From the June 1998 issue of Startups

Deciding to sell your product or service on the Web isn't always an earthshaking event. Take the case of David Mutton, president of Driving Obsession Inc., a homebased golf training company in San Francisco. In 1996, Mutton noticed that more than 50 percent of his new clients signing up for golf lessons listed an e-mail address on their customer information forms. This detail told Mutton that a fairly large percentage of his customers are Web savvy and eventually spurred him to create a site that sells golf merchandise and gift certificates. The Web site has substantially increased his sales. "I was looking for opportunities to reach people who aren't [existing] clients," says Mutton, 41. "This has been a great way for me to generate sales that I don't think I would've gotten otherwise."

Most industry experts agree that Internet commerce has finally arrived. At last, a fair amount of computer users have reached a comfort level regarding the security of buying over the Internet. After trying it out, many have quickly been won over by the wide selection and convenience that online shopping offers. In fact, The Yankee Group Inc., a Boston-based technology research firm, estimates that business-to-consumer sales over the Internet will balloon to $10 billion by 2000.

For homebased entrepreneurs, setting up an online storefront to enhance sales--or serve as their sole means for generating business--is more viable than ever. In recent months, it's gotten easier and cheaper to build a Web site that takes orders electronically, and everyone from banks to ISPs are more knowledgeable about the process. Moreover, Internet commerce has evolved into a fairly low-budget way for homebased businesses without a distribution channel or retail location to sell their wares. For many, creating a digital storefront requires a much smaller investment than traditional retail methods.

That's not to say the Internet commerce waters aren't rough. Some Web site designers and others have led people to believe it's easy and cheap to set up an online storefront, when the reality isn't always so. In the near future, much of the growth in Internet commerce will be in the business-to-business sector (The Yankee Group estimates business-to-business sales will reach $171 billion by 2000), so consumer acceptance still has a way to go. Plus, with Internet commerce in its early stages, the art of selling online where you can't talk to people and easily build a rapport takes a lot of patience, skill--and a bit of luck.

"It's hard to develop a relationship with people on the Web because they can just disappear like smoke," says Phil Doyle, president of WebAgency Marketing & Consulting, a Santa Rosa, California, firm specializing in Internet commerce, online advertising and public relations.

For homebased businesses, the promise and problems of Internet commerce are pronounced. Setting up an online storefront is a natural move for homebased mail order companies with established methods of acquiring products, processing orders and shipping internationally. But those who aren't familiar with the intricacies of a retail business must be prepared to invest the proper amount of time and resources to make a Web store work.

Building Blocks

Navigating Internet commerce can be tricky. If you're up to the challenge, the key is to put the proper framework in place. In many cases, you'll need to work with a variety of players, from ISPs to Web site designers, and become familiar with software programs, security technologies and methods of selling. So before you begin building your Web store, do your homework.

One necessary step is to choose the right products or services to sell on the Web. Certain items, such as clothing, that typically require a "look-see" before shoppers buy usually won't be bestsellers; neither will perishable goods with sensitive shipping schedules. Currently, bestselling products on the Web include books and magazines, computer software, music CDs and tapes, and travel-related products and services.

But running a Web store takes more than just mimicking a successful retail concept. Experts advise finding a popular product category and then adding your own twist. "You need to find a market niche that's underserved and that fits you," says Rosalind Resnick, co-author of The Internet Business Guide: Riding the Information Superhighway to Profit (Sams Publishing) and president and CEO of NetCreations Inc., a Brooklyn, New York, Internet marketing company.

If you don't already have merchant status, your next step is to apply for a merchant account. Presently, credit cards are the best means for accepting payment on the Web. Checks are fraught with risk, and e-cash is still somewhat experimental. (For more on e-cash, see "Money Clips" on page 50.) Many entrepreneurs jump into the construction and design of a Web store before they have the proper means of accepting payment.

In the past, banks have been leery about accepting credit cards on the Net. However, Resnick says financial institutions are becoming more familiar with Internet commerce and what's required for merchants to accept credit cards over the Web. If your bank isn't experienced with Internet commerce, other banks are--and they're worth hunting for.

If you can't obtain merchant status, there are companies such as Vantage (http://www-Agency.com) that will process credit card transactions for you. The downside: Most charge a hefty fee for this service. The fee is much higher than the 2 percent to 5 percent rate that businesses who do their own transactions are typically charged, so exhaust all other avenues first.

