Internet commerce on the rise, but not yet booming.

The Internet's marketing hype has it that consumers are buying products off the Word Wide Web as never before - and merchants are rushing to get online stores up and running.

Some of the hype is on target, but some is running roughshod over reality.

At the recent Internet World '97 conference at the L.A. Convention Center, online commerce was all the rage. Companies touting security software for online credit card transactions, marketers of cyber-malls, retail-oriented service providers and Web site developers - all were present in unusually large numbers.

Adding fuel to the promotional fires was a study released March 12 from Nielsen Media Research and a Silicon Valley trade association called CommerceNet, which found a dramatic increase in the number of people shopping on the Internet.

The study concluded that 39 percent of Web users have searched for product information online before making a purchase, compared to only 19 percent in the fall of 1995.

"When the first wave of Internet hype came on, everyone saw it as a huge opportunity, but nobody knew how to make money off of it. Now the second wave is upon us, and that's where people are saying they want to do commerce on the Internet," said Ron Pretlac, co-owner of Net Value Sales Group, a Westlake Village company that creates and hosts Web sites for retailers.

Pretlac isn't alone in extolling the oncoming wave of mass Internet commerce. Cyber-malls, enormous Web sites that contain dozens of "stores" (Web. pages put up by retailers to sell merchandise), are becoming much bigger and more common in recent months.

One of the biggest local players is Guthy-Renker Corp. of Santa Monica, which is best known for producing and distributing infomercials. Its Internet division runs a cyber-mall called America's Choice Mall (www.choice-mall.com) that grew from 125 retailers and 155,000 hits in January 1996 to 949 retailers and 3.25 million hits in December.

Cyber-malls are an attractive alternative for many small businesses that can't afford to market their own Web sites.

Guthy-Renker's mall is marketed through infomercials and TV advertisements; merchants pay a one-time fee of $995 for a one-page site and a monthly fee of $25 a page to be part of America's Choice Mall, according to Ken Burke, vice president of development for Guthy-Renker Internet.

But despite the rosy forecasts from proponents of Internet commerce, merchants trying to sell things via the Web tell a different story.

Burke cites an online store called California Wine Country as one of the hottest sites on his cyber-mall. But Paul McCann, whose First Source Inc. runs the wine site, said his sales have slowed dramatically since December; although he made over $20,000 in sales off the site that month, he expects to sell only about $200 worth of merchandise in March.

"There's something wrong with this picture," McCann said. "It's like something died somewhere."

A random survey of L.A. County merchants trying to do business over the Web paints an even uglier picture. "I'm really not getting any response," said Ernest Mandrysh, who runs a home-based business called Rocking Horse Ranch in Covina, which sells patterns for making wooden rocking horses. "I'm spending 35 bucks a month (to lease the Web page). And when you're generating nothing, it's kind of stupid to throw 35 bucks down the drain."

Amanda Fashions, an L.A.-based apparel firm, has sold next to nothing off the Web since launching a site six months ago, according to owner Bijan Navabian. Donna Mague, whose Simi Valley-based Majestic Eagle Enterprises sells kitchen gadgets, describes her online sales as "small, a trickle."

Larger companies report similar results. Ameri-Chem Manufacturing Co. based in Glendora, which sells automotive polishes and sealants through branches in 18 countries, launched a Web site for customer orders in February 1996. Since then, it has received a total of only about six online orders, according to Director of Operations Chuck Barnes.

"It has lined us up with more overseas contacts for export, but sales have not been a key factor," Barnes said of his company's online presence.

Agoura Hills-based J.D. Power & Associates markets a CD-ROM car-buying guide through its Web site, which began operating early last year. The company sells about two or three discs a day online, according to the program's editorial director, John Rettie.

Like many online merchants, Rettie said the Web site has generated far more sales through customer calls than direct orders over the Inter-net. In other words, customers viewing a Web site may see a product they want, but rather than order it through the site by credit card, they seem to prefer to make the order over the phone.

Burke of Guthy-Renker Internet confirmed that about 60 percent of sales through the company's cyber-mall are transacted over the telephone rather than on the site itself. The Nielsen survey brings further evidence. Although it found that 73 percent of Web users spend some portion of their online time searching for information about a product or service, only 15 percent have ever made a purchase online.

The reason for the phenomenon appears to be a lingering fear by consumers that the Internet is not a secure environment for transmitting credit card information. But analysts say that with improvements in encryption technology, it is nearly impossible for hackers to steal credit card numbers.

"The fear is wildly misplaced," said Jeannine Parker, a principal with online business consulting firm Magnitude Associates. "You are at much greater risk for the theft of your credit card when you hand it to the waiter in a restaurant than when you buy things off the Net."