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Culture

Upstarts tap lucrative services market online

A cottage industry is growing on the Internet that links consumers with expert advice or small businesses offering services such as housepainting, fitness training, and even cat psychiatry.

    A cottage industry is growing on the Internet that links consumers with expert advice or small businesses offering services such as housepainting, fitness training, and even cat psychiatry.

    Just this week, Advoco.com, which links people seeking advice to pundits in a variety of fields, relaunched its Web site as Exp.com. In addition, Imandi.com, which launched its Web site in May, just added small-business offerings such as long distance and temp services to its previous lineup on the site.

    Because these services are not readily tangible like, for example, a book or CD from Amazon.com, it remains to be seen whether consumers will take to buying them over the Internet.

    To date, the services market remains largely untapped on the Web. Although it comprises some 40 percent of the U.S. annual gross domestic product, few service industries besides travel and stock trading have taken off online.

    As Jupiter Communications analyst Ken Cassar put it, "Services are…much overlooked in the overall scheme of things on the Web."

    That's due in part to the nature of many of these services. Unlike books and CDs, which are sold as standardized products, service needs vary with each consumer. For example, cleaning needs for one person's house may not be the same as the cleaning needs for another.

    But the market for services appears ready to explode in e-commerce. The amount of services that businesses will buy on the Net will grow from $22.1 billion this year to $220 billion in 2003, according to Forrester Research.

    "My early read on it is that there is a tremendous amount of potential that may dwarf the online book market," Jupiter's Cassar said.

    Poised to take advantage of this growth are companies such as Exp.com, Imandi, BizBuyer.com, NewMediary.com, and ImproveNet, many of which utilize a reverse-auction format to pair service buyers and sellers.

    In a reverse auction, users submit a request for anything from astrological advice to home-improvement expertise, which the sites then pass on to service providers. The service providers then submit a bid on the project either directly to the customer or through the system, depending on the site.

    But the Internet could pose challenges to service providers, said Forrester analyst Charlene Li. Such companies may not have the time to find sites like Imandi.com, let alone maintain their presence on them, Li said. Also, Internet users have come to expect instant responses to requests, which could prove difficult to businesses that are new to the Net, she said.

    "Customers are going to expect some sort of response back--and a nonresponse is going to be unacceptable," Li said

    Gomez Advisors analyst Martin DeBono expects services to eventually take off on the Net, but he said it could take 5 to 10 years before they do. Many consumers will still want to meet housepainters and other service providers in person before they hire them, he said.

    "It's going to take a substantial shift for people to interact with people only on the Internet," DeBono said.

    But Imandi president Raghav Kher said his site has already signed up some 150,000 merchants and has about 40,000 users. Although his site also links buyers and sellers of antiques, collectibles, and office equipment, Kher said Imandi has seen a strong demand for home and garden services as well as insurance.

    Kher said that the time is right for selling services online: "We are at the right juncture, I think."