Agencyfaqs.com
- October, 2003 (New!!!)
Net4Barter - Reinventing an old age practice
The Big Idea
The seeds of this corporate barter system were sown
way back in 1999 during the time of dotcom boom when
Rakesh Bhatnagar and Manish Dutta – now partners
in Net4Barter – were working with production house
UTV. Chairman Ronnie Screwvala, it seems, wanted the
duo to get rid of some unsold inventory (airtime) and
raise enough money to advertise a company production.
While Bhatnagar and Dutta didn’t really start
off with a barter deal on their minds, they managed
to organise a Rs 50-lakh outdoor campaign in exchange
for products that the group intended to sell through
its sister concern Teleshopping Network.
That is when the two decided to set up an online marketplace
where corporates could trade seamlessly using their
inventories instead of spending cash. Part of Net4India’s
networking and communications business, India’s
first online barter platform Net4Barter started operations
in June 2000.
Online to offline
Soon enough, the company ventured offline to get more
people into its fold. On September 28, 2000, the offline
version of the online exchange took off. Says Manish
Dutta, COO, Net4Barter, “Honestly speaking, all
our members wanted to deal with human beings instead
of interactive screens.” The company plans to
remain an offline company for the next few years till
it crosses the revenue figure of Rs 100 crore. Once
the target is achieved, it would start transferring
smaller clients and smaller orders on to the net, which
should form about 15-20 per cent of the business. Currently,
the share of its online transaction is 2-3 per cent
of the total business.
Treading a new route
Treading a new path was not easy, but the company brass
ascribes its success to its first mover advantage. Says
Dutta, “The toughest thing was to convince companies
that we would be able to get them what they wanted against
their product/services. Our credibility was also doubted
as this was a business that nobody had heard of and
we happened to be a ‘dotcom’ during a season
when dotcoms were actually going bust. But once we started,
we never had to look back and we have experienced double-digit
growth every single year of our existence.”
The main reason for the success of this concept is
the fact that the company “offers something valuable
to corporates in lieu of something that is useless for
them or are in abundance”, explains the duo. Rakesh
Bhatnagar, co-founder and chief executive officer, adds,
“We help clients use their under-performing assets
to finance all or part of the cost of products or services
they require.”
The investment
Net4Barter made huge investments in its early days,
which involved setting up five offices simultaneously
with all the infrastructure they needed. Says Dutta,
“All put together, we would have put in at least
a couple of crores.” The investments have obviously
paid off. While last year, the company’s turnover
stood at Rs 40 crores, this year it is likely to hit
Rs 70-80 crore.
The company serves around 1,500 corporate clients across
nine cities in the country. It deals in more than 1,000
products and services – from ball pens to flight
tickets to hotel rooms. The company’s client roster
boasts of names such as The Times of India, Hindustan
Times, Magna Publishing, United Television, Lashkara,
STAR Vijay, Philips, Swatch, Archie’s Products,
Radisson Hotels, Modi Revlon, Timex Watches, Eureka
Forbes, Hotel Nikko, Singer and Jaipan Appliances, among
others. Says Bhatnagar, “Our clients span across
all industries, while media contributes nearly 40-60
per cent to our annual turnover.”
The way ahead
As forecasted by industry experts, the Indian barter
market is expected to be worth Rs 600-700 crore by 2005.
The company expects to have a major share of this market,
and claims to be looking at barter transactions to the
tune of Rs 300-350 crore by 2005, that is around 50
per cent of the total market. Says Dutta, “Our
nearest competitor would be anywhere between 25-30 per
cent of the total market and the rest would be shared
between various regional players spread across India.”
In the next six months, the company plans to expand
into new markets in the country and cover new segments
in which it doesn’t have a presence yet. The company
is also eyeing overseas markets and may tap some of
the Middle East countries to begin with. New clients
are also being solicited. Says Manish, “Adding
new clients has become a regular feature of our company.”
