Israel search startup finds niche to challenge giants

TEL AVIV - A small, until recently unknown Internet startup company far from Silicon Valley is making inroads against the well-funded giants of the industry by focusing on a vertical slice of the search market: comparison shopping for books. Its success so far illustrates an Internet business model that is catching on.

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With neither venture-capital funding nor other investors, Israel-based Fetchbook has carved out a niche for itself by developing a book search and price comparison engine.

"We believe we are in the right time at the right place," says Aviv Eliezer, Fetchbook's co-chief executive officer and co-founder. "Today, if you look for a new or used book over the Internet, most search engines return too many results per query. So you prefer to go to one or two known sites such as Amazon.com Inc. or Barnes & Noble. But you don't get the best price," Eliezer said.

On the Fetchbook site, one click allows users to compare hundreds of bookstores and choose the lowest available price. Given the price gap between online stores, the customer can obtain as much as 80 percent discount off the list price, Eliezer said.

Fetchbook has succeeded in reaching at least one million users per month, according to figures based on findings from Web search and analysis site Alexa.com, and the numbers continue to grow on a day-to-day basis, according to company officials.

Its success so far appears to come from the optimization of its search engine for a very specific need. Though other, larger price-comparison shopping sites, such as Alibris, allows for comparison shopping for books, Fetchbook only does book-searching.

"Fetchbook is a niche vertical search and price comparison engine that gives users the fastest service, with no pop-ups, and the lowest price; and it seems this is exactly what Internet users are looking for," said Mickey Mokotov, Fetchbook's co-founder and co-CEO.

"Vertical search engines are fast developing into a 'hot' niche," said Susan Feldman, vice president of research at IDC. "Vertical engines mine data for the narrow niche of the market and give the user more accurate results," she said. "For example, if I look for the word 'bank' at Google, with reference to a riverbank, I will get many irrelevant results relating to financial institutions; and that is not what I am looking for. But if I go to an environmental search engine, I will get exactly what I want in much shorter time. A vertical search engine focuses more narrowly on a particular area, so it will give me the best results."

Fetchbook is not alone, Feldman said. Price-comparison sites such as Nextag Inc., Froogle by Google Inc. and PriceGrabber.com LLC are a few examples of early vertical search engines. However, the next generation of such sites is going to be more granular, focusing on increasingly narrower vertical markets, Feldman said.

Just last month, for example, Yahoo Inc. launched a vertical search tool for information and creative content that can be shared under the so-called "Creative Commons" license. The Internet today is replete with new, highly vertical search sites that promise to revolutionize the market by returning the most narrowly focused results possible in the least amount of time. Job seekers may try www.indeed.com.

Fetchbook itself has some direct vertical-search competition, including Campusi Inc., Addall, and Bookfinder. However, the Fetchbooks site traffic is outpacing its direct startup competition, and some months matches the bigger, well-funded sites such as Alibris. This is important for the site's business model, since Fetchbook makes money by getting a commission on sales. officials said. So far, Fetchbook, which was started as a hobby, now has eight employees and is profitable, according to the company's founders.

Market observers, however, don't think sites like Yahoo and Google will be completely usurped.

"I have no doubt we will continue to see more and more vertical search engines," IDC's Feldman said. "But it is going to be for people who look for specific things. If I want to find the best book price or the best vacation, I will go to a vertical search engine, because I need to do a thorough search; but for general questions, I will keep using Yahoo and Google."