You'll also want to hook up with an ISP early on. Besides hosting your site, an ISP can be an invaluable resource for developing an electronic storefront. For example, the ISP may be able to help with Web site design, sell you software for building an electronic catalog, or recommend vendors that provide credit card authorization on the Net. Some offer better Internet commerce services and have more experience than others, so choose carefully.

After working with many ISPs, David Mutton eventually decided on La Jolla, California-based SimpleNet. A competitive hosting fee ($49 per month), unlimited traffic and storage, and the flexibility to access SimpleNet's server and make Web site changes himself were among Mutton's primary reasons for choosing the company. He has also found SimpleNet's Internet commerce services for building and marketing a Web store helpful.

Site Design

With these systems in place, you're finally ready to build your electronic storefront. First, take a long, hard look at other Internet commerce sites. Note what you like about their designs, analyze how the advertising copy and products are presented, and see what sales techniques make you want to buy so you can incorporate these things into your own Web store.

If you have technical know-how, one possibility is to design your own Web site. Those who are familiar with the Internet and who have the extra time can select from many off-the-shelf Web design programs. Mutton, for example, used NetObjects Fusion (http://www.netobjects.com) to create a basic Web site in just one day. "I looked at the costs of having a consultant build it, realized that I had much of the artwork and content from my marketing materials, and decided I could probably build it myself," Mutton says.

One popular Web site creation tool is Microsoft's FrontPage 98 ($149). For beginners, FrontPage 98 is a good choice because it allows you to create professional-looking Web pages without learning programming languages. It contains 50 templates, as well as functions to build backgrounds, navigation bars, buttons and hyperlinks. There are also wizards to help you through the process.

Besides ease of use, FrontPage 98 also has advanced site creation and management capabilities. Power users can take advantage of HTML editing and the ability to incorporate Java, ActiveX and other leading-edge features into their Web pages. FrontPage 98 contains powerful image-editing features to crop, rotate or customize images, as well as new features to design and edit navigation buttons. The program also includes site management tools to automatically check the status of hyperlinks and provides many "views" to analyze the working condition of your site; for example, the new All Files View makes it easy to take inventory of all the files in your site in a single snapshot.

Adobe PageMill 3.0 ($99) is another affordable, easy-to-use program. Because it relies less on templates and wizards than FrontPage 98 does, you may find it creates Web sites with a less "cookie cutter" look and feel. PageMill is for those who want ease of use but still want to maintain close control over design. Its familiar drag-and-drop interface makes it easy to create features such as links and frames. WYSIWYG capabilities also give you control over a page's appearance without requiring you to switch between the HTML editor and a browser to see what pages will look like. In addition, this program comes with a copy of Photoshop LE (a light version of Adobe's popular image-editing program) and more than 10,000 Web-ready images.

If you're not very knowledgeable about Web sites, hire a Web design firm. Keep in mind that this will significantly increase the amount of money you spend on designing your site: It's not uncommon to pay several thousand dollars for Web site design. There's no shortage of good Web designers, though, so shop around for a skilled developer with the most reasonable rates.

Begin your hunt for a Web site designer by searching the Internet for sites that are similar to the one you'd like to build and e-mailing them a request for information about the company that designed their site. Also, ask for referrals from business associates who have Web sites. The idea is to have several highly reputable, experienced companies to choose from.

You can take certain steps to keep the price down, as well. First, don't pay by the hour for Web site design. Resnick advises negotiating a fixed price for the entire project before giving the go-ahead. It's also smart to stay away from more advanced (read: pricier) features such as Java or 3-D graphics.

Another important component of any Web store is the catalog software needed for building order-processing capabilities. Also known as "shopping cart" software, these programs typically contain features to help you design a Web catalog complete with product and pricing information, order forms on which you can enter products and have sales tax and shipping costs automatically calculated, and management features that notify vendors when an order has been placed.

By purchasing SimpleNet's Commerce Made Simple (CMS) package, Mutton was able to incorporate these features into his Web site. One main component of the CMS package is access to Htmlscript Corp.'s KoolCat electronic catalog. Mutton used this software, which resides on SimpleNet's server, to customize an online catalog with product and pricing information. KoolCat also has order-management features that automatically notify Mutton via e-mail when orders have been placed. CMS (priced at $802 plus monthly service fees of $65) includes a VeriSign Secure Server Digital ID for security and encryption capabilities, plus domain Web-hosting and e-mail services.

