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Is the definition of local search not clear in the minds of Indian entrepreneurs?

by Satrajit Sen

by Satrajit Sen

“Many Indian entrepreneurs have missed the real definition of local search service in India and hence the country’s market has so many diversified players who are finding it tough to perform here,” VSS Mani, founder and chief executive officer, JustDial told AlooTechie while speaking about the present state of local search market in India.

VSS Mani further said that in India there are three types of local search players and hence facing challenges related to business, visitor stats and investor expectations. “The first are technology enabled search service providers which are pure-play local search companies and they have the power technology to take them to the next level. I see these companies performing fairly well in regards to consumer and investor expectations,” explained Mani.

According to VSS Mani, the second type of companies start as some other service, like a blogging platform, and then, to attract more users, diversify into providing classifieds and local search services. “Such companies might get investments but fail to perform well as they often lose the focus and hence still struggle to make money out of the service,” said Mani.

The third type of local search companies have first time entrepreneurs who manage to raise funds on their face value and then focus on making an attractive website by copying foreign successful models, rather than offering better services to people. “Users are smart and they flock to the best service and in that case, it becomes tough for these companies to raise a second or third round. It is then when these players look at market leaders either to raise funds or to go public, so that they can tell a story,” added VSS Mani.

Talking about his understanding of the local search market, Shriram Adukoorie, founder, AskLaila.com, said, “Four years back when we raised money, there were a lot of buzz and a dozen companies in this space. Over a period of time, companies that invested in technology and databases have established themselves and grown significantly. Today, there are only a couple of companies at the top. This is typical of most growth segments. Initially, there is euphoria, then a few companies establish themselves as market consolidates and post that you will see a steady growth from the top two to three leaders in the segment.”
According to Satya Prabhakar, CEO, Sulekha.com, there is a continuing interest of VCs in this area and the increasing attractiveness of internet players in India post MakeMyTrip listing is making it significantly attractive for local search players also. “Sulekha.com regularly gets calls from investors but hasn’t raised funds, since we have been profitable for a couple of years now. However, we might raise funds for expanding into new opportunities,” said Prabhakar.

Satya Prabhakar further said that in 2010, the local search market has exploded in usage for Sulekha.com with over 110 per cent increase in users and more than 140 per cent increase in SME (Small and Medium Enterprise) customers who utilize the searches. “We feel that other leading players have also benefited in 2010 – while some level of consolidation of the leaders at the top has also happened,” added Prabhakar.

Commenting on whether the proliferation of search engines acting as default websites for local information search is posing a threat to standalone local search businesses in India, VSS Mani of JustDial opined that the users are becoming experienced and are gradually shifting from generic search engines to niche local search engines for local information and hence there is no bigger threat from them.

According to Satya Prabhakar of Sulekha.com, the growth of Google Local, Google Places, Yahoo Local etc is a threat for most local search players as these services have become de facto starting place for almost all kinds of searches. “However, innovations and unique offerings like reviews, maps, directions and value-added content will help the leading local search players like Sulekha.com to build their own direct traffic. Specifically for Sulekha, direct traffic has grown even faster at about 132 per cent in 2010, compared to 2009,” said Prabhakar.

Shriram Adukoorie of AskLaila opined that general search engines in India do not have such comprehensive and accurate listing databases as that of local search players and hence AskLaila’s traffic has been steadily growing over the last 12 months. “This proves that more and more users still are unable to find the local information on other sites and are coming to us as we provide the information they are looking for. Local search and information is all about having great data that is accurate and current. At AskLaila, we have significantly invested in building this database. We validate and verify all the listings on our site and have the most comprehensive and current database,” added Adukoorie.

Speaking on how challenging it is to build a representative database around local information in India, Shriram Adukoorie said that building listings database is a non-trivial task in any country and India adds to this complexity and that is the reason why, after so much of focus on this segment over the last five to six years, there are only a couple of companies with good databases. “India has many mom and pop neighbourhood stores and services that do not necessarily exist in developed countries. Also, since mobile penetration is quite high, many companies just have a mobile number and no landline number. With the prevalence of prepaid – mobile numbers change often and we do a lot of statistical modelling to call and keep our data alive and current. We have invested significantly in tools and software to manage our data. We regularly encounter crawlers trying to access our database. We have invested significantly in protecting our database and we have watermarked our listings,” added Adukoorie.

Agreeing on this, Satya Prabhakar of Sulekha.com also said that keeping the local yellow pages database up-to-date is the most important challenge in India. “Our studies indicate that restaurants and bars have a mortality rate of about 15-18 months in most cities. This means that most restaurants close down and are no longer relevant within a year-and-a-half, while countless new restaurants keep opening in the major cities. We have invested in more than 180 resources that only take care of database maintenance and this is a very high cost effort for Sulekha.com and other leading local search players,” said Prabhakar.

Speaking on how the lack of awareness, accessibility and language barriers is hampering the growth of Sulekha.com’s user numbers, Satya Prabhakar said, “Given, comScore quoted the internet user population of 42 million (as of October 2010), we feel there is a lot of potential to scale English language users – that numbers about 100 million in India. Accessibility via mobile internet is, however, a big plus in driving greater usage for Sulekha.com and other local search players.”

Shriram Adukoorie of AskLaila didn’t see this as a barrier. “We provide the best experience on both the digital platforms – Internet and Mobile – across 300 cities in India. We are still growing at a very healthy rate and that shows there is enough headroom for growth. We expanded to over 250 cities in the last six to eight months. As we penetrate into the SEC B and C towns, we are finding new ways to reach more consumers. On the mobile front, we work with carriers who have a great understanding and experience of penetrating these markets. They are helping us with promotions etc.”

VSS Mani of JustDial opined that more than language and accessibility, the industry needs to work on getting the people out of their cultural barrier of asking others while searching for local information. “We believe that local information should be present in all platforms like wap, voice and web. Quite a few people are moving from PC to Mobile, but a lot of work remains in bringing people to internet and voice for local search. Once that is done, the penetration will rise and with 3G and proliferation of mobile internet usage, the local information search industry will be big in the next two years,” added Mani.

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