How to succeed online

The internet sector has taken its fair share of stick over the last three years, and some even have left it for dead. But a couple of industry titans offered their perspective on Tuesday on what's working on the web and what it will take to propel future growth.

Executives from eBay, Google and other companies offered up their two cents during the Thomas Weisel Partners' Internet Conference 2003 in San Francisco. Precision in searches, personalisation, aggregation versus subscription, and helping customers build businesses through revenue growth instead of cost savings were some of the topics discussed during the conference.

Marc Andreessen, chairman of Opsware and founder of Netscape, said the internet is undergoing a maturation process. He predicted that better days lie ahead for the industry over the next few years.

"It takes 20 years for things to play themselves out," Andreessen said. "Like the TV and PC, people discounted (the net's) importance at first; then there was a huge bubble; then the collapse; and now people realise it's here to stay and are building more and more businesses around it."

In addressing growth areas, Google chief executive Eric Schmidt said internet companies that focus on aggregation, or pulling together content from various sources, will do better than those focused on a subscription model.

"Subscription businesses are hard to build," Schmidt said. "The notion that people will have 1,000 subscriptions at $3 each is not going to happen. How many subscriptions do you have and can you remember your passwords?"

Highly personalised information is another growth area for internet companies, Schmidt said. In fact, he said, "personalisation will drive the internet".

Internet companies with access to a wide pool of users may find success in teaming up with other internet companies that specialise in a vertical industry. Yahoo, for example, has seen success with its job-search site, HotJobs.

"Verticals pay a lot of money to (sites with broad distribution)," said Susan Decker, Yahoo's chief financial officer.

Certain categories in ecommerce are performing well for online auctioneer eBay.

During the first quarter, eBay's motor vehicles category generated a 107 per cent increase in the value of merchandise sold on an annualised basis, jumping to $5.3bn and rivalling the performance of car dealerships. And although clothing generated only $1.2bn, in terms of value of merchandise sold on an annualised basis in the quarter, it posted a 101 per cent increase year over year.

"Clothing is hot. It's on fire," said Mark Rubash, eBay's vice president of finance.

This has not been lost on eBay competitor Amazon.com, which late last year launched an apparel store. Both eBay and Amazon sell new, discounted out-of-season, and used apparel on their sites.

And eBay has found that its the new clothes and discounted out-of-season deals have been a main driver of its apparel category.

Dawn Kawamoto writes for News.com