(FORTUNE Magazine) – Surf's up, skinflints: The World Wide Web is fast becoming the best place to shop for bargains. Savvy online shoppers are already getting sweet deals on life insurance, airline tickets, cars, computers, books, and other items. Soon all the pieces of the Web's commercial infrastructure will be in place, providing a launch pad for competitive online selling to blast off.

It's about time. For all the ballyhoo about Web commerce, shopping in cyberspace often seems like driving across Manhattan at rush hour to a store where you mail-order beef jerky and paisley bow ties. Many Web stores are little more than online catalogues that would work much better on paper. Finding desired items can resemble playing an inane videogame in slow motion. And consumers face a confusing welter of payment formats that make online shopping like joining a bunch of secret clubs with different passwords and high signs.

But 1997 will mark a turning point--the harried masses can begin surfing to save time (and money) rather than kill it. The agents of this transformation are already emerging, from standardized software for Web shopping to global auctions online. Soon buying many things on the Web will be easier, cheaper, and more secure than going to stores or flipping through catalogues, credit card in hand. By the end of the decade, online retail sales could soar tenfold, while business-to-business transactions could explode by a factor of 100.

Importantly, a consortium spearheaded by Visa and MasterCard will soon establish a standard protocol for credit card purchases on the Web. This secure electronic transaction, or SET, standard will be rapidly incorporated into industrial-strength "merchantware" already available from Netscape, Microsoft, IBM, and other software sellers. Pundits who dismiss the Web as a hyped-up boutique for nerds may be in for a shock: Consider what happened to computing in the Eighties as players like Microsoft, Apple, and Lotus jumped in with software that redefined our desktop machines.

Stamped with trusted brand names, the new SET-based systems will give a major boost to the comfort level of Web shopping for both merchants and consumers. That should draw many more of both online to create a truly vibrant bazaar. Says D. James Dee, a New York City entrepreneur who recently founded a Web art gallery called Provenance.com: "Having what I needed with Microsoft's name on it was a major consideration in going ahead."

Provenance.com shows how the Web is spawning new ways to make and get a deal. Within a year, Dee plans to fill his online gallery's still sparse virtual walls with digital images of some 5,000 works by artists worldwide. By entering desired price ranges, size, medium, and school of art, online aficionados can see pieces of interest instantly. The possible payoffs: Starving artists eat; astute buyers discover the next Jasper Johns; Dee gets rich.

The new merchantware will provide online vendors with seamless, fraud-resistant ways to handle everything from displaying goods online to settling credit card transactions via back-office links to banks. Shoppers will be able to buy things by simply clicking on an icon to transmit an encrypted, or scrambled, version of their "digital ID." The IDs will be far harder to forge or repudiate than signatures--they're more like fingerprints. Each will incorporate a (real world) mailing address and credit card data, dispensing with the current practice of having to type in the same information time after time when shopping at different Websites. They'll let you make stock trades, move funds around, pay bills, access medical records, and sign contracts on the Web. For maximum security, shoppers may not even submit their credit card numbers to merchants--instead, software that handles purchases will automatically e-mail the numbers from shoppers' own PCs to banks, which then relay credit authorization to the sellers.

Where will you get a digital ID? Companies including VeriSign, in Mountain View, California, and GTE, in Stamford, Connecticut, are racing to develop services that will let merchants and shoppers prove their identities online.

Other building blocks for Web commerce are rapidly falling into place. CyberCash, in Reston, Virginia, is spearheading "microtransactions," Web purchases under $10 that aren't practical using credit cards because of processing costs. The company's recently introduced Cyber Coin system uses encrypted digital signals in the place of real coins. A CyberCoin-hip rock band, for instance, could open a Website that would let consumers download digitized versions of its tunes for pocket change--the money adds up fast when there's no cut to music publishers. Another application is "repurposing" intellectual property: The Los Angeles Times plans to test the CyberCash system to charge for online access to its archives.

InterTrust in Sunnyvale, California, is developing a way to prevent unauthorized copying of digitized content such as software and, eventually, movies. With the system, scheduled for launch in early 1997, content purchased online will be sent via the Internet to buyers in encrypted form. To unscramble it, shoppers will employ a free program downloaded over the Web that acts as an invisible clerk in their machines, toting up charges and relaying them to sellers for processing. Cheating will be difficult--among other safeguards, the system will automatically hide identifying data inside your computer so that if your software clerk is copied to another person's machine, it will know something's wrong and freeze. IBM is developing an alternative called Cryptolope containers to protect online documents.

Another group, the eTRUST consortium, plans to launch a kind of Good Housekeeping Seal of Approval for commercial Websites in early 1997. Companies abiding by the consortium's rules for protecting consumers' privacy will be able to display eTRUST's logo--different versions will indicate whether consumer data are captured during online transactions and, if so, how they are used.

All this is potent fuel for the Web commerce rocket. Forrester Research in Cambridge, Massachusetts, predicts that the online shopping business will soar from $518 million this year to $6.6 billion in 2000. That still won't make the Web a major force in retailing--mail-order catalogue sales alone this year are expected to reach $75 billion. But when business-to-business selling on the Web is factored in, the numbers get more impressive: Between 1995 and 2000, overall Web-initiated sales will rise from $1 billion to $117 billion, predicts International Data Corp. in Framingham, Massachusetts. Its forecast presumes the number of Web surfers will explode during the period, from 16 million last year to 163 million--and that the capacity of the Internet will rise to accommodate the growth. IDC's analysts also bet that online shopping will offer perks unavailable elsewhere, boosting the proportion of Web users who buy things--it's currently about one in four.

