Posts filed under online travel

Interview with Aloke Bajpai of iXigo

Written by: gaurav

On Jul 22nd, 2007

Aloke Bajpai is a founder of iXigo, an Indian travel search engine that currently serves domestic airline bookings.

The online travel business is a fast growing market segment due to increased travel in India as well as growing number of travel service providers like airlines and hotels. This market segment is also competitive with multiple players including travel agencies like Yatra, MakeMytrip and travel search portals like iXigo, Zoomtra.

In this interview Aloke talks about the market, iXigo’s value proposition and competitive positioning, revenue model as well as general tips on how to bootstrap and build a successful company.

(Click here to see a list of Consumer Internet companies in India like iXigo)

Transcript of interview with Ixigo.

What is iXigo –
iXiGO is a travel search engine for Indian consumers. It currently focuses on airline ticket search.

Any plans to extend your search beyond airlines?
We are currently evaluating other search opportunities such as hotel reservations, tours/activities, railway booking etc but have no immediate release announcements to make.

When was iXigo founded and who are the founders?
iXigo was founded in early 2006. The founders are Aloke Bajpai, Jens Schutter, Rajnish Kumar and Dharmendra Yashovardhan. The idea was conceived while Aloke was at INSEAD business school. Aloke, Rajnish and Jens are from Amadeus, the world’s largest travel technology company, while Dharmendra is Aloke’s classmate from INSEAD. The entire iXigo team possesses knowledge in what we believe are the three pillars of building a successful company in this space – Business, Technology and domain (Travel) expertise.

Where is iXigo located?
Gurgaon, India

How is the company funded?
Bootstrapped. Before building iXigo, the founders also provided product strategy consulting to another innovative European travel company and the proceeds from this engagement helped fund iXigo’s ongoing operations.

How do you compare yourselves against other travel portals like Cleartrip, Yatra, MakeMyTrip?
These companies are travel agencies that sell tickets on their own platform. We are a travel search portal that searches for the best deals on the web, and then takes you to the airline you select to buy a ticket for. In fact we complement these companies, since we can even search the travel agencies along with the airlines directly for the best price. This will be even more useful for products like hotels and packages, where product differentiation and price differentiation occurs.

Prices for the same air-ticket at the same time on different travel agencies like Yatra, MakeMyTrip will never be the same as they charge additional booking fees based on their relationship with the carrier. We don’t charge additional fees. We simply aggregate ALL available flights and redirect you to the airlines web site for the ticket you wish to purchase. Our unbiased and comprehensive service will almost always provide the lowest price.

Many Indian consumers feel more comfortable entering their credit card on the well known airline’s Web site than a travel agency’s site. We plan to attract those customers to our platform since it eases the search on multiple airline websites.

We also believe that our user experience and superior search algorithms are our points of differentiation. Finally we fall in the search quadrant and not transaction quadrant, and so our product roadmap is likely to be significantly different than those of travel agencies. Stay tuned!

OK, so how do you make money?
We have relationships with the airlines by which they pay us for a transaction. Over time we’d like to move to a pure referral model, where we are paid for each referral to the airline’s Web Site. In addition, we will introduce targeted advertising on our platform.

How do you plan to get users to iXigo?
At this point we are relying on word of mouth and making sure we get repeat usage thanks to a great first-time experience. Today 30% of our visitors come to our site again within a month. Also, we already launched two features that came as feedback from users of our product. We plan to continue doing that in the short term, get feedback from our customers and perhaps in the future, launch more mainstream marketing efforts.

Closing thoughts?
Over 55% of people that buy airline tickets online in India, still buy direct from the airlines. Both the travel agency sites and travel search sites like ours provide means for customer to find their right flight, however, we provide a more direct search and comparison for those 55% who still prefer to book directly. This fact, along with the continuing overall surge of air travel in India, makes it a large market potential and a very exciting space to be in!

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India Internet - status check

Written by: Madhur

On Jul 17th, 2007

comScore recently came out with a report on the Indian Internet industry. Here are some of my observations and thoughts:

Search engines - One of the popular category of sites. This category pretty much reflects the global trends in terms of the popularity of search engines. (Google, Yahoo, Microsoft, Ask). The interesting thing to note here is that there is no Indian company in the list. Given the variety of different cultures and languages in India, one might think local players might have an edge if they really tried. Currently though, most of the Internet population is English, but this is certainly going to change as the penetration increases. If Chinese search engine Baidu is anything to go by, there is certainly room for a local player in India too. And hey, its not like no one is trying. But frankly, other than Guruji, no one seems to be anywhere close to the standards of the big global players. We have talked about Guruji here and here, let’s see how they progress in the coming years.

