Keane Insight

Yahoo-Rediff alliance: Foes turn friends

A few months ago, Yahoo India and Rediff.com were bitter enemies, aggressively competing against each other. But in a surprise move, the two leading portals have announced an alliance to target the booming Indian market. VENKATESH GANESH analyses the impact of the deal

While Ajit Balakrishnan refuses to speculate on the financial gains from the alliance, he says it will definitely increase exposure to Rediff.com's shopping site

BUYOUTS and strategic alliances seem to be the flavour of the month. Yahoo India and Rediff.com have announced a strategic alliance to jointly promote online shopping and mobile content across both portals. For the first time in the Indian portal industry, two players with a high user base have decided to join hands and leverage their respective strengths.

This effectively means that Rediff will power the shopping channel being launched on Yahoo India and Yahoo in turn would facilitate the usage of its value-added mobile content for Rediff visitors. Yahoo India will showcase its mobile content—ring tones, polyphonic tunes, wallpapers and Java games, among others on the Rediff.com website. Similarly, Rediff.com users would be able to download this content through Yahoo India. NASDAQ gave a thumbs-up to the alliance (as can be seen from Rediff.com’s share price, which doubled to $19 from around $8.4).

Synergies

According to a survey conducted by IDC, the Indian B2C commerce space is expected to cross Rs 2,300 crore by 2006 at a CAGR of 79 percent. The report elucidates on the kind of items purchased on the Net and it’s clear that most customers buy books, music CDs and consumer electronics devices. Currently, Yahoo India has 30 million registered users and 12 million unique users (these users do not hold multiple Yahoo accounts).

The company’s mobile offerings includes its Messenger, group SMS, mail, logos, astrology, cricket, jokes and a host of other services catering to these users. This relationship is spread across almost every cellular operator, including the likes of Hutch, Airtel, Idea, Spice Telecom, RPG Cellular, Escotel and Oasis.

The Yahoo content on Rediff.com would be in addition to Rediff Mobile content currently available on Rediff.com. Further translated, this tie-up could help Rediff consumers and would offer them a mobile platform with value-added services.

Yahoo users now have access to the Rediff marketplace, which has over 100 shops across 30 categories. The existing tie-up enables users to buy and gift products and accessories from leading international brands such as Nike, Arrow, Tissot, Phillips and Casio, among others, to their friends and families across 800 locations in India.

It’s the Indian Net user, who stands to gain from the combined synergies and strengths of Rediff.com and Yahoo India. “Our alliance marks the beginning of a new era in Indian cyberspace,” says Neville Taraporewalla, country manager, Yahoo India.

According to Neville Taraporewalla, thanks to the strategic alliance, Yahoo and Rediff.com can now jointly address over 85 percent of the Indian Internet audience

This move seems to be a case where two big online companies are embracing each other and offering a common platform for the consumer to choose either one or the other. At the outset, the balance is slightly tilted in favour of Rediff.com, since the Indian portal giant can now capitalise on the existing user base of Yahoo.

So, would this translate into big revenues for Rediff? Avers Ajit Balakrishnan, chairman and CEO, Rediff.com, “We cannot specify the extent to which this would increase revenues, but it would definitely increase exposure to our shopping site. Also, the sheer volume of exposure, with more than 85 percent of users gaining access to our site is a huge gain for us.”

The revenues accrued would be shared equally between Rediff and Yahoo. Neville Taraporewalla expands on the Yahoo strategy. “At this point in time, the idea is to offer Yahoo India users a complete shopping experience. We have identified shopping, since a lot of Indian users log onto Y! Shopping in the US and now they have an option to buy on Y! India, where products would be more local in nature. But our objective right now is to grow the market and we have not put any numbers to it.”

Time to celebrate?

It’s rare to see two strong competing brands coming together for mutual benefit. It is common knowledge that both have a sizeable share in the Indian cyberspace. Neville Taraporewalla feels that with this strategic alliance Yahoo and Rediff.com can jointly address over 85 percent of the Indian Internet audience. Though analysts hail the move as a revolution in the Indian Internet arena, the extent to which this move would really explode the market remains to be seen. The combined forces from two of the strongest portals in the country would definitely be watched with keen interest. Whether this association would herald a new chapter in the online retail e-commerce space in India, only time will tell.

venkatesh@expresscomputeronline.com