Looking For Frictionless E-Commerce

Online shoppers are like the optimistic little boy who got a truckload of manure for his birthday: Everybody knows the pony’s out there in cyberspace but finding it requires shoveling through all the e-hype and i-dreck and even when the pony finally emerges, there’s no easy way to determine if the price is right.

Frictionless Commerce thinks it has a slick solution with its Frictionless Value-Comparison Engine which it claims will help online shoppers find the best value for a given product and will even help select a product based on their particular needs even if they don’t have a particular brand or product already in mind.

If Frictionless succeeds — or even provides an incremental advance over the existing junk heap of lame shopperbots like Junglee — experts agree that it would help drive online purchases by removing the hassles — the friction as it were.

With online retail sales projected by Forrester Research to hit $138 million in the U.S. worldwide by 2003, lubricating the purchase process, even fractional percentage points of this market make the stakes big indeed, big enough to attract about $2 million in seed funding — a small first round from friends and family in November 1998 and a larger second tranche in February 1999 from such digerati as Nicolas Negroponte and established Web companies as Lycos (LCOS) .

Frictionless was founded last year by President Alex F. Kleiner III and Robert H. Guttman when they were still students at MIT. The two created Frictionless Commerce as a business plan to enter in their school’s $50K Entrepreneurship Competition

The MIT program was first launched in 1990 as a “$10K competition” and now splits $50,000 among the top three winners. Since its inception, the competition has facilitated the creation of approximately 40 companies with an aggregate market value of more than $500 million.

Frictionless was a semi-finalist and lost to co-grand prize winners Direct Hit (profiled by VC watch on Aug. 12) and the Volunteer Community Connection. And even though Frictionless didn’t win the 1998 competition, its goal to be the 10W-40 of e-tailing has emerged in a beta-version which they expect to launch on Lycos later this year.

Forrester Research analyst Paul Hagen said the most significant advance developed by Frictionless is the ability to search for a product based not on knowing a specific model and manufacturer, but on a more vague list of capabilities and features.

Frictionless offers a beta-stage demonstration on its Web site which allows a quick keyword search or a step-by-step process intended to help select a specific product based on answers to a series of product specifications.

Frictionless aid it plans to private label their technology and sell it to portals and high-traffic sites and share in the transaction and advertising revenues generated by the service. Unlike many shopping services, Frictionless said it will not require payment from firms whose products are included in its comparisons.

“They have certainly taken a step in the right direction,” said Hagen, “I’m intrigued to see what they develop.”

As Hagen alludes, Frictionless certainly shows great potential. But only the next few months will tell if the well they are drilling hits oil or becomes just another dusty dry hole.

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