- Loss of Traffic
The above websites are SEO optimized for search queries related to Jet Airways. No doubt they are ranked well, hence receive significantly higher traffic – which originally should have been received by Jet Airways website by default (in event this websites were absent).
These websites are so well optimized that they might be taking about around 20%-30% (or more) of traffic that was meant for Jet Airways itself.
- Loss of Revenue
Loss of traffic also means loss of revenue! No further explanation here.
- Paying from its Pocket!
Many of these websites are running affiliate tracking codes (mostly for Jet Airways itself) – which means indirectly Jet Airways is paying affiliate commissions for this diverted traffic originally meant for them. Are such affiliate cookies kept live for a longer period (say 30 days)? Imagine the loss of revenue.
- Loss of Brand Value
Frequent internet users directly reach destination websites, unsure how a normal internet consumer will react to this or if loss of brand value can be attributed. I landed on one of such websites today – first reaction – “What happened to Jet Airways website today?”
Social Commerce is Simple. Here is how you solve it in 24 hours!
The Context of this post: Have been hearing & participating in some awesome conversations lately about Social Commerce. Someone explained me this – Transactional eCommerce is Big. Social media is where all users are today, it is already very Big.
So, Social + eCommerce = Social Commerce = Very very big!
Hence there is lot of interest today in products and platforms that are trying to bridge the gap. Analysts are predicting that its the next big thing and stating it is reaching its inflection point.
Completely agree with all that. But Social Commerce is simple, here is how you solve it.
Oooops, btw did I tell you that more than $50 Million has been invested till date to solve this Social Commerce problem that merchants can do it themselves in less than 24 hours!
The following text is not included in above presentation.
Some key insights for players in Social Commerce:
Existing ecosystem of eCommerce and Social Media is sufficient for building a Social Commerce without intermediation of players who do not add any value.
It will be difficult for a:
- Existing social player to exploit potential of social commerce by introducing a new ecommerce service
(Facebook or Twitter trying to build a Amazon)
- Existing ecommerce player to exploit potential of social commerce by introducing a new social service.
(Amazon trying to build a Facebook or Twitter)
Most current players who are trying to build solutions are concentrating on building their own ecosystem of users & products – which is not impossible but extremely challenging. Reason being – such players do not own the products or the users (users that have more tight social connections as on Facebook & Twitter)
Unless a third situation happens – someone builds a valuable middle layer that provides affinity to both – social & commerce. As an platform in this case you need to provide enough value to users (either users from Social Media or users from eCommerce).
One such promising player is FourSquare. They add a new value of – “checking in” to its users that are socially connected. Their current efforts are concentrated on getting these Social Connections to checkin to venues – which is demonstrated by its 6Mn+ users.
For purpose of this presentation I have kept other Social Models out –
- Foursquare: Because its reach is still 1% compared to Facebook’s 600 Million users.
- Groupon: It is a commerce player, but not social player. Groupon is not user engagement – view Fred Wilson’s comments here: http://t.co/p78buu0
Drop me a mail, Available for Coffee and endless Product Management Conversations on weekends
There would be multiple Consolidations, Mergers, Change of Strategies by lot of VC-invested companies by 2015.
Product based eCommerce companies:
Lot of interest seen in recent times by VCs. LetsBuy, Snapdeal, FashionAndYou, Flipkart, and so on, Infibeam as well (though still not part of any portfolio yet). Future of eCommerce companies will depend completely on two factors:
– Internet penetration in India > 200 Mn by that time
– Improvement in eCommerce transactions (Infrastructure + User Comfort)
The rate at which investments are made are much higher than rate of growth of both the factors mentioned above – which in a way may be good – as all invested companies will act as catalyst in growth and get new set consumers on-board.
If we see an IPO exit for atleast one of product based eCommerce companies that will be awesome; One or Two VCs in India (without naming any here) have been actively investing in eCommerce space. There may be a very high possibility that they may merge two or more portfolio companies to form an large entity, which may be just a good acquisition target for Amazon or an IPO exit.
Group Buying companies:
Was surprised (like many others?) with GroupOn‘s decision of acquiring SoSasta. There are established players in Group Buying space, I’m sure GroupOn has seen some merit and synergies. For existing leading players like SnapDeal, Deals and You and Taggle – they will continue to grow and have to.
