Saturday, December 15, 2007

When will traditional businesses adopt the Internet as a serious medium?

I am currently managing a portal, IndiaAutomobile.com, that aids potential car buyers in making the right car purchase decision. We provide visitors to the portal with all the information they would need during their decision-making process - 360 degree animations, pictures, prices, specs/features, expert reviews/consumer feedback.

Given the fact that most visitors to the portal are looking to make a car purchase, it also becomes an excellent platform for auto manufacturers and dealers to showcase/market their vehicles to the potential buyers. Moreover, we offer auto manufacturers and dealers the benefit of a Cost Per Action model i.e. they pay us only if we get them customers. And I have no doubt in my mind that we help these clients cut their customer acquisition cost by a substantial margin. Under such circumstances one would think that the industry should have embraced us. But that has not been the case thus far despite a more than satisfactory volume of potential car buyers. Why?

I'd like to demonstrate my answer to the above with an example.

Consider a car dealer who sells 300 cars in a month with a marketing spend of Rs. 6,00,000 i.e. a spend of Rs. 2,000 per car. Using our product, we can help them sell 15-20 more cars at a fraction of their existing spend per car. But even then, we have found it difficult to convince most of the dealers to subscribe to our service. Agreed, its a relatively new concept in India and the dealers are not Internet savvy - but WTF, as long as we generate more business for them, why should it matter whether the concept is new or whether we are an Internet company? And I for one do not think this is the reason for low adoption levels.

The real reason lies in the fact that we help them sell an additional 15-20 cars against their existing volume of 300 cars i.e. we can help them grow by 5%. And it is this 5% where the problem lies. The number is too inconspicuous for someone to look up and take notice. Its only when this number goes upward to the 20+% levels that we will be seen as a serious marketing medium.

We have seen the above happen in the recruitment industry. Job sites like Naukri and Monster are now the primary recruitment channel and hence employers have taken a serious note of the online medium. Am certain the same would happen in case of autos and other Internet businesses in India. Till then, the excruciating wait continues.

4 comments:

Asher said...

Great insight and a must read for anyone part of the internet industry. But as far speeding up the success is concerned, it will be upto the industry, your portal and its competitors to do so. 2 great ways to do so would be employ advertising, PR buzz and word of mouth. Also as everywhere on the internet space, the product. Seen the site, its great!

Joe said...

The site rocks ;)

Bingo Nimish.. The name of the game is to increase the size of the pie and thats likely to happen, only when the dotcoms start showing ways to rake in serious moolah.
Government allowing the import of used car at lower import duty will also throw up a "New Market" that might look at more information than , what a dealer would provide. Add this to your list of wishes in Daily Prayer too :)

Nimish V Adani said...

Joe, if I were to make a wish, I'd want us to own the traditional businesses so that integration between click and brick would be easy and truly beneficial. In the case of the auto industry, I wish I owned a huge network of dealers across the country. With the amount of customer insights and enquiries we are generating through the portal, we would do more business than any existing dealership.

G Praveen Kumar said...

the idea of owning the traditional business is a easy way to show how well we can work offline with the support of online medium.....let this learning also come to the dealers then ultimately they take us serious....till then time is a healing factor for our BURNS..;-)