Portal/Services - A popular category from the Web 1.0 era. The sites in this category either have day-to-day utility or entertainment value. Lot of early local players here from the 90’s, yet only a few established ones. Google, Yahoo, MSN are again the big players, although the good news here is that there are at least a handful local players in the sector.
news/entertainment/communication - rediff, timesnetwork and sify - decent content but poor user experience (broken links, popup ads, flashy ads)
classifieds - This is one category which has achieved the best success rate as far as the local players are concerned. One of the reasons is the demographics that is online in India and the fact that these players jumped on to the opportunity quite early in the game and more importantly stuck it out at the time of dotcome burst. Naukri, Shaadi, Bharatmatrimony, etc. are a few examples. A few promising sites in this space - mapmyindia (maps and directions), onyomo (local yellow page listings)

Social networking / web2.0 - A rapidly growing category. Very few decent Indian sites. Mostly dominated by the likes of Orkut, Facebook, Youtube etc. Again this is a category where one would think a local player can gain an edge as they would presumably understand the sensibilities of the youth better. Like I mentioned above, once English ceases to remain the predominant language on the web, more possibilities will open up. A few promising startups in this space - Minglebox, burrp.

Ecommerce - My personal favorite but not a popular category in India yet. We really need to catch up here if Internet has to sustain. The reason is simple - the most popular business model on the Internet is advertisments and for ads you need companies who are ready to advertise in the first place. Yes offline companies do want to advertise online, but there is only so much they will do. Real spending will come only from ecommerce players as they can directly affect the sales/branding using this form of advertising. We are seeing growth in this category. Check out some good articles on this space at Darpan Munjal’s blog. Travel is definitely a hot sector which already has a bunch of players (makemytrip, yatra, travelguru, cleartrip etc.) followed by entertainment (seventymm). The next big sector is retail which is currently dominated by Ebay India, but definitely expect to see some action here. IndiaPlaza.in and Futurebazaar are upcoming players. Remains to be seen who will emerge out as the Amazon of India (how about Amazon India itself?)

While on this topic, you might want to check out an interesting discussion here about why Indian companies are lagging behind global players (as opposed to Chinese, Korean, European markets). You can read the complete article for details, but the summary is that dominance of English language and poor user experience of Indian sites are the two main reasons.

Conclusion
India Internet has come a long way just in the last 3-4 years, but I think we are still in early stages. It might still take some time to reach the maturity level of more developed markets. To me, it looks more like the pre-bubble period (’97-98) of the US market. A lot of investment is happening, user base is increasing, new companies are coming up - things seem to be moving in the right direction. What are your thoughts?

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Hungry for online deals

Written by: Madhur

On Jan 19th, 2007

One of the most prevalent business models in Internet companies is advertising. Here is a look at different types of business models that exist on the Internet around advertisements. The basic aim of advertisements is to generate leads for the advertiser. The beauty of CPC (cost per click) advertising on the Internet is that the vendors (advertisers) need to pay only when they actually get the traffic, which makes their marketing costs much more accountable compared to traditional banner advertising. Realizing the ROI that this promises to the advertisers, in the US, people have set up companies that solely do this - generate leads for online vendors. Of course any website that has google ads already does that. But let’s talk about sites that are dedicated to generating leads without focusing on any other content at all. One of the categories of sites that is quite popular in the US markets is the “deals” sites. These sites publish the latest and the greatest deals and discounts regularly, some updated throughout the day. People hungry for deals keep coming back to the site to check out the latest deals. Because of the timely nature of these deals, the daily traffic volume is high and since these sites publish hot deals that tend to expire soon, the clickthrough ratio is also very high. FatWallet is the big daddy of all such deal sites. There are dime a dozen other deals sites like edealinfo.com, deals2buy.com and more.

