Indian Local Services – Demystified

This post is dedicated to all the non-believers in the Indian local search space. I’m going to enlighten you. Now stop running around like headless chickens. The sky is not falling.

It’s a marathon, not a sprint – No one said it’s going to be easy. To begin with you need lots of  business listings. Some estimates put the number of local businesses in India in the 5-7 million range. However, in a country like India, data collection is no trivial exercise. How do you collect consistent good quality data across a bazillion cities without any central authoritative source to license or procure from? Go figure this one out. If you setup your processes and practices right, you’ll keep earning data dividends time and again.  Oh, and this keeps the barriers of entry high. A must have for any good business model.

Once you collect it, you will still need to scrub and polish it before you make it available for users to consume it. Then finally you gotta a build a business on top of it.

Building the ultimate database of local businesses – No, the database itself is not the business – the business gets built on top of it. Of course once the data is collected, you might make some money by distributing it to third-parties. However, don’t expect a windfall from this.

Services are the real revenue enablers – In continuation of the above point, building consumer and business services or offerings on top of the data are the real revenue enablers. The user gets to ride it for free – mostly. The merchants pay for the transactions, leads, clicks, impressions or presence as the case may be.

Online, what online? Still got doubts? Indiamart, Alibaba, TradeIndia run some very successful B2B marketplaces, while companies like Sulekha, Foodiebay and AskLaila run equally good local listings search services. All these companies are investing time and money in building their local databases. And who said it only has to be online? Go and ask India’s No. 1 local search engine aka JustDial. They run a very successful voice business with a topline of over Rs. 200cr and growing 50% annually. Unless you were sleeping under a rock, you should also know they’re aiming for a Rs. 700cr IPO in the next few months.

Most of the above listed companies have been around for over 10 years – which reinforces my earlier point of this being a marathon-not-a-sprint. Go ask Sequoia, Norwest, Yahoo, Matrix Ventures etc. why are they investing heavily in the Indian local search space? I think this space is about to make the big leap.

Wake up smell the coffee.

What’s the problem being solved – With the increasing number of consumers and businesses getting online and connected – many via mobile phones, there is a tremendous opportunity to service them via their medium of choice. B2B marketplaces solve the problem of connecting buyers and suppliers. Some cater to the local audience while some provide a platform for local businesses to reach out to the audience from abroad. Local listing services cater to the utilitarian need of finding businesses for specific needs. Services like burrp! add a layer of user reviews, ratings and rich meta data to help you make informed choices.

An eye for detail – Who cares how rich your business listing meta-data is? Right? Wrong. Whether you store business attributes in a database or in a flat text file, ultimately the business model should be such as to derive intelligence and money making opportunities from it. That’s what matters at the end of the day. Rich, detailed business listing information can be your service differentiators. Wouldn’t you prefer taking your girl-friend out to a candle-lit dinner restaurant?

Money makes the world go round – So where’s the money coming from? Services like JustDial, Sulekha, IndiaMart etc. charge for leads of potential customers. Generally, the price of the lead depends on the “ticket” value of the product being advertised by the business or sought after by the consumer. The Google Adsense banners etc. give inconsequential revenues – don’t even think of  building a business around it. Some players also charge money to provide online presence (read – website creation) and exposure to businesses. This entire sector is in a hyper growth stage and there is a lot of money to be made, specially since a lot of new consumers and businesses are still in the discovery stage of finding and connecting with online businesses.

I think a lot of players in this space are still in the process of discovering their business model.  A few are experimenting with group buying, a few with discount coupons. Yet some others are figuring out whether online ordering works. Even the B2B category is evolving. The space is exciting for the challenges and opportunities it offers.

Obligatory disclaimer – The opinions/facts/ideas listed above are my own and not of my employer Infomedia18 Ltd.  I co-founded burrp! in Aug 2006 with the aim of connecting users with the awesome businesses.

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Author: anand

Currently CleverTap. Founder & ex-CTO - burrp. A techie and an entrepreneur at heart. Have worked in US, China and India.

2 thoughts on “Indian Local Services – Demystified”

  1. Another problem entering the market is people writing scripts to scrape-off your hard earned data, and the next one is monetizing the data, specially repeat money for the lack of payment gateways. Maybe this increased mobile penetration can help overcome that.

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