Second, many people are now more than willing to pay to receive quality services and products even if they were offered for free earlier. Several paid content websites have already proven this unmistakable trend. The discerning buyer values his/her time as also the quality of information or service and is willing to pay for it.

However, not all products can be sold on the Internet. Some products may be better suited for online sales than others; others simply will not work on this new commercial medium. According to an Ernst and Young study, the most popular online purchases are computer related products (40%), books (20%), travel (16%), clothing (10%), recorded music (6%), subscriptions (6%), gifts (5%) and investments (4%).

Businesses offering paid services have also prospered enormously. The top three categories (Business Content/Investment, Entertainment/Lifestyles and Personals/Dating) accounted for 62% of all paid content revenues in the first three quarters of 2002. The total market for paid online content in the U.S. grew to $361.4 million for the quarter, a 14 percent gain over the previous quarter and a 105.3 percent gain over Q3 2001. An interesting statistic put forward by this report is that 85% of money spent by U.S. Consumers for online content goes to the top 50 sites in most of the categories.

The graph below (Top 3 Content Categories) is indicative of this change.

In terms of "stickiness" of different categories, Business sites - especially finance and investment rank the highest. In other words, users are more likely to spend longer time surfing through a business website compared to other categories. This study was conducted by Nielsen//NetRatings. The table below shows the most addictive web categories for 2002.

Source: Nielsen//NetRatings

According to the above figures a person spends about 22 minutes on a finance website on an average.

2.3 Should you be selling a product or a service?

The Internet is primarily used to communicate, entertain, educate and research. It is thus no wonder that nonperishable, information-intensive products - including computers and software, books, travel, consumer electronics, magazine subscriptions - are the most popular online products at present. Content-rich sites, subscription-based sites to advertiser-supported sites focusing on a wide range of topics, have been sprouting all over the Internet.

Services such as hotel reservation, air travel and investments have successfully translated themselves to the Internet.

Unique services such as Online driving schools have been prospering. Some states in the US have set up online payment sites for Government services. Residents of a state can log on to a common site to pay all bills and other expenses, such as parking tickets to the local/County courts.

However, all kinds of services cannot be run entirely on the Internet. The Internet is less effective when face-to-face selling is needed to close a deal. The Internet can give lots of preliminary information that's useful in setting the scene for the closing. But the actual closing takes place offline - i.e., not on the Internet.

Products can also be marketed and sold successfully on the Internet. The kinds of products and services that sell best on the Internet are those that take advantage of the convenience of the Net. Remember that convenience is the primary reason why consumers flock to the Internet in the first place. People can shop any hour of the day at any site. They can avoid crowded stores, irritating sales clerks, and even avoid pickpockets.