards are currently accepted only by a few merchants. As a result, Maktoob gives users the facility to purchase a virtual mastercard number from the cashucard web site. The number can only be used if there is enough credit on the cashucard. “This is a very secure measure as there is no money on the credit card itself. You will have to transfer money from the cashucard to the credit card for use and there is only a limited amount.” By introducing CashU, Maktoob hopes to open doors to e-commerce in countries where normal credit card transactions have not been possible so far.

By conceiving and implementing ideas that the Arab world so badly needs, Maktoob has stayed ahead of its competition. More importantly, the company has also resisted the temptation to invest in too much infrastructure and people. “We started with a tenth of the capital that big players like Arabia.com had,” says Khuffash. Today, they are downsizing while we are hiring. They used to have 25 people in sales but now they have only three. while we were just two here and now, we are looking to hire more people,” he says.

||**||III|~||~||~|Maktoob.com, however, has been in the news for a long time and received the Best Information Portal Award at the recent Middle East IT Awards in Dubai. But there are less prominent ones that have also done their owners proud. A good example of this is bestwishesonline.com and emiratesflowers.com. The sites may not have been exposed to the media but they have caught the attention of people who want to send their friends in the Middle East gifts like flowers, cakes, perfumes and other accessories. And behind both sites is one woman -- Poornima Mehta.

Mehta gave up her career in fraud management and credit compliance at Mashreq Bank in November 2001, when she had a baby. But with an MBA in marketing and work experience in financial houses, sitting idle at home was not her cup of tea. That’s when Best Wishes Online was conceived and was soon followed by EmiratesFlowers.com.

“When I was sitting at home, I spent a lot of time on the Net,” says Mehta. “That’s when I saw that there was a lot of potential for this kind of a site in terms of business. I have many friends who live abroad and send me gifts for my birthday. And I suddenly realised that there are other people in the region as well with loved ones abroad. But there were no web sites delivering gifts to any of these places.”

So she started a gift site, gradually networked with florists and shops in different parts of the GCC and now has a reputed business going on the Web that pays much higher dividends than a job at a bank. “Now, I deliver to the UAE, Bahrain, Qatar and Kuwait. I have never been to some of these places but the internet is one small world, and I have gradually built a good reputation,” she says.

Mehta’s secret lies in her business model and her customer service. “I got this site built by an Indian company called India Pride. The best part of the site is that it is adaptable to my needs, in terms of adding extra options. When I got the site developed, I was very clear that I wanted a multi-pricing, multi-location site. That way, I could add a new country or a new product without any technical help. Today, I take all the pictures of my gifts, I write all the content, and I do everything on the site. India Pride does a little bit of maintenance for me on and off,” she explains.

It took Mehta six months to break even. “The investment was very little,” she says, compared to the return on investment. “$4,500 for the web site and extras for a trade license, bank account, sponsor etc.” Work for Mehta often begins at night because her customers are mostly in the US. “Invariably, as most human beings are, these people sent in requests at the last minute but still, I make sure I deliver.”

||**||IV|~||~||~|As a single merchant, Mehta needs to avoid fraud if she is to stay on in the business. “My credit card and fraud management background have helped me to manage my site cautiously,” says Mehta. “I have rejected orders if I suspect fraud. I just don’t process some orders. If the cost of the product is more than $150, for instance, I ask the person to fax the request with his signature. And it’s all on a case-by-case basis.”

Mehta says there are ways to detect fraud orders. “You can ask for the name of the issuing bank and other personal financial details that only the card holder is likely to know,” she says. “There was this guy who gave me an order for $300. He would fax me the request again and again but refuse to put his signature on it. It’s worth letting those go,” she says. “After all, now that I am on the other side of the table, I have to protect myself against chargebacks,” she says, referring to the current system where credit card companies charge the merchant back for the product if a customer contests a purchase.

Many factors have contributed to Mehta’s success. For one, she continues to liase with new shops each time they open and is gradually widening her enterprise to include more countries. She is constantly on the look out for new products to attract customers and she monitors the placement of her sites regularly on search engines to ensure that they register in the top ten.
Like Mehta, Soniya Kirpalani also primarily lives a dotcom dream. Out of that was born the Websmiths, a web designing company based in Dubai Internet City. But the two entrepreneurs have adopted two completely different methods of operation and both have survived - so far. Kirpalani has been working online for a long time and she attributes her success to a click-and-brick policy. She has various little businesses but almost all of them are also linked online. Her own little boutique, where she sells clothes designed by Indian fashion designers is linked to her web site www.astylestatement.com and purchases happen both online as well as offline. In many cases, people see the designs on the web site and come down to the boutique to check if they really want to purchase the product.

