Solutions for Communities of Interest: The Portal
-- Anjana Srikanth
Contrary to popular belief there is such a thing as a profitable venture
on the web. Success online comes from two factors - value to the customer
and value to the company. Most of us understand the value to the organization
and are able to relate to it readily. But very few of us understand that
the key to achieving this is to understand the value to the customer.
And what does this mean? It means understanding your customers within
the time frame and context to achieve business objectives.
Many of the existing business models on the web are a mere extension
to their online counterparts, but the web can also redefine traditional
business models. What the web does is that it helps us do things that
we normally did in slightly different ways. And if this generates added
value to the business, then isn't it a case for consideration? New business
strategies that take advantage of the net as a many-to-many interactive
medium that emphasize communication and community are what we are going
to study here.
In business-speak a portal is an infomediary. What does an infomediary
do? It brings buyers and sellers together by providing content in the
form of advice, services or any other benefits. A portal is a content
aggregator - content in the form of information, knowledge or experience.
Example: Yahoo.com; autobytel.com, e-loan.com, travelocity, expedia and
A portal is synonymous with a gateway or a COIN (communities of interest)-
a major starting site for users when they get connected to the web. Typical
services that a portal offers include a directory of websites, a facility
to search for other sites, news, weather information, email, stock quotes,
phone and map information and sometimes a community forum.
How do portals make money? After all they don't really own anything.
They rely on their partners for all the money. Now isn't that one of the
most unpredictable ways of making money? But surprisingly, the current
statistics show that portals or rather these infomediaries dominate a
lion's share of the business and will continue to do so in the future.
To understand how they make money, we need to understand how a portal
Where does a portal make money?
It connects buyers and sellers on the web and provides value by offering
content in the form of advice, personal service or other benefits. In
Internet parlance, it's playing the role of an infomediary or a content
aggregator that offers information, knowledge, or any experience that
adds value to a particular e-business transaction.
It focuses on numerous partnerships, on maintaining extensive content
and promoting the site and its services to potential buyers and sellers.
The main sources of revenues are commission, advertising, tenancy deals,
and supply-side subscriptions.
By offering specialized content/information within a vertical industry,
like vertical.net they create value by reducing the time and complexity
of transactions. Vertical.net, one of the fastest growing facilitators
of industry-specific content for B2B commerce on the net brings buyers
and sellers from a particular industry together. It's website, wateronline
attracts more than 100,000 visitors a month. With services like latest
news, online directories, personalized advertisements, targeted email
newsletters of products and services, and a facility to create an individual
company website within the main portal makes it a major commerce facilitator.
Personalized advertising, hosting websites, building and designing websites,
sponsoring discussion forums, and negotiating a percentage of each transaction
that takes place on the online marketplace form a part of any portal.
Such sites may not start with too many transactions happening, but as
they capture valuable buyer and seller information in the matching process,
there exists immense opportunity to make their portal an e-commerce hub
for that particular vertical. Sponsor loyalty enables this while customer
As long as there is an industry with a lack of knowledge and ignorance
about prices and performance of products, there will exist a profit zone
for portals of this kind.
What are the functions of a portal?
- Aggregation of needs
- Aggregation of services
- Negotiation and notification services
- Consulting services
- Creating demand
- Up selling
Portals understand that they have value because they can command the
attention of large numbers of visitors to the E-conomy. But the key point
that many portal owners miss is that they need business partners more
than they need users. The portal site is not the product, instead "eyeballs"
are the product and the portal's advertisers, E-conomy partners, and content
providers are its consumers.
A portal can't survive without attracting and retaining eyeballs. More
importantly, it needs to attract the right kind of eyeballs. It needs
to build relationships that keep their customers coming back at a profit.
A sticky site creates customer loyalty by offering the content, the community
and the context.
Allowing a customer to create a website on the portal that talks about
the customer's specific services is a sure-fire way of ensuring customer
loyalty. "Sticky applications", like these are where the customer
makes investments by creating individualized content. When the portal
takes such a personal interest in the customer's business model it's bound
to have the customer for life.
A portal doesn't have to be large - both in terms of its customers and
sponsors. This would mean greater investment in hardware and infrastructure
and more costs. The battle should be about the business of potential advertisers
and merchants. This market will be the chief source of revenue and the
relationships that are built within this market through the portal are
what make the difference.
Banner ads and traditional mouseovers don't work: they form the traditional
advertising method of interruption marketing where the visitor is interrupted
from his focus when he clicks on a banner ad. Buyers are less willing
to give a part of their attention away today. Instead if they are rewarded
for giving away their attention through a contest, a prize or a game,
they just might be interested enough. This is an example of permission
marketing and describes another business model that the net is breeding
What do you look for if you are interested in creating a COIN or a portal?
- Identify inefficient digital value chains - where there is a glut
of information in a particular industry - large markets with significant
fragmentation - multiple independent buyers and sellers who operate
- Products in a particular supply chain that come in a complex configuration
and require simpler sales and distributor channels.
- Industries with complicated or expensive distribution processes -
the portal will provide a valuable single and uniform platform4. Symmetries
in a value chain.
Questions you need to ask while building your portal:
- How efficient is the relationship between buyer and seller?
- How digitizable is the product or service?
- How customizable is the product or service?
- What is the balance of power between the buyer and the seller?
- How fragmented is the market in which you operate?
- How ready are the customers to accept new ways?
- How critical is the need for speed in the delivery of the product
What can a portal grow into?
A portal that plays by the rules and studies the markets effectively
can become a major e-commerce facilitator in that vertical industry that
it chooses to focus on. (travelocity.com). A variety of business models
can be combined to form other kinds of transformed portals - for instance
becoming a virtual order desk like instill.com, or NetBuy, a B2B infomediary
that matches buyers and sellers, the value proposition being that of immediate
Being a success on the web doesn't mean that a business model once adopted
cannot be changed. A successful portal is the right mix of business models,
a dash of an online brokerage model (e-Bay) mixed with a trust enabler
model (Paypal) and maybe even an online mall, whichever model is the most
strategic and grants the maximum ROI.