Some Web site creation programs are compatible with popular shopping cart software. For instance, Mercantec StoreBuilder for Microsoft FrontPage 98 ($149) offers the latest electronic commerce features that work with FrontPage to build a virtual store. You can add Mercantec's SoftCart functionality to an existing FrontPage Web site or develop a site from scratch using both programs. To "open" your store, you must purchase a production license for SoftCart or host the store at an ISP offering the software for a monthly fee. Similarly, you can add online shopping capabilities to Adobe PageMill 3.0 with ICentral's ShopSite Express (SSE) for Adobe PageMill, which is available from an authorized SSE provider.

There are a variety of other shopping cart programs on the market. Product features and prices vary widely. For example, on the low end, Easy-Catalog from Software Design Associates (http://www.software-design.com) is priced from $349; on the high end, Encanto Networks Inc.'s e.go webstation (http://www.encanto.com) costs $1,295.

Some Final Thoughts . . .

Once your site is built, there are a few more considerations, one of which is security. Experts and merchants alike understand that security on the Net is a big consumer concern. With credit card fraud a reality of doing business on the Net, you need to make your customers feel secure. One way: Confirm that your ISP has a secure server installed, says Resnick. Secure servers encrypt consumers' credit card numbers when transmitting them over the Net so users can feel confident about entering them.

Server Digital ID is included in the CMS program. SimpleNet handled the process for Mutton so he could apply for a Digital ID, which authenticates Web sites. This gives consumers confidence that a site's domain name has been verified as belonging to the business representing itself as the operator of the site. Digital IDs also enable encrypted communications between a Web site and its visitors, allowing the exchange of confidential information such as credit card numbers across the Net.

Next, think marketing. No matter how well-designed your site is, it's not going to generate sales unless consumers know about it. One easy way to get the word out is to register with the top search engines or sign up for a service that does this for you. For Mutton, using such a service through SimpleNet substantially increased his number of hits per day--and cost just $40. Change your marketing materials, such as business cards and letterhead, to reflect your new Web address. You may also want to consider renting a direct marketing list of e-mail addresses to jump-start traffic.

Over time, you'll need to find ongoing ways to keep users coming to your site or risk having much of your traffic dwindle. One smart way to maintain traffic levels is to establish long-term link exchanges with other sites. Contact Web sites with similar content and offer to swap links. This ensures a steady stream of visitors to your Web store from a variety of sources.

As with any venture, there are no guarantees for Internet commerce success. However, the key to selling on the Internet is to cover all your bases to give customers the most value. An electronic storefront must offer new products. It must provide convenient order-placing and be marketed to the public. It must be secure. There are many areas on which to focus your attention, but laying the proper groundwork, using professionals when necessary, and being willing to experiment will put you one step ahead of the competition.

It's In The Bag

A web store is not a vending machine. Put one up and most people won't just come, take a look and then pump in the nickels. The most successful e-commerce sites have systems in place that entice people to come and buy--again and again. Here are some helpful hints:

1. Do everything you can to get people to leave their names and e-mail addresses so you can tell them about upcoming sales, new products and so on. Consider offering a free newsletter or service that sends out updates about your products or services.

2. Pay close attention to your catalog copy, aiming to make it interesting yet concise so that it can be easily understood. Also, pricing information should be clear.

3. Because sales strategies on the Web shouldn't be different from storefront sales strategies, consider discounting items, having a sale or offering coupons for consumers to download.

4. Letting consumers know that real people are behind your Web store will put them more at ease about buying, so list your phone and fax numbers--and an e-mail address--prominently on your Web site. Make sure you can be reached easily.

5. One simple way to draw users to your new Web store is to register it with the top search engines (or use a service that automatically does this for you).

Want To Know More?

Check out the following resources:

  • Understanding Electronic Commerce (Microsoft Press) by David Kosiur covers successful e-commerce strategies, security issues and case studies of innovative sites.
  • At Mercantec's Web site (http://www.mercantec.com), you can download a free 19-page guide, Always Open for Business--A Merchant's Guide to Opening a Store on the Web, that includes tips on how to successfully market and operate a store in cyberspace.
  • The monthly online newsletter Web Commerce Today (http://www.wilsonweb.com/wct) is geared toward helping merchants plan, design, manage and promote retail or business-to-business Web stores. An annual subscription costs $49.95.

*The CommerceNet site (http://www.commerce.net) contains general information and news on the e-commerce industry, vendor contacts and links to popular e-commerce sites.