First to Market, First to Gain

SINGAPORE (03/09/2000) - Amongst a swelling sea of new dot-com companies, how can a startup yell loud enough to be heard? Computerworld spoke with some new dot-com companies and examined how these firms hope to differentiate themselves from their competitors.

Being first in the market is critical for start-ups, said Patrick Grove, chief executive officer, Catcha.com Pte. Ltd.

Internet users tend to be very loyal, and are unwilling to move to another site that offers similar services, Grove said. "Once you have them as members, it will hard for your competitors to get them," he said.

"Today, people still associate Hotmail with free e-mail service. Yahoo, Ebay, and Amazon may not be the best sites in their markets, but because they were there first, people continue to stick with them," he added.

And having a large user base is most valuable to a dot-com company because the larger the number of users, the higher the revenue it can pull in from advertisers, said Raphael Tham, CEO, WizOffice.com.

Attracting more users also increases the chances of converting them from subscribers to actual purchasers, which will help further grow the company's revenue, Tham said. WizOffice generates revenues from its sales of products and services, fees for Web applications, Web advertising and hosting, and e-business services.

Targeting small and medium-sized enterprises, WizOffice.com serves as an e-commerce portal for office equipment, and also provides other offerings such as courier services and online auctioning.

A user base is one way of judging the success of dot-com companies and assessing the market value of the companies, where "the larger the potential market, the greater the valuation", said Darren Sng, head of Web services, Similan.com, which owns online auction site, SurfingBananas.com.

The subscriber base is critical to Internet companies because traffic is so incredibly important in this business, said Jacobson. Traffic to a company's Web site not only increases the potential sales that can be achieved, it also increases the value of advertising on the site, she added.

"Since most dot-com companies do not have a sustainable revenue and profit model, one of the most popular way to benchmark success is the size of its user base," Sng explained. "However, this cannot be a long-term prospect for dot-coms because eventually, companies will have to justify their spending by revenue figures."

SurfingBananas.com generates revenue in a variety of ways which includes advertising, success fees for completed transactions, and value added services such as 3D pictures, Jacobson added.

"It's important for dot-com companies to try to stand out from the crowd," Jacobson said. "Generating traffic is the mantra of so many Internet companies, and there are lots of ways to do this from providing a very user-friendly site, to offering sought after value-added services, to offering a distinctly unique product compared to other Web sites in the same space.

"Success and differentiation among dot-com companies competing in the same industry is all about marketing, marketing, and marketing," Sng added.

"Innovative product and responsive service will also help build a sustainable user base."

It is also crucial that dot-com companies are able to move and change quickly "to drive home that dream of creating Internet enablement and out-of-the-box solutions", Tham said. He added that corporate culture is just as important, where employees who are given stock options, will feel personally responsible in making things work well for the company.

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