Rediff.com : Redefining e-business
India Post, Antara Nanda, November 24, 2000
It was a chilly, cold December day in the sylvan environs of Oxford. Trapped indoors for weeks with nothing much to do, Ajit
Balakrishnan was exploring the newly emerging world of the Internet. That was 1995. The world wide web was still a fledgling
network being slowly spun around the globe. But Balakrishnan was convinced that the Internet would soon revolutionize the
way the world communicated and did business. The entrepreneurial bug bit him once again and on return to India from that
brief personal visit, Balakrishnan wrote a personal check to set up Rediff.com. His assets? The years of experience as one of
the co-founders of Rediffusion Advertising Pvt. Ltd., which is today, one of India’s most successful advertising agencies.
Since then, Rediff.com India Limited (Nasdaq.-REDF), has grown into one of India’s most popular and successful Internet
portals with its market capitalization touching US$ 129.5 million as on October 14, 2000. It became not only the country’s first
dot.com to be listed on the Nasdaq bourse but also the first Indian company to be listed on a US exchange via an Initial Public
Offering. The US stock market listing has reflected well on the company’s bottomlines. For the quarter ended September 30,
2000, the company registered a 53 per cent jump in net revenues over the previous quarter ended June 30, 2000 to US$ 1.34
million and 306 percent over the corresponding quarter of 1999. Gross margins improved to 65 percent and loss per American
Depository Share (ADS) decreased by 39 percent over previous quarter to US$ 0.082.
I am pleased to report that the company continues to successfully execute on its business plan and attain key operating and
financial milestones. Our achievements on all key parameters of the business have been extremely encouraging,” said Ajit
Balakrishnan, chairman and chief executive officer, Rediff.com India Limited. “Strong revenue growth, robust increase in traffic
and registered users and a definitive reduction in loss demonstrates that the fundamentals of the company remain strong,” he
The portal’s popularity is growing by leaps and bounds evident from its skyrocketing page views and email subscribers.
Rediffmail subscribers increased to a record 2.1 million and page views for September 2000 stood at 158 million - a 50
percent increase over June 2000. The potential of the booming market among Non-Resident Indians (NRIs) prompted
Rediff.com to launch a special US edition now known as Rediff.com USA that offers a medley of news, entertainment, services
and products, e-mail, chat, instant messaging and personal homepages, all tailored to suit Indian interests. There are a host of
interest specific channels including astrology, broadband, cricket, movies, e-cards, women, wedding, lifestyle as well as handy
guides to those ‘New to US’ and Immigration.
Community news coverage is a unique offering on this site with city specific pages covering Chicago, DC Area, Houston,
Jersey Area, Los Angeles, New York and the SF Bay area and city directories with over 1800 listings from all over the US
including restaurants, grocery stores, movie theatres and travel agents.
Though a number of business-to-consumer (B2C) sites built around the e-commerce business model have not succeeded in
generating enough traffic, Rediff.com has unleashed a slew of niche products and services to induce the visitor to buy off the
net. For NRIs in the US, there are specially designed service including booking tickets to Indian music shows and concerts,
airline information, hotel bookings at various destinations in India, and so on.
Customers in India and around the world can enjoy a range of shopping options at Rediff.com’s Marketplace from more than
120 shops, spread over 50 categories offering a large number of Indian and international branded products. NRI users can also
‘gift’ from the Rediff.com Marketplace to their relatives and friends hack home in India. Thus, there are a range of payment
options from rupee and dollar credit cards to debit and charge cards, checks, demand draft and the recently launched Cash on
Delivery (COD) system for deliveries to more than 800 locations across India. A live 24 X 7 customer service help desk is also
available at the Indian toll free number, 1-600-115696.
The revenue model of Rediff.com’s Marketplace is built around providing entrepreneurs a platform to showcase and sell their
products to a large online consumer base wherein the company itself assumes no inventory risk. Rediff.com accounts for
revenues on a net basis, i.e. net of cost of goods sold.
Investors are convinced that the portal has high potential for generating revenues even in the quicksand dot.com arena.
Investment bank Goldman Sachs in a recent report said it expects the gross margins of Rediff.com to rise to 75 percent from
the current level of 60 percent and net margins to be as high as 40 percent. According to Goldman Sachs, “Rediff will generate
$5 million of revenue in calendar 2000, raising to $17 million in calendar 2001 and $88 million by 2003.”
To further its market expansion plans, Rediff.com has been acquiring dot.com ventures to strike synergies. It recently acquired
Thinkindia.com for $3 million worth ADS, to build on its content and service offerings for NRIs. In September 2000,
Rediff.com made strategic investments in two portals backed by ICICI Limited, a leading financial intermediary in India, by
acquiring a 10 percent equity stake in Traveljini.com and a 5 percent equity stake in Billjunction.com.
At India Internet World, 2000, Rediff.com was adjudged the best portal of the year while Traveijini.com bagged Golden
Mouse awards for best travel site.
Rediff.com also recognized that for e-commerce to flourish, more women need to get on the Internet since they make the
purchase decisions. Balakrishnan feels the male-female user ratio should be split 50:50 and these users should surf from home,
not as most of them do now - from offices and cyber cafes. To enhance its specific women-oriented services, Rediff.com had
picked up a 26 percent equity stake in FootForward.com, an information and services portal for women, earlier in March this
year and made it the channel partner for its ‘Woman’s Channel’. Later in July 2000, it integrated footforward.com as its