Keeping Their Day Jobs

SAN FRANCISCO (01/04/2000) - On Wall Street there is tremendous nervous anticipation over the results of the holiday shopping season.

Analysts and institutional investors alike are praying that the numbers punched out by the major e-commerce sites will be above their modeled expectations. The stakes are equally high for traditional brick-and-mortar merchants: They're trying to demonstrate the strengths and benefits of their businesses against the Internet threat, even as Net investors are hoping for results that show the superiority of Web commerce over traditional methods.

But there's another constituency that has a stake in the online shopping wars, one that Wall Street largely has ignored: the individual as retailer.

EBay is well-known as the pioneer in consumer-to-consumer e-commerce. Unlike sites such as Onsale, where inventoried goods are put up for purchase, eBay operates as a virtual garage sale, with consumers auctioning goods and services directly to other consumers. The interesting question is whether the sellers on eBay -- and the buyers, for that matter -- are amateurs or professionals.

I'd argue that eBay and other online auctions are not dominated by consumers selling to other consumers. In fact, I contend that the Internet has created an entirely new class of merchants, a group of business professionals who rely on the Internet, not necessarily as their primary job, but at least as a significant source of income. This new type of business professional is what I term the moonlighter class.

The Internet has allowed individuals to build businesses as an adjunct to their steady jobs. Moonlighters either set up shop or sell services over the Internet, and have created substantial businesses from their Internet presence -- some bringing in auction incomes that outstrip their regular jobs. The moonlighter class, however, uses the Internet very differently from the way workers use it (as a resource) or the way consumers use it (as a shopping environment).

So what are the characteristics of this moonlighter class and how significantly will it affect our economy? This group is characterized as individuals who have a skill or a passion that is relevant to creating a small side business that they did not have the time or the resources to build prior to the arrival of the Internet. Moonlighters set their own work hours -- which are often continually changing. Moonlighters also have few overhead costs, as they are typically very self-sufficient and rely on the Internet as their primary advertising vehicle, their primary marketplace and their primary infrastructure.

There are differences between a freelancer and a moonlighter. To begin with, freelancers usually do not have a steady job, relying on their consulting talents for their primary source of income. And freelancers are not necessarily Internet-reliant. Some freelancers may leverage the Internet in their work, but they would still be in business without the Internet. Moonlighters may end up being freelancers, if their Internet business becomes sizable enough to justify it.

While day jobs may be more secure, moonlighting jobs may be more profitable.

Individuals are realizing that through the Internet they can establish not only a presence, but an extremely cost- effective business where their work hours and work terms are entirely up to them. Essentially, moonlighters have become a structured and organized Internet labor class and have numerous sites and services at their disposal to assist them in their mercantile endeavors.

One interesting question is whether reverse auction sites like BizBuyer, BuyerWeb and Respond.com, and small-business sites like SmartAge and LinkExchange, are geared toward traditional small businesses or moonlighters.

If these sites are in fact geared toward the moonlighting class, will this group be a powerful enough economic class to sustain all of these supporting businesses? It's too early to tell. But clearly this Christmas season was important not only to the major e-commerce vendors, the traditional brick-and-mortar superstores and the small corner stores, but also to the online retailing moonlighters. I believe that this holiday season will prove to have been a windfall for the moonlighters -- and that they will begin spending significant amounts of money to build their businesses over the course of 2000.

Danny Rimer is a partner at the Barksdale Group, a full-service investment group that focuses on the Internet, and an advisory director at Hambrecht & Quist.

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