Naturally the trend is already beginning to catch on in the Indian markets. If you look at the google trends data for “online deals” India is not too low down on the list. So we had a chat with a couple of players - allindiadeals.com (publishes deals in online shopping space), tripmela.com (publishes deals in online travel space) - to get insights into what they are doing to get the latest deals on their sites and to drive the hungry for deals traffic on their sites:

Sources of data
: Both of these sites use a combination of feeds from vendors and handpicked deals from variety of websites.

Freshness of data: allindiadeals updates the site once a day while tripmela does that 2-3 times a week.

Business model
: The source of revenue for both of these sites comes from a mix of CPC based listings plus google ads on the site.

Marketing: Both the sites realize the power of SEO and are doing things to promote their site high up in the organic search results. allindiadeals uses the power of social networks like orkut and other online communities to spread the word. tripmela has used techniques like press releases and Search Engine Marketing to buy sponsored listings in search engines. tripmela also delivers weekly newsletters to the inboxes of the registered users and a lot of customers seem to like this feature. (Tip: Doing RSS based subscription could also be quite useful)

Problems they are facing
: This is probably the most interesting data that we got:
1. allindiadeals says initially people were not really familiar with the concept of online deals, although with the competition increasing among the online merchants, people are starting to get it now.
2. Both players mentioned that a lot of the online vendors do not understand the power of CPC based advertisement, as a result of which they are not willing to give data feeds. This is starting to change as well, with the increasing competition and increasing advertising budgets for online companies.

Bottomline
It’s clear from our conversation that a lot of merchants still do not understand the concept of lead generation and CPC advertising. We think as the market evolves, lead generation phenomenon will pick up steam - online vendors will realize the importance of CPC based advertising and they will start providing feeds of their data. As a result, we will start seeing more players who will get into lead generating business in the form of comparison shopping, vertical searches, affiliates and deals publishing sites.

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How to indianize your ecommerce site?

Written by: Madhur

On Jan 12th, 2007

Ecommerce is very important to sustain the growth of Internet. The ecosystem just doesn’t complete without ecommerce. After all that’s where the real money exchange happens between users and businesses. All other revenue models and businesses are just supporting, they cannot stand on their own. For example, there cannot be much expansion in ad revenues, or revenues from affiliates unless customers are ready to buy stuff that businesses are trying to advertise in the first place. We know that it is going to happen. Today or tomorrow, ecommerce will take off. It has happened in travel, it has happened in matrimony, jobs. Online retail is the next important and the biggest sector. There’s already a good number of sites that have decent offerings, but something feels lacking in them. Some of them are better than others in some respects, but none of them seem to be really tailor-made for Indian infrastructure and audience. Here is a list of points that we have come up to make a site better suited for users in the Indian context.

Payment system
People are not used to online payments. Forget online payments, people living outside of metros don’t even do a lot of credit card transactions. Customers need to be educated about this. They need to be given extra assurance that these transactions are safe. They should be given multiple payment options. Credit Card, Cash on Delivery, Cheque, Net Banking are just few of the days. Just today came across these two pieces of news, which talk about how BharatMatrimony (payment at local post office) and Yatra (payment at Web World) are using interesting ways of making payments easy for the users - quite neat.

Customer Service
Customer service is not a concept that a lot of Indian companies are associated with. (Isn’t it ironic that India considering that world’s leading companies have their call centers in India?) In any case, customers need to be assured that they will get top notch service. Phone numbers, live chat are some of the ways. Providing them assurance of smooth returns/exchanges will help quite a bit as well.

Shipping (delivery) assurance
Postal service is not exactly something that people in India count on. Of course most ecommerce companies use private courier companies for delivery, which are much more reliable. This needs to be spelled out explicitly on the site. Users need to be given guarantees about this.

Offline presence
We have written about this in details here. Having offline presence just gives a feeling that its all “real”. This can be a very important psychological factor for many users.

Mobile angle
We have seen a lot of companies using interesting ways to promote their service using mobile as a medium. This needs to be continued. Shipping info, tracking, price alerts, there are so many things that can be done using mobile. One of the biggest things that will help is mobile payments, when that hits the mainstream.

Price break
All things said and done, there is no real compelling reason for people to buy online unless they get a real break in the price. And this should happen. Businesses avoid the cost of building and maintaining physical stores and hiring employees by selling stuff online. At least a part of these savings should be passed on to the customers. And again customers need to be given proofs that they are getting non-trivial savings because they are buying online. Schemes like price matching will also definitely help.

