Site Uses Free Messaging as Lure for Pay Services, which provides services for Indian expatriates, has put a new twist on e-mail as a loss leader as part of a scheme to sell its for-profit services, mainly cash transfers.

Under homeindia's business model, the 20 million Indians living abroad can send e-mail messages to the site. The messages are printed out, placed in envelopes and posted to friends or family in India at a cost to homeindia of 15 cents per message.

“Our free message service is much faster than the postal system, sometimes by several weeks,” said Hareesh Tibrewala, co-founder of homeindia. Messages are delivered in three to five days.

He said the company delivers 20,000 free messages each month, up from 5,000 a year ago. At 15 cents per message, this loss leader costs the company $3,000 per month.

Homeindia, Mumbai, India, added another loss leader: message recipients can answer mail from abroad at no charge.

Once expatriates use the mail service, Tibrewala claims 15 percent take advantage of his for-profit services. Homeindia charges $35 per cash transfer via credit card, which undercuts the charges of both Western Union and U.S. banks. For instance, to forward $500 (clients' average cash transfer) to India, Western Union charges $39 if the customer pays in cash, but $52 for credit card transactions.

Homeindia's other for-profit service is delivering gifts to folks back home. The gift service grossed only $150,000 last year, but is expected to grow 1,000 percent in the next 12 months. Expatriates can also send gifts to their favorite movie stars in Bollywood, India's film capital in Mumbai. Free messages also can be forwarded to favorite stars. Only about 500 clients, mostly men, send fan mail each month.

Among the other loss leaders offered by homeindia are Find an Indian, a matrimonial databank, and Jobs Back Home. These are free, even to Indian employers hoping to lure expatriates home.

Of the 20 million Indians living abroad, 3 million are in the United States, with equal numbers in the United Kingdom and the Persian Gulf states. There are 1 million in Africa, with smaller communities in Canada, Hong Kong and Australia. Indians in the United States are the major market for homeindia because, Tibrewala said, they are more affluent and Net-savvy.

There are other sizable Asian expatriate communities, such as those from Bangladesh, China, Pakistan, the Philippines and Sri Lanka. Tibrewala is sure that they could be well-served by demographic sites similar to homeindia. However, he and co-founder Sanjay Mehta — both of whom were trained in computer science in the United States — have no current plans to serve those communities.

Since the site launched in February 1998, they and their Indian investors have invested only $500,000. To expand, they are seeking $4 million from venture capitalists, including those outside of India. With added funding, they project profitability by 2002.

Because of limited funding, homeindia relies on word-of-mouth. It also advertises in newspapers published in India and abroad, on local TV and at functions where expatriates gather. It also does direct marketing. That The Economic Times, India's equivalent of The Wall Street Journal, honored homeindia as India's best Web site has also helped.

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