Net Sales
The Telegraph, September 09, 1998

Rediff On the NeT has opened an Internet site where book and music lovers can visit and choose from thousands of titles to make their purchases.

It is said that only sex and Wall Street will make money on the Internet in the long run. But Ajit Balakrishnan of Rediff On The NeT is is aiming at Indian book and music lovers through an on-line retail store (www.rediff.com) launched recently. The Rediff chairman is gungho about the prospect of Indian consumers lapping up the chance to shop from their desktops, pay online with credit cards and get orders delivered home anywhere in the world.

'Surfers can choose from over 40,000 music titles and 100,000 book titles with discounts of up to 40 per cent,' he says. So, has e-commerce finally arrived? Balakrishnan clucks at this description of Rediff's online shop (although the company's press releases do describe it as such). 'It is online shopping not e-commerce,' he says.

E-Commerce, say financial experts, has obviously much broader dimensions and will only be possible once the rupee becomes fully convertible. As of now, the twin questions uppermost on one's mind are those of secure transactions and getting around regulations regarding plastic transactions.

Commenting on the latter, Balakrishnan says it was a popular misconception that government regulations prohibited credit card transaction through the Net. 'There has been nothing to bar anyone from such transactions through the Net. It is just that not many people had the technical resources or the investment required for safe transactions.'

Till now, very few transactions actually took place through the Net in India, with orders largely restricted to sending or receiving information by e-mail and following it up with phones and faxes. Online shopping requires considerable technique and expertise which Balakrishnan believes not many have. 'Besides, to implement secure shopping one needs strong international partners. We have IBM and FedEX.' Online security is provided through secure sockets layer (SSL) which encrypts information (such as name, address and credit card number), from customer to browser which sends it to the server and returns information.

'To crack the code, one would require 200-300 high-end computers. I am not saying it is impossible but the encryption is done session by session which can contain the break-ion. We have the kind of systems that Amazon and Citibank have and we are the first to start online shopping in this manner with the same level of security as them,' says Balakrishnan.

Since Rediff opened shop, they have already had several thousand orders. 'Within four days of the launch, 99 per cent of the buyers paid by credit card with their number given online with the print order.' Rediff offers all payment options -- card, cheque or demand draft. One can simply phone or fax in the reference order. 'Enabling payment process does not require brain surgery. In India everyone seems to think it is a miracle.'

Rediff promises delivery worldwide. 'There was a cute little bookshop in Tokyo which ordered 15,000- 20,000 Indian books in English. It happened quite by chance for they were looking for these books urgently and came across us. Then, there were three people in the Antartica who were following Rediff and were desperate to have Abdul Kalam's India 2020. Currently, Kalam's book is Rediff's bestseller,' says Balakrishnan.

Right now, 60 per cent of the orders are from abroad, specifically from the US, and this, according to him, reflects the demography of Net users.

One of the reasons for an existing online bookshop is the paucity of Indian writing being easily available abroad for the Indian diaspora. 'New Jersey may stock music for NRIs but Indian books would be difficult to find in Harvard square,' he says.

What of the long-term prospects of retailing on the Net? Balakrishnan says that the key to leveraging the potential here is technical creativity. 'We'll lower overheads. Traditional bookshops used to keep large inventories and needed space. Profits were seen as a percentage of sales. We have broken this down. One of the benefits of low inventories is we can pass on discounts from publishers. Ours is the cheapest bookstore in India. A book priced at Rs 770 is available for Rs 470 through Rediff.'

In the long-term, as an on-line business service, Rediff hopes shopping will take over from advertising as the main source of revenue. Ideally, it would get one-third from advertising and two-thirds from shopping which is the worldwide model.

Balakrishnan says he had anticipated the potential market since Rediff started in 1995. If it took as long as it did to start online shopping it was because it was waiting for the local-registered Net-user population to touch 100,000. 'It has taken nearly three years for as many users to register with VSNL.'

To attract newcomers, Rediff says it is innovating on other online services. 'We have innovated on chat, HP, free e-mail Websites. And besides online shopping, we also provide the facility of making a free personal home page. Sadly, no one from the press has focussed on this although it is as big a technological breakthrough.'

It is said that there was a business shift taking place on the Net -- from offering content ot offering services. Was Rediff responding to this trend? 'Yes, content alone is really not a play on the Net. Constructive applications are very important too -- unless you provide an e-mail service which is what Net users spend maximum time on, you are not an important player. And most Indian see free e-mail as a birthright.'

In the early days of the Internet in India, getting on to the Net was full of technicalities. Users were largely software professionals who were able to access it through their companies. With the entry of VSNL, more mainstream professionals signed up. Till last year, infotech and media professionals dominated Net user groups.

'That is largely so even today. Thirty-five per cent of the users are IT-related people and virtually every journalist that I know is on the Net. But I also see a younger, more PC-savvy lifestyle paradigm increasingly at work here, which will be the bigger market.'

So will Rediff be retailing live to compete with sex and Wall Street? 'I don't know about the second but it's partially true that sex is the first to make money in the evolution of every medium. For instance, when photography began, 60 per cent of the money came through dirty pictures. With VCR, porn tapes sold the most. But then the mainstream takes over and government regulations check misuse. In the future, more and more business of all kinds will take to the Net.'

He predicts that the next 100,000 shoppers will be added by 1999, comprising new media professionals and the intelligentsia and year 2000 will see another 100,000 who will provide the mass market or the mainstream coming in. 'VSNL is adding on 10,000-15,000 connections a month. These groups will be interesting to watch.'