Local language
The largest circulated daily in India is not English. To reach the critical mass, Internet has to go local language in India. Ecommerce sites typically have very little content. Having options to see them in local languages can be a very useful value add.

User interface
Keep it simple. Lot of Internet users are new and will be new in this growth phase. Lot of them would be doing their shopping first time. There is no point having complicated Ajax site or having a site full of flashy ads or million options for customizing what users are buying. Remember that most of Internet users still use dial-up, so the simpler the site, the faster it will be and more reach it will have.

What do you think? Why would you buy online, or why do you NOT buy online today?

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10 predictions for year 2007

Written by: Vivek Garg

On Dec 31st, 2006

I have been thinking about the predictions that I want to make for the upcoming year. Predicting is a tricky business unless you are inspired by Nostradamus. First few things that come to mind if you tried predicting about the consumer Internet industry in India are : “mobile 2.0 will lead the way to web 2.0″ or “more investments in booming industry” or “we will see increased M&A”. These predictions are either extended state of our present or they are generally true. So with the risk of sounding really stupid from iLeher camp, we put forward 10 specific predictions for year 2007. We tried to make them as specific as possible. Remember predicting is tough. But I am hoping this will get the dialogue started and we could encourage others to dare predict what they think will happen in future.     

1. Broadband growth in India will continue to disappoint by not showing an exponential growth. As against the target of 3 million broadband connections till 2005 end, only 0.18 million were achieved. At end-October, the total number of broadband connections stood at 1.92 million. The target till 2007-end is 9 million and 143 million by end of 2010.

2. WiMax will not be able to solve the last mile challenge; instead we will see a realistic alternative in cellular. Surge in Wi-Fi enabled devices will increase the number of ways people get online.

3. Airline tax cuts will boost travel industry further in 2007. Better taxation model will lower the net cost of flying around in India. This will increase the volume for travel portals. Too many players will lead to lower margins on each transaction.

4. Introductions of DVR in Indian markets with onset of Set Top boxes and DTH - people will no longer have to sit through painful ads to watch their favorite soaps. Set-top boxes will increase the market share of VOD. Find a detail post on various movie distribution channels here .

5. Online maps and local data will become commonplace. People will start using street maps and peer reviews of local destinations. It will lead consumers to online directions and use of map for their travel. This will benefit local search players like mapmyindia, burrp, onyomo. Google has recently started offering street level maps in India. At least a few of the big players like yahoo/msn/google/rediff/indiatimes will start offering local search in India.

6. ATMs everywhere will become a platform for ad placement, movie tickets and quick data shopping. This will cause increased computer literacy of Indian populace. Indian Railways is already extending the use of Internet to assist passenger’s book e-tickets over the ATM.

7. Mobile payment and mobile ticketing will hit mainstream. This will lead the ecommerce players to take mobile interface more seriously.

8. We will find Indians spending more time playing games (mobile, PC and console). Zapak.com will find itself well positioned. We will see players entering the gaming arena.

9. At least some online DVD rental companies and travel portals will realize the importance of offline presence and will tie up with local retailers and local travel agents for convenience of non-Internet savvy population.

10. iLeher will continue building a community of young professionals trying to make sense of the complex web of events relating to Indian Internet industry. Read our about page if you are interested in being a part of this community.

Your comments/suggestions and predictions are most welcome.     

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Exclusive interview with redBus.in – India’s first vertical for online bus tickets

Written by: Madhur

On Oct 18th, 2006

Online ticketing is big. It’s clearly leading the ecommerce industry in India. IRCTC (online railway ticketing) is the biggest player followed by air tickets. Not surprising that there are so many travel portals funded by the biggest VC’s in India. A quick look on Google Trends proves that search volume for tickets is quite significant in India (relative to other countries)

Search volume for railway tickets
Search volume for air tickets
Search volume for bus tickets

redbus logoWe had a chat with the three co-founders (Phanindra Sama, Charan Padmaraju and Sudhakar Pasupunuri) of India’s first vertical for online bus tickets called redBus.in. They launched the site just a couple of months back in August 2006 and have already partnered with 30 bus operators in India and are doing great in terms of sales. Below we share their experiences, insights and our thoughts on their business, industry and consumer trends.

