Niche sites aim for cyber stardom

Niche sites may ultimately become highly popular destinations in their own right.

To many people, the World Wide Web is seen as the next great mass medium -- and to an extent, it may indeed fulfil that role some day. However, the Web`s greatest value does not lie in its potential to take over the role of television. Instead, it provides value through its numerous discrete, segmented sites and communities.

This week`s column considers the role of niche sites that may ultimately become highly popular destinations in their own right, albeit not superstars like Yahoo!, AOL, Netscape and such like. Many will be centred on specific communities and interest groups; others will exploit the power of the Web as a new channel for conducting business.

While music and finance are obvious examples, there are numerous other types of businesses that will do exceptionally well on the Web. These businesses have one thing in common: they are able to exploit the unique communication modalities of the Web. As this happens, new business models often emerge, sometimes upsetting a whole supply chain and existing distribution channel structures.

A good example of such a modality is online auctioning. Anyone - consumer or business buyer - who makes price the top criterion in a purchasing decision has a strong incentive to take his or her business to the Internet. Although buying direct has helped companies like Dell increase their margins and force price points down within their respective industries, the Internet brings the concept of supply and demand to a new level. If buyers have the ability to find the absolute cheapest cost for a specific product by using online brokers or auction sites, and this exercise costs them nothing in the way of opportunity costs or time investment, what will happen to traditional sales channels?

Airlines and tour operators have been quick to utilise the auction business model as a means of filling empty seats. In this instance, Web auctioning is just one of many channels, targeted mainly at the price-sensitive or opportunistic traveller.

A more striking example, perhaps, is the brokering of commodities, such as computer components. NECX (www.necx.com) and Fairmarket (www.fairmarket.com), two prominent component brokerages, have exploited this key Web modality. The utility they provide makes them compelling sites to visit for professional IT buyers and consumers. To the extent that the auction channel succeeds, product vendors will also support it, thus re-enforcing its viability.

Fairmarket is already taking steps to build its position as a destination site on the Web. In addition to its auction model, it is pursuing advertising relationships with major IT vendors. Fairmarket could further improve its offering as a destination site if it integrates more content with its product offerings (eg product reviews).

Moving on from auctioning computer parts to another community, in this case small- and medium-sized businesses seeking to become e-businesses. This community has lately been targeted by various ISPs and IT industry players (including M-Web locally), in recognition of their need for simple, low cost Web commerce solutions. One such company - iCat, an e-commerce software supplier - has found a way to provide small businesses with added value by hosting their Web sites, and finding valuable business resources for marketing ventures.

Although hosting commerce sites is not new, iCat is trying to add value to the equation by creating forums and links for merchants to use to promote their sites and develop e-commerce strategies. iCat offers one-stop shopping for e-merchants to establish their businesses, and useful advice on running an online business. Through a variety of links and partnering agreements, merchants can perform business functions (eg order graphics or place banner ads) without leaving the iCat site (www.icat.com).

What do NECX, Fairmarket and iCat share in common? As destination sites they are all far less known than the media darlings like Yahoo! Like their superstar cousins, each presents a compelling business model that attempts to build community, but the sense of community at the "practical portals" comes from discrete utility - utility that comes only from the unique modalities afforded by the World Wide Web.