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Internet

What’s Left to Webify?


New web technologies are making their way through many industries, bringing syndication, transparency, and personalization to everything from travel to real estate. But there are a few spots untapped still.

The last few weeks have seen the launch of two companies, ZiXXo and Red Roller, tackle coupons and shipping, respectively. Though most web 2.0 companies take inspiration from earlier, failed late-‘90s startups, these two appear to be somewhat original.

Of course, the lack of innovation in these areas at this point suggests the market opportunities are unclear.

Belmont, California-based ZiXXo launched its self-serve coupon service Thursday. The company is focused on the “long tail” opportunity of local merchants—that is, the idea that selling to a large number of mom-and-pop shops in aggregate could be as valuable as selling to a small group of major retailers.

“Nobody has effectively done local coupons, which is the vast majority of the opportunity,” ZiXXo CEO Mike Hogan said.

Internet coupons accounted for less than 1 percent of 314 billion coupons printed in the United States in 2004, according to coupon company CMS. The Kelsey Group puts Internet advertising spending by local businesses at $5 billion by 2008, with $1.3 billion from online Yellow Pages.

Coupon Syndicate

Formed in 2003, ZiXXo had originally intended to offer free classifieds as a destination site, but it changed tack to offer coupon services to other sites. The company hopes to partner with portals and Yellow Pages sites to bring in advertisers and syndicate ads.

Unlike coupon providers such as Valpak or CoolSavings, ZiXXo advertisers don’t have to go through an extended process to create coupons; they simply visit the ZiXXo site and customize their coupon there. Then the company sends it out through syndication partners, email, and RSS (really simple syndication) feeds.

CoolSavings

The coupons are now free to all involved. Starting next year, the company will charge $0.50 per coupon printed and split about half of that between the affiliate who referred the advertiser and the affiliate who displayed the coupon.

Though it’s easy to imagine Google or Yahoo adding local coupons to their popular self-serve pay-per-click ad programs, Mr. Hogan predicts that portals will want to partner with him rather than build their own systems. Meanwhile, Mr. Hogan will try to drum up goodwill of smaller outfits, especially by providing an application programming interface (API) for developers to build on top of ZiXXo.

Yahoo

If ZiXXo is able to scale, and it’s easier to plug in, it’s entirely possible for Google or Yahoo to use his service, said Sterling Market Intelligence analyst Greg Sterling, who disclosed he had offered assistance to ZiXXo but not in exchange for money.

Mr. Sterling pointed to business owners’ interest in tracking the success of their ad spending on revenue, saying coupons and click-to-call are two key avenues into attracting local advertisers.

ZiXXo, which has six employees, had raised a $350,000 friends-and-family round, but Mr. Hogan said he has added “far more than that” from his own pocket. He is now seeking additional funding from either a venture capital firm or a strategic partner.

Shipping Aggregator

Red Roller, another company trying to make a web service out of a somewhat low-tech industry, launched last week at eBay’s conference in Las Vegas.

The Norwalk, Connecticut-based company, which has also been in the works for over two years, has built an on-demand shipping site “designed to have the same look, feel, and function as an e-travel site,” Red Roller CEO Bill Van Wyck said.

Targeted at small businesses and eBay sellers, the site plugs in to all the major shipping carriers except UPS. It’s a more full-featured version of bubble-era company iShip—which after being bought by Stamps.com and UPS, is still alive today, but in a fairly dormant state.

Stamps.com

After customers enter shipping, departure, and destination information as well as packaging and weight information, Red Roller delivers price comparison, then processes payment and formats labels for printing.

The 35-employee company, which has raised “several million dollars” from individual investors, plans to earn a cut on some of the shipping deals, as well as sell advertising, boxes, labels, and tape.

Mr. Van Wyck said increased competition between parcel delivery companies has opened up the opportunity to make price estimates more competitive. Enterprise-grade shipping-price comparison software has been around for 15-plus years, he admitted, but generally as part of expensive warehouse management systems that are only feasible for large companies.

Red Roller also plans to sell its service to third-party sites. JupiterResearch has found that 63 percent of online shopping carts are abandoned, and Mr. Van Wyck reasons that increased transparency about shipping prices, often a frustration for consumers, would decrease that figure.

“Businesses that ship frequently are going to have established shipper relationships,” said Mr. Sterling, noting that a small price savings probably won’t be enough to check Red Roller.

Contact the writer:LGannes@RedHerring.com