Possible exit for them will be Google (since they are starting with Google Offers) or an acquisition by eBay; or maybe GroupOn India may now want to expand presence with one more acquisition. Not to forget that LivingSocial will also come knocking. Now that eBay has ventured into Group Buying space – it has much higher accountability as deals are now served by eBay and not marketplace. eBay India may acquire someone if they decide to have an experienced them to execute this business vertical.
Expect one very large player to enter Group Buying space in next 1-2 months, if well executed – in all probability it may give tough challenge to current market leaders.
Unfortunately many small players will hit the dead pool (few of them have already) due to execution challenges, expansion costs, and lack of operating revenues to keep going as the model is very easy to replicate, but not easy to scale with thin-margins and high acquisition cost.
Online Travel Companies:
Clear IPOs for Yatra & Cleartrip. Will be great exit for all invested players. GoIbibo and ezeego1 are also leading players in travel domain – Goibibo’s exit may depend on ibibo’s overall plans, ezeego1 may raise capital through markets directly bypassing VC route.
Redbus is promising, they are very high on number of transactions – ticket size may be lower compared to Airline tickets, but % margins will be definitely higher. In all probabilities – Redbus may too hit an IPO or will be an acquisition target for Yatra or Cleartrip (listed travel companies by then as MakeMyTrip has acquired Ticketvala)
I hope someone in Indian Government thinks of the opportunity of listing IRCTC on stock markets.
BookMyShow will expand to more geographies – they have presence in Malaysia & New Zealand. To get to more such markets, they will require more capital – further investment and definite IPO candidate. Reliance ADAG is trying to make it big in entertainment through BIG – they might knock doors.
Pubmatic (industry’s first yield optimization player) may get acquired in few years. It faces good competition from AdMeld & Rubicon Project, however none of these yield companies are focusing on small publishers (the long tail) which may be the key to larger success.
iYogi by all speculation is IPO bound. Slideshare is leading in its segment and may be a great exit story. Fusion Charts is another one that may be acquired for technology and customers; and so is Martjack.
Existing players – Tyroo, Komli, Ozone Media, AdMagnet and others. Do not forecast a immediate exit for these players – the number of players in this segment has been same for long time (no new entrants) – and otherwise too existing players seem to looking outside of India, are they hinting saturation of market? The frequency of acquisitions of pure advt-networks has decreased outside India (no big news in so many months?).
There is no distinct advantage over each other and offerings (if Vizisense is treated as product outside of Advt-Network). Would have been great to see an situation like AdMax Network (owns up majority market share in countries they operate – very tough competition to Google as they have leveraged on local language audience which is majority).
Google has played a flattener by opening up its unlimited inventory on Doubleclick exchange through Google Certified AdNetworks program. Post which the publisher development story may have taken some hit, but wondering why have not the Indian Advt Networks integrated on Google’s Doubleclick exchange yet – expand you publisher network!
InMobi which is now the largest mobile advt network (outside of Google/AdMob) – maybe one of the biggest exits through Nasdaq IPO. There is no immediate need for Google to buy another mobile advt network – that leaves IPO as only logical exit unless AOL, Yahoo or Microsoft realize that they haven’t looked at the mobile monetization business seriously.
BharatMatrimony (Consim Group) would be going for IPO in coming times. Not aware of any investors in Shaadi.com (although there are in Mauj & Fropper), if business is profitable and there are no investor pressures – unlikely to see an IPO from them (at least before BharatMatrimony).
Read somewhere that Jeevansathi has abandoned markets in South India (not sure of this), however its already a part of listed InfoEdge group, spin-off very unlikely as numbers are reported as part of InfoEdge.
The next wave of promising startups in India will be product-driven companies. Although the eco-system to fast acceptance of technology products is not so strong right now – it will be in coming years. Emergence of interesting start-ups like Practo, Zaakpay, Grexit, emo2, Workasaur are first steps in that direction.
Hoping to see many success in next 5 years! Best Wishes
This opinion was posted originally as an answer on Quora at: http://www.quora.com/Which-Indian-internet-company-will-have-the-biggest-exit-by-2015
Once an VC-favorite business domain in India, Online Travel Agents (OTA) business model has been quite silent since last 2-3 years in this activity. Primarily cause Aviation industry suffered huge losses in this time and most of the plans to expand the aviation businesses in India fell flat post the recession on 2008-2009.
