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This story appears in the March 2000 issue of Entrepreneur. Subscribe »

Think mega-Web merchants have molded the Internet into a formidable corporate monolith with no space for start-ups to capitalize on particular retail segments? With a plethora of domains in which to buy pet goods, beauty products, toys and the like, would-be entrepreneurs and their investors are mulling over that very question, leading Entrepreneur staff writer Victoria Neal to interview analyst Melissa Shore from Jupiter Communications. Is there any space left in the virtual mall? You betcha!

Victoria Neal: With the onslaught of major Web stores, is it too late for start-ups to enter the e-commerce revolution?

Melissa Shore: Many people believe the game is over in certain categories, but we believe the game is just beginning. There's a lot of shopping going on online. Jupiter projected $15 billion in sales in 1999, but that only represents a very small portion of the total sales for particular categories. For example, only 3 percent of all travel sales occurred online last year. So, for every given category, there is still lots of opportunity for players to enter. There are plenty of opportunities for companies to come in and really compete on certain niches--targeting a certain customer segment and offering a specialty type of good or service. One example is a site aimed at baby boomers and there's another site that serves the needs and interests of city moms.

Neal: Some have suggested that the Web is quickly becoming an oligopoly, unable to support new category-specific sites.

Shore: One of the problems with the Inter-net is that it promises total information. Now that so many consumers have this total information, they are overwhelmed by it. Niche-focused sites help particular segments of the population by doing the work for them.

Neal: So, the answer is finding a niche, as smarterkids.com and toytime.com did by selling educational toys rather than taking a mass-marketing approach like eToys?

Shore: Absolutely! Pick a particular niche and then commit to that niche not only in terms of content, but also in product selection and the marketing messages you create for it. The company must make sure that everything they do gives a consistent message for that niche, as well as assure the niche is big enough to make money.

Contact Sources

Cartoon Networks,http://www.cartoonnetwork.com

Jupiter Communications, mshore@jup.com, http://www.jup.com

United Media, (212) 293-8565, http://www.comics.com

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