But Kirpalani hasn’t stopped with a fashion web site. As a sculptress and an art collector, she also decided to take her knowledge of art online and make it available on a portal. The result will be Artexchange.com, which will host the web sites of 50 artists across the Asian region. “Art is the largest selling luxury item online — not clothes, not cosmetics,” she says, adding that she only intends to promote Eastern art globally, because it has been badly represented in the past.

“Our aim is the corporatisation of art,” says Kirpalani, who has already tied up with one of the world’s largest banks to build the corporatisation process. By doing this, just as banks help their investors choose what stocks to invest in, clients are advised to invest in art in an informed manner so that the art pieces they choose appreciate in value over the years.

“But don’t expect somebody to buy a $50,000 piece of art online without a background on the person and the kind of work he does and what form of art it is,” warns Kirpalani. “That’s where we come in. We educate people on buying art in a careful and planned manner by giving them all the information, organising artist exchanges, getting artists to display their art in specific art galleries and so on.” Today, Kirpalani claims that 40 to 42% of her revenues come from her online ventures.

||**||V|~||~||~|But the web is not just filled with individual dreams. Many companies are using the internet in very creative ways as well to generate more business.

E-media, for instance, is an internet consultancy company and most consumers in the region have not heard of it, although they may have visited its interactive quiz site Wimjig.com. If they have, E-media has succeeded. “Our basic objective is to work with clients and make them see the advantages of the interactive media. We tell clients to put a fraction of their advertising into the internet and see how intimately they can communicate with their customers,” says Vikram Tah, chief operating officer, E-media. According to him, most companies ignore the power of the internet to create brand awareness, influence buying decisions and do research. “Your average audience today spends a significant portion of their time on the computer. To not catch them when they are on the internet is a wasted opportunity,” according to him.

Tah’s clients sponsor specific zones on Winjig.com and they sponsor the prizes as well. Tah, in turn, is responsible for marketing the web site and attracting consumers to take part in competitions. Participants accumulate points as they take part in more competitions on the site. This way, he has ensured that visitors stick to his web site. When a person has accumulated a certain number of points, he can redeem them for pens, electronic products and so on.
E-media, no doubt, operates on a shoe-string budget. “This is a survival industry. The bottom line is that you have to maintain costs. So we house our development team in India. We only have a revenue and marketing office here,” he explains.

Dubai-based publishing house ITP has extended its services online and generated revenue from banner ads, online subscriptions, selling tickets online and much more. “From a subscription point of view,” says Peter Conmy, internet and distribution manager, ITP, “it has always been difficult to collect cheques. But now, our online payment system enables us to collect them immediately. Moreover, we had to manually enter each subscriber’s data, credit card information etc and this takes a lot of time in the backend. Now, we don’t have that problem. Everything is part of an automated workflow.”

Likewise, selling tickets online has been a fruitful decision for ITP. Within a span of seven to eight months, the company has sold $180,000 worth of tickets through www.itptickets.com. “People are usually apathetical about buying tickets. They often put it off till the last minute and, because they don’t have the ticket, they don’t go for the event. But if you make tickets easy to buy, people will support the event because one, they have paid for it and two, we are delivering it to them,” he adds.

||**||VI|~||~||~|Then there are businesses like Dubai-based IT solutions company Emirates Computers that have developed etechnoworld.com to reach out to customers as far out as Afghanistan and Africa, who purchase from here to evade tax.

“By going online, we have kept our overheads down, we have gone global and need no office space and we also don’t need to spend time with each customer,” says Elaine Fernandes, manager of Emirates Computers’ online division.

“At the same time, we have made sure our rates are competitive online or that we offer incentives like discounts or value-adds like a carry bag or a voucher or a chance to win something so that a customer feels motivated to buy the product even if he can’t literally see it. Within the UAE, we also supplement it with free delivery,” she explains.

Emirates Computers has included all modes of payment such as cash on delivery, credit cards and bank transfers to ensure that it does not turn off any customer. “This part of the world is not ready for a complete online transaction yet. So we have ensured that we can cater to all kinds of clients,” says Fernandes.
As Fernandes points out, the region is not completely ready for e-commerce. Some countries are, but most are not. Most are still grappling with basic issues such as more bandwidth, cheap internet connections, easy access to web sites and online payment solutions. Despite these hurdles, the Middle East is gradually opening its doors to e-commerce.

The number of small-and-medium enterprises taking their business online has increased significantly in the last year although few are actually generating any money out of it. Most are content to have an online presence so that they can direct trade enquiries to their web site.

Only a few have transited from a mere online presence to an online store. It won’t be long, however, before most companies strut their presence online. Then, what will separate good online business models from the bad will be the bottom line.||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code