Of course the direct impact of this was on OTAs. Consolidation is expected to take place, naturally since the number of players in market today are probably equal to or more than the number of airlines operating in India. The big 3 of course are Cleartrip, MakeMyTrip & Yatra, however the question is are other players in market big enough or valuable to get acquired or carry any differentiators to be acquired.
Nevertheless, this post is about some number crunching and to answer the question – How big exactly is the OTA market for domestic flights? Taking a reverse approach on this… from Supply to Demand.
Domestic Airline Fleet in India:
|Dec-09||Kingfisher & Red||66||400|
|Total||All Private Airlines||249||1398|
*indicative data only, gathered from various sources available like company websites, news, etc. Consider all numbers as indicative figures
* Data excludes Air India / Indian Airlines domestic flight operations
* Actual flights per day may be an lower number since most carriers operate multi-destination flights, like Mum-Kolkata-Guwahati
*Jet Airways fleet size may be fleet in service for both domestic/international operations.
Maximum Tickets Available for Sale:
|Kingfisher & Red||400||200||80,000|
|All Private Airlines||1398||275,680|
Total Tickets available for sale each day = Total Seats available = 275,680
*indicative data only, gathered from various sources available. Consider all numbers as indicative figures
* Actual number of seats available may be lower than mentioned since flights operated may be lower, as mentioned in previous slide
* Most airlines in India operate Airbus/Boeing aircrafts with which seating configuration varying between 180 to 220
* Full service airlines like Jet Airways & Kingfisher operates flight with business class seats, and have ATR aircrafts in fleets as well
* Paramount Airways flies smaller Embraer aircrafts
PLF – Passenger Load Factor:
Total tickets available for sale, indicates maximum inventory available or max supply From time to time, airlines in India have raised concerns on the occupancy levels of seats, that’s passenger load factor.
Mostly the number has hovered between 68% to 72% for most full service airlines & between 75% to 82% for low cost carriers. Assuming 75% PLF for India, total sold out tickets in India per day would be: 2,06,760
Total Seats Offered: 275,680
Passenger Load Factor: 75%
Seats sold: 206,760
Sale Distribution through Different Channels:
Having said that 206,760 tickets are available for sale, lets not assume that all sale happen through online channels. Different channel includes – Offline Travel Agents & Tour Operators, Tickets sold as part of travel packages, Big Corporate Organizations booking tickets for its employees through offline travel partners, Ticket Counters at airports and yes – Online.
Assuming a healthy 40% of all airline ticket sales as online sales. However, consumers in India are price sensitive and do book directly from airline’s websites as well.
Doing the division
– Ticket Sales on airline websites = 15%
– Ticket Sales on OTA websites = 25%
Tickets sold by OTAs daily = 51690
So What are Daily Transactional Sales like?
Total Ticket Sold by all OTAs per day = 51690
Assuming average price of ticket sold online at = Rs. 5000 (not all get a Rs.3000 ticket)
That’s daily sale of Rs. 258,450,000 -> ie. Rs. 25.84 crores
Monthly = 775.2 crores
Yearly= 9062.4 crores
Market size for Indian OTA Industry in Domestic Flights: 9000 crores approximately
On a 5000 INR priced ticket, you pay 2000 INR tax (that’s 40% ). Hence removing the tax factor, the number will be 5400 crores per year
Figures based on assumptions & numbers used in this post.
Interesting take aways from this dissection…
- this could have been extended to predict profitability of an OTA but has been restricted to predicting the market size only. However it’s a volume game!
- On an average, every aircraft in India does 5.6 flights per day
If airlines could further manage route optimization and do 1 more flight per day, at 6.6 flights per day, OTA Industry Sales will be up by 15%
- If an airline adds one more aircraft to its fleet, OTA business increases by 0.4%
Note that the airlines listed here itself (excluding Air India, Indian Airlines (now part of Air India)) have over 250+ air crafts in orders with Airbus / Boeing and others. This is equivalent to number of aircrafts in operations now. If market conditions remain positive and airlines accept deliveries of these aircrafts over next 5 years, the market size will be double of existing today!
- Nevertheless, Online Booking of Tickets will only increase in coming years. This presentation assumes 40% of ticketing happening online, this percentage share will increase with increase in consumer’s likeness for online transactions. The share of online reservations between airlines & OTAs will be deciding factor.
PS: The flow has many assumptions, however if one has or knows the right numbers – logically the market size can be concluded. I feel the numbers I have taken here are little on higher side.