Searching for Solutions
                    February 12, 2001

                    BOMBAY -- One e-commerce company is learning by experience that
                    overseas sites set the trends, but local consumers wear the trousers.

                    Nasdaq-listed Rediff.com India Ltd., the only Indian Web site so far to
                    raise money in the U.S. stock market, is India's answer to Yahoo! Inc.
                    -- a news and search portal with shopping services, catering to Indians
                    both at home and abroad. So there was confusion when many
                    shoppers reported they couldn't find what they wanted through the
                    site's search engine. It turned out that the standard e-commerce
                    software Rediff was using couldn't handle Indian-English peculiarities,
                    such as substituting "trousers" for "pants." Rediff had to build its own
                    search engine.

                    It's just one way the five-year-old company is
                    learning to balance lessons from India and the
                    West. Rediff's 52-year-old founder, Ajit
                    Balakrishnan, an advertising veteran (Rediff's
                    names comes from Rediffusion Advertising Pte.,
                    an agency Mr. Balakrishnan founded in the
                    1970s), makes frequent trips to the U.S. and
                    online visits to U.S. market-research sites, to
                    find out what is and isn't working for U.S.
                    e-commerce sites. A generation older than
                    most of India's Net mavens, Mr. Balakrishnan is
                    considered something of a business guru within
                    the country's Internet community. He says
                    investors tend to be strict about not letting
                    sites repeat the mistakes made in the U.S.

                    "The source of capital goes back to Wall
                    Street," Mr. Balakrishnan says. "That received
                    wisdom is spread throughout."

                    Though grateful that India has been spared some e-commerce
                    bloodletting, Mr. Balakrishnan thinks it would be wrong to adopt
                    America's latest lessons wholesale. India's e-commerce business in
                    2000 is like America's in 1997, he says: Consumers are just starting to
                    trust that credit cards can be used safely for Internet purchases, and
                    the overwhelming majority of online-shopping excursions end without a
                    sale.

                    Cart Unknown

                    A recent survey done by the company showed that just four of every
                    100 people entering Rediff's site actually put something into their
                    shopping cart, and 93% of those who put something into their cart
                    moved on without buying. This figure, the so-called drop-off rate, is
                    between 60% and 80% in other countries, says Mr. Balakrishnan. It
                    occurred to Rediff officials that the cart itself might be the culprit. The
                    shopping cart was an easy metaphor in the U.S., but India's shops are
                    generally too small for shopping carts.

                    And so, the Rediff team is redesigning the shopping site, with one eye
                    on American Web sites, another on local conditions. On a recent visit, a
                    prototype is under construction at designer Zereh Lalji's desk, in
                    Rediff's headquarters in a squalid central Bombay neighborhood. Ms.
                    Lalji, 26, has been with Rediff since graduating from Bombay University
                    with a master's degree in sociology in 1997 and teaching herself Web
                    design.

                    She rifles through a printout of the seven Web pages viewed in the
                    course of purchasing a camera on Amazon.com, and says, "It would be
                    disastrous if you had something like this in India," where Internet
                    connections are shaky. (Rediff says sales jumped more than 60% when
                    it collapsed its nine shopping steps into three.) But she also borrows
                    something from a U.S. online grocer, Webvan.com: a shopping list that
                    stays in the same left-hand spot while the user shops. Indians will
                    identify more closely with a shopping list that remains on the screen
                    while they shop than a shopping-cart icon they have to click each time
                    they want to consult it, the company believes.

                    Mr. Balakrishnan says the 24-hour help number should be highlighted
                    for emphasis. Ms. Lalji experiments with a vibrant yellow. "I would love
                    to see no words in the instructions," he says.

                    Fewer Words

                    Rediff's bet is that stripping away words -- including most product
                    reviews -- will help customers proceed undistracted to the electronic
                    checkout. "The first 10 million users were relatively sophisticated," Mr.
                    Balakrishnan says. "The next 10 will never be more sophisticated."
                    Though Rediff has yet to earn a profit (net revenue for the quarter
                    ending in December was $1.75 million), analysts expect it to turn
                    profitable this year.

                    It is at the elite level that the American experience transfers best. For
                    example, Mr. Balakrishnan predicted Indians would protest the same
                    way Americans did at the idea of having their Web clicks tracked for
                    marketing purposes. "The kind of people who react is not the public at
                    large, but the 1% who care, and that 1% is very similar throughout the
                    world," he says. So Rediff decided to track only a customer's actual
                    purchases.

                    When it comes to using the information to suggest future purchases,
                    Rediff won't be able to use the U.S. as a template. Not only is the
                    number of shoppers much smaller than in the U.S., but the market is
                    more complex. By the time it divided up its Indian-pop and
                    traditional-music selections by region and style, for example, Rediff had
                    no fewer than 300 categories.

                                                                       -- Daniel Pearl