Did I miss something? On Friday the 14th, as the stock market was crashing, I flew out of the country for a rare family vacation. The tech market meltdown was news in London, but it was played somewhere below Manchester United's Premiership win, the racial and political turmoil in Zimbabwe, and Tory immigration policy.

I arrive back in the USA and the papers are filled with hand-wringing columns. It was a distasteful scene. Once-bullish Internet pundits like James Cramer playing Chicken Little in the pages of New York Magazine. Tight-ass old school journalists and business people, who have been sitting on the sidelines grimacing jealously, racing out to pen poisonous columns with all the acuity of a school kid razzing playground rivals with a hearty "Nyah-Nyah-Nyah-Nyah-Nyah."

The biggest whipping boy these days seems to be online retail to consumers. It's an easy target. The sector's grand stalking horse, Amazon.com, released another quarter's worth of results that even its biggest believers could only term "mixed."

Sure Amazon slightly beat expectations, and has slightly narrower cash losses than expected. But traditional seasonal economics seem to be settling in. For the first time in the company's public history Amazon sales dropped in sequential quarters from the fourth to first quarters. While gross margins improved to 22.3 percent, up from 13 percent in the fourth quarter, the company doesn't include the cost of order fulfillment in its cost of revenues, so the gross margin number is skewed. According to TheStreet.com's Herb Greenberg, factoring this legitimate cost of doing business into Amazon's gross margin would trim it by 17 percentage points. How does a 5.3 percent gross margin grab ya?

The bottom line for the company was a net loss of more than $300 million, and a loss from operations of nearly $200 million, up from around $52 million in the first quarter of 1999.

Amazon has more than 20 million customers. If the biggest e-tailer is mired in financial muck, the thinking goes, what does that mean for the rest of the sector?

Consumer e-commerce remains one of the Net's biggest opportunities. The sheer amount of money and media coverage the Net has received over the past five years has masked the fact that we remain five years into a 30-year cycle of change that will remake the world economy. That means 85 percent of the change has yet to come. We're all babies in this business. These companies are babies. Few of them will survive. Amazon.com may in fact be a company in deep trouble. I have always been exceedingly skeptical of a business plan that calls for losing hundreds of millions in an illusory effort to capture consumer behavior in the hopes of some day convincing those consumers to buy higher margin items from Amazon.com.

But e-tailing will thrive. As an enterprise, consumer online commerce is not only here to stay but will represent a vast part of all commerce in the United States in the 21st century. In fact, for non-perishable items, I wouldn't be surprised if online commerce in one form or another becomes 50 percent or more of the consumer economy.

The problem for the current class of e-tailers is that they've done little more than drag the traditional way of doing things online, and in so doing, lost sight of the advantages the Net was supposed to afford. We forgot about what was new about the so-called "new economy."

When the first generation of consumer Net companies were founded -- stores, malls, publishers, community builders and the like -- we all clung to the notion that the Net afforded two unassailable advantages over the traditional way of doing things. First, the cost of distribution is more or less a flat line as companies grow. It costs basically the same to produce a Website or e-mail venture whether you're reaching 2 people or 200 million. Second, retailers don't need to hold inventory in the online world since distributors can drop ship directly to consumers. So carrying costs and the kind of debt service and guesswork that go with it, can be chopped out of the economy.

If the cost advantages of true Net business -- cheaper distribution and sales costs -- are illusory, than the nay-sayers are right, the whole Net economy will come crashing to the ground and the Net will just become an incremental revenue tool for the big boys.

But consider the case of eBay. If Amazon.com is the biggest consumer e-commerce company, eBay is the most important. Because eBay's example proves that a Netcentric model to selling online works. The company turned a cash profit of $8 million for its recently ended quarter -- excluding some one-time non-cash charges. Results were a bit skewed by the including of unusually high interest income in the quarter. But the company's sales and marketing costs were more than $7 million dollars less than Amazon.com's. Its gross margins came in at around 73 percent. And its sequential quarter sales continue to grow.

EBay is an Internet company, not a "retailer" in the traditional sense. It doesn't hold inventory. Its value is as a network builder. It connects people to one another. It enables commerce while reducing the kind of friction that Amazon.com has managed to drag from traditional retail into the online retail world. Ebay is proof that profitable business-to-consumer online retail is already here.

Now that we've proved the concept, it's just a matter of time before the whole thing mushrooms. In the not-too-distant future, with addressable set-top boxes on televisions throughout the world, with connected mobile devices "plugged in" to wireless networks, will come a dramatic expansion of the number of consumers on the grid. The first generation of children who grew up on the Net will arrive at their teen years ready to buy. And the pace of Internet adoption across the world -- slowed so far by high telecom taxes -- will quicken as wireless networks mature.

Consumer retail will become as vast, as important, and as profitable a part of the economy in cyberspace as its been in physical space. Cyberspace will become a ubiquitous marketplace for goods and services for time-pressed, two-earner families, for kids and teens that can easily get to the mall, for international commerce, for everybody. Many of today's publicly-traded consumer e-tailers may be troubled, pursuing the wrong model, burning cash, on the precipice of a financial abyss. But there will be succeeding generations of e-tailing companies. And there are companies like eBay out there today making a living building a marketplace for consumers online.

Consumer e-commerce is the real deal. It's here to stay. Don't believe the hype.

* Jason Chervokas (jchervokas@internet.com) is co-founder and co-managing editor of atNewYork.com.