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Imandi hopes location becomes everything

The company runs a "reverse auction" site for local services. But do people want to accept bids from housepainters over the Web? is banking on local services becoming the next hot e-commerce market, but some observers say the company faces huge challenges. Chief among them: persuading consumers to accept bids over the Net. launched its Web site today, hoping to cater to consumers looking to purchase services on the Web. In addition to pairing up potential travelers and drivers with airlines and automobiles, the site hopes to connect homeowners with local painters, house cleaners, and roofers.

Imandi's launch comes one month after eBay entered the local market in Los Angeles with eBay LA Newspapers and yellow pages sites like Zip2 also attempt to connect local buyers and sellers.

But Imandi is taking on local markets with a different business model. It is essentially a reverse auction: Buyers contact Imandi to let it know they are looking for a particular service. Imandi then passes on the information to merchants who submit bids to the buyer for how much they will charge for the service.

Raghav Kher, Imandi's co-founder and chief executive, said the site offers 25 services and has plans to expand that number to 200 in the next year. Kher said the site can connect consumers with merchants in 87 percent of the nation's ZIP codes.

"Our focus is to build a hub of transactions between buyers and sellers," Kher said.

Initially, the site will be free for both consumers and merchants. But in six to nine months, the firm plans to charge merchants referral fees. Eventually the site will charge merchants subscription fees.

E-commerce analyst Barry Parr of International Data Corporation said that the demand for services will grow as Net usage grows. But, he added, there is a "pretty big disconnect" between online consumers and people who paint houses, for instance. Puesuading both groups to use a service like Imandi will take a "huge marketing effort," Parr said.

Parr pointed to Zip2, which despite having local partners such as the San Jose Mercury News and other local newspapers, has had a difficult time getting local businesses to advertise on its service.

"You almost need to be an eBay or a Yahoo, or an AOL to get something like this to happen," Parr said. "Either that or start in a single market and build from there."

Michele Pelino, senior Internet market strategies analyst at the Yankee Group, agreed that Imandi faces a big challenge. But consumers are already buying and researching products online, Pelino said, which means it shouldn't be too difficult to persuade them to start shopping online for local services also.

"Certainly it's not a big leap," Pelino said. "I do believe that the next step in the Internet is moving from products to services."

But Pelino added that it could be a while before consumers look to the Internet for housepainters or roofers.

"It's not going to happen overnight. When I think about who's going to do my gardening or who's going to cut my lawn, I don't necessarily think about going online," he said.

Forrester Research analyst Seema Williams said it will take two to three years before there is a critical mass of consumers purchasing local services online. But she said Imandi has a chance to establish itself in the market because of a lack of direct competition and because the company has tried to make it easy for merchants to use the service.

"They're headed in the right direction," Williams said. "It seems like they've go the right vision for what they are heading toward."