Russell Nakano, a Sunnyvale, California, software engineer, shows why such prophets augur profits. "A few months ago, I regarded the Web as a kind of rumbling in the outside world," he says. But after changing jobs, the 41-year-old father of two found himself needing life insurance, so he tried the Web at the office to speed his search. He soon discovered www.quickquote.com, which summons up term-insurance rates from carriers nationwide. Quickquote also lets consumers order policies online--it gets commissions from insurers. Before long, Nakano located and signed up for a policy whose premiums were some 25% lower than ones he'd found before. Says he: "It was great. I don't have time to get my car repaired, much less go shopping for insurance."

Just replicating strip malls and mail-order catalogues online won't cut it as Web commerce takes off, says Forrester analyst David Weisman. The wave of the future is new kinds of brokers, like Quickquote and Provenance, that carve niches by bringing sellers and buyers together in novel ways. Other exemplars:

--Amazon.com Books (www.amazon.com) offers over a million titles at discounts and lets you see readers' comments on recent ones before buying. (See following story.)

--Auto-by-Tel (www.autobytel.com) matches car buyers nationwide with nearby dealers who, with lower selling costs thanks to the service, sell for less.

--The classifieds at Yellow Pages Online (www.ypo.com) allow used-car shoppers to zero in quickly on nearby offerings at desired ranges of price, year, model, and mileage.

--USAir (www.usair.com) and American Airlines (www.americanair.com) let you sign up to receive e-mailed notices of cheap tickets on flights with empty seats. American also sells such seats through online auctions.

--Onsale (www.onsale.com) auctions off over $1 million a week of refurbished personal computers and other consumer electronics items.

The killer app for Web commerce, however, will be facilitating corporate buying and selling. Business-to-business selling on the Web already is taking off under the auspices of online marts like Nets Inc. (www.industry.net). Headed by Jim Manzi, former CEO of Lotus Development, Nets recently announced an alliance with PNC Bank Corp., in Pittsburgh, to build a soup-to-nuts Web system for corporate purchases of everything from bolts to computers.

Pioneering ways to streamline the back office may seem pretty dull after having held the limelight at Lotus, but Manzi may well have hitched his wagon to an idea as revolutionary as spreadsheets were in the early Eighties. Steven Johnson, a managing partner at Andersen Consulting, gives one reason why: Systems like that of Nets Inc. "give the ability to invert the traditional purchasing process. Companies can post their supply requirements at a Website where anyone can bid on them. 'Here's what I need. Hit me.' That could have a huge impact."

General Electric already does just that through its Web-based Trading Process Network, which the company says will account for about $1 billion of its purchases during its first 12 months of operation ending early next year. Says Jim Drabik, a Cleveland tool- and diemaker who uses the system to sell to GE: "I don't like the idea of more people bidding in my niche [which the Web-based system fosters]. But on the other hand, sometimes you call a purchasing agent and he won't even talk to you. If I put my bid on the Web at a good price, suddenly he'll talk."

Drabik adds that GE's first version of the mart, on a private network, was set up like an auction. "I was bidding on a part, and the quotes got ridiculous. Finally I cut my bid in half, below my materials cost, just to see what would happen, and somebody bid even lower. Then I shut off my computer, called GE, and said I wasn't going to deal with this anymore." Bombarded with such gripes, GE soon switched to sealed bids.

So much for visionaries' dreams of "friction free" capitalism online. Indeed, some analysts now argue that the idea that the Web will become a buyer's eden humming with software "agents" that automatically find the best deals may be a fairy tale. Andrew Odlyzko, who opines on electronic commerce at AT&T Labs, predicts that Web merchants will erect barriers to automated price-comparison shopping in order to prevent their markets from being mercilessly commoditized. Sellers, for example, might offer an array of slightly different, frequently updated models through different distributors, making price comparisons almost impossible. And anti-agent systems may proliferate: When Andersen Consulting last year launched BargainFinder, an agent to compare music CD prices at Web stores, online sellers blocked it from retrieving their prices.

Still, the growing number of Websites that abet price-comparison shopping should keep a rosy glow in cheapskates' cheeks. Price Watch Corp. (www.pricewatch.com) discloses the latest street prices for various vendors' computer products in a database that it boasts is updated three times a day. An outfit called pcOrder.com Inc. (www.pcorder.com) lets corporate buyers tailor computer systems online to meet their needs, then compare different vendors' prices for those configurations. Micro- soft's CarPoint (carpoint.msn.com) shows how new cars stack up against competing models, including price and feature comparisons. Using the service is like reading through car magazines at warp speed.

Moreover, new software agents appear likely to blow by merchants' barriers. For technical reasons, it is "nearly impossible" for vendors to block price-comparing agents based on Sun Microsystems' Java language, says Bassam Aoun, an expert on such agents at Curtin University of Technology in Perth, Australia. Sellers in some niches seem resigned to the trend--Aoun says online book vendors have even helped him ensure that Bargainbot, a Web agent he created, gets accurate price information from their sites.

So, aspiring Web merchants, it may be wise to post an e-mail to yourself: "Let the seller beware."

REPORTER ASSOCIATE Henry Goldblatt