1. What inspired you to start this venture?
This venture has come out as a result of a necessity. Last Diwali one of the co-founders was looking for bus tickets to travel home and missed the bus because of getting too late in buying the ticket. Thats when the idea struck that it would be really useful to have a service where people can buy bus tickets online.

iLeher: May sound clichéd but is still very true: “Necessity is the mother of invention”

2. Overview about how the company evolved from idea to “live” state?
Started off with talking to travel operators to understand how the industry works. Surveyed the bus operators and travel agents to figure out the logistics. Convinced the bus operators about advantages of online tickets sales. Provided the software needed to maintain their tickets inventory. While some operators signed up for real time tickets inventory update to redBus, most of them agreed for providing tickets to redBus on a quota basis.

iLeher: Market research, partnerships, logistics. Most important factors in ecommerce.

3. How does your team look like?
3 business dev and marketing people, 2 software people and 3 customer support agents. All currently based in Bangalore.

iLeher: Proves that writing code is easy, but evangelizing, selling and keeping customers happy is more challenging, especially in emerging markets. Makes sense to invest in resources that will help in changing the mentality of the people about ecommerce in India.

4. How is your company funded so for? Any plans of raise more funding?
Pitched the idea at a TIE Bangalore event and got $25,000 seed funding and mentoring from 3 TIE members.

iLeher: Just as important as money is networking and good mentoring to stay focused in the right direction.

5. What is your business model?
Commission from booking tickets and ads on the site.

iLeher: Easy question for an ecommerce site. Try asking this to the latest Web2.0 Social media startup.

6. How is redBus doing so far? Any feedback from customers?
There has been a growth rate of 100% every month since inception. Ticket sales for this month as of today (Oct 17) is already more than double the sales from the complete month of September. Customers have given very positive feedback and they have questions mostly around security of credit card payments over the web.

iLeher: Reassures the fact that people in India are really getting more and more comfortable with doing online transactions.

7. What are some of the key challenges in your business?
Making sure that assigned seat (during e-booking) remains when passengers board the bus. There is a lot of travel on weekends, but on other days occupancy is less.

iLeher: Shows that tech savvy are buying more tickets (since they tend to travel more on weekends). Need for more distribution channels for the people without Internet access?

8. What are the marketing strategies that you have been using?
Email distribution lists, pamphlets on bus stations, posters inside the busses. Google adwords (surprisingly number of clicks resulting from that is not very significant)

iLeher: Although Search Engine Marketing is small right now, its coming.

9. What do you have to say about competitors like Yatra Bus ticket service?
redBus has a big early mover advantage. Yatra started their bus ticketing service only recently. redBus already has partnership with 30 bus operators and are expanding fast. Yatra has very less partners compared to redBus.

iLeher: Big player doesn’t necessarily has big advantage. I don’t particularly like comparisons, but still just to illustrate: Google video v/s YouTube.

10. What is the payment method most used by users?
There is a 50-50 split between credit and debit card. Plan to introduce mobile payment soon.

iLeher: Good to see more usage of credit cards. Mobile interface can work wonders in India, considering the subscriber base.

11. What are the challenges of running a business in India?
Other than the obvious issues of Internet penetration and customers being hesitant of doing credit card transactions online, evangelizing and educating the customers is a big task. Working with different service providers such as lawyers, CA’s is not always a breeze. Things do not always get done as fast as you would like. Coding gets done fast, but there are lot of other variables and things can get delayed to them.

iLeher: We hope that as the markets become mature, other processes to support online business will start getting more and more streamlined in India.

12. How has TIE-EAP program helped you?
TIE was really helpful from day one. It was a source of continuous mentorship and direction. It provides a great network of relevant and useful people in the industry.

iLeher: Network, network, network

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Internet connectivity coming soon in Indian trains

Written by: Madhur

On Oct 10th, 2006

From TOI: Indian Railways plans to provide Internet connectivity in passanger trains in India. The facility will be first provided in premier trains like Rajdhani and Shatabdi and will be later rolled out to other Express and Mail trains as well. So the day is not far when you can use your laptop and be connected to the world while travelling across the length and breadth of the country in Indian trains.

In some ways Indian Railways has pioneered the ecommerce boom in travel sector by being the largest revenue generator in e-ticketing. Lets hope that with this project, they kick start an era of ubiquitous Internet connectivity in India.

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