From the February 2000 issue of Entrepreneur

Research firm GartnerGroup recently released a report with a frightening headline: "An E-Commerce Web Site Costs $1 Million to Build." The report's findings indicate average cost is expected to rise 25 percent annually through the second quarter of 2001 and labor accounts for 79 percent of the total cost. Time to pack up youre-dreams and open something more affordable like, say, a McDonald's? Not so fast. If you're considering opening your own e-commerce store, you're not too late. You're just in time.

There's still plenty of affordable Web room to go around, according to Juanita Ellis and Steffano Korper, co-authors of The E-Commerce Book: Building the E-Empire (Academic Press) and creators of The E-Commerce Program certification courses at Southern Methodist University in Dallas and the University of California, Los Angeles. "Small businesses can actually pay a CSP [commerce service provider] to build as well as host their solution for a fairly low start-up cost," Ellis points out. "Other entrepreneurs are going in and linking into malls. If they're just selling a few products, they can purchase malls that complement their particular product, which means an even lower start-up cost."

E-commerce Web design and hosting companies abound on the Internet as well as in your local Yellow Pages. Need a good place to start? Try ClickZ Network's (http://www.clickz.com) comprehensive listings of online service providers. One popular Web service is iCat (http://www.icat.com), whose iCat Web Store package starts at $9.95 per month and features a familiar Web browser-based store-building wizard for set-up.

If an online mall seems more your speed, you only have to plug "online mall" or "virtual mall" into any search engine, and hundreds will pop up vying for your attention. Take current hot spot Amazon.com. Via their zShops service, merchants sign up to list individual products on the site, at a cost of 25 cents to $2 per listing plus a percentage of the closing price. Visit iMall (http://www.imall.com) for an example of a large virtual mall composed of individual stores. The Web site, http://www.merchantstuff.com, features store-building wizards and services.

The founders of New Enough Motorcycle Leathers (http://www.newenough.com), Paul and Holly Thompson, went the do-it-yourself route. Paul, 39, explains the idea behind their site which buys, sells and trades used and new motorcycle leathers: "It was basically just a [marriage of hobbies]: motorcycling and computers. I've owned six motorcycles over the years and bought jackets and helmets to match each one. When you trade motorcycles, you're stuck with the gear you bought. Then what do you do with it? I thought it would be a good idea to start a Web site and see if anything would come of it."

Armed with just Microsoft FrontPage (FrontPage 2000 is now available for $149 street) and an ISP to host their site, the Thompsons went from minimal sales to selling more than 250 articles of clothing per month. The e-business is now full-time work for the couple. In late 1999, the Thompsons opened a brick-and-mortar showroom in Lubbock, Texas, to complement their Web site.

Are You Cut Out For It?

How can you tell whether e-commerce is for you? Don't be intimidated by terms like HTML, cgi bins, Java scripts, secure servers and browser compatibility--your ability to get in on the Internet explosion has less to do with your technical expertise than with your basic entrepreneurial skills.

"E-commerce is more business-oriented," Ellis says. "The technology is just an enablement. After all the business ideas have been put together, the technologists come in and say how we can implement these ideas. So the business piece is much greater than the actual technology piece."

In fact, Ellis believes knowledge in sales and marketing is the key to Internet success."E-commerce is not just setting up the site, understanding the software and hosting it. It's about getting the word out that you have these products online, and getting those products to the consumer in a timely manner."

The Thompsons took a low-key, but effective, approach to marketing. "We run a couple of ads in the back of Motorcyclist and Cycle World to solicit inventory," says Thompson. "I don't do any advertising to sell--it's all through search engines. I have the site listed in Yahoo!, and the others pick it up automatically."

The couple's secret weapon is actually one of the most effective customer-retention tools available online: an e-mail list. "We signed up with one of those mailing list services where customers can go to my site and put their name on the list. Once a week we prepare a catalog of all the new items, shoot the new e-mail out and a third of the new stuff sells within 24 hours."

You'll find no dearth of resources when you begin your venture into the basics of e-commerce. A keyword search for "e-commerce" on Amazon.com results in 323 returns. Internet.com's E-commerce Guide (http://www.e-commerce-guide.com) includes news, a tech advisor and a library. The Web Marketing Info Center (http://www.wilsonweb.com/webmarket) has a link to "Introductory Articles" to help get you started. "Just buy a computer and get with it," Thompson recommends.

Research firm IDC offers plenty of reasons to follow his advice. In a 1999 report, it found that Internet commerce will grow to over $1.3 trillion, with more than 502 million online consumers, by 2003--up from just 142 million users in 1998.

Stand Out From The Rest

Though the ease, affordability and available assistance make now the prime time for you to cash in on the Web, remember that this applies to every other prospective Netpreneur as well. "You have to be unique; otherwise, you'll get lost among all the other hundreds of vendors and Web pages," says Thompson. For example, he focuseson buying and selling used Vanson leathers to separate his site from those selling other motorcycle leathers.

Korper points out that the need to distinguish your Internet start-up will become increasingly important. "How many small businesses open up every day? Not only do you have to be different; you have to be better than the others. With e-commerce, you [compete] with the whole world. Of course, the beauty of e-commerce is you only have to do it right once and you become a global leader."

New Enough Motorcycle Leathers has a double-edged approach to ensuring their difference--not only is its product specific, but its service is unique in the industry. "The advantage we have over all the other resellers is our way of handling trade-ins," says Thompson. "No other retailer of motorcycle gear takes trade-ins, so I can sell right alongside them in price but still get the orders."

Thompson's success illustrates just how significantly the Internet is able to bring life to the smallest of start-ups. "When you multiply even a seemingly small idea by the number of people in the United States, it becomes viable," he explains. "Anybody can do it if they can come up with something that fills a small need out there. The type of business I have could easily be duplicated in other areas, whether it's ski clothes or golf clubs."

In other words, it's time to get out and get started online. "The [opportunities] are still there," says Ellis. "Most of the companies that have done extremely well are less than five years old."

Web Businesses To Start in 2000

Online education and training: an area ready to grow with no clear leaders

New and used clothing and accessories: Thrift-style stores are successfully moving online.

Specialized books: Competing with Amazon.com and Barnes & Noble means focusing on a specific area, especially on used, rare and antique books.

Hobby and craft supplies: The big brick-and-mortar craft store chains haven't cornered the Web yet.

Web publishing: desktop publishing services with an online angle

Niche auctions: the more specialized, the better. A tip: Offer intimacy over eBay's bulk.

Business-to-business sales: Look for business beyond consumers.

Software: a popular product to buy online from retailers large and small

Imports: From art to rugs to decorative items, imports are in demand on the Internet.

Specialty and used CDs and MP3s: The future of music (and music retailing) is online.

Convenience Products

Convenience Products (total)

1999 Web sales (billions): $7.037

2004 Web sales (billions): $69.107

Online share of all 2004 retail sales: 10%

Software

1999 Web sales (billions): $1.24

2004 Web sales (billions): $3.29

Online share of all 2004 retail sales: 50%

Music

1999 Web sales (billions): $.848

2004 Web sales (billions): $4.286

Online share of all 2004 retail sales: 25%

Books

1999 Web sales (billions): $1.202

2004 Web sales (billions): $3.279

Online share of all 2004 retail sales: 16%

Videos

1999 Web sales (billions): $.326

2004 Web sales (billions): $1.743

Online share of all 2004 retail sales: 15%

Event Tickets

1999 Web sales (billions): $.3

2004 Web sales (billions): $3.929

Online share of all 2004 retail sales: 14%

Replenishment Products

Replenishment Products (total)

1999 Web sales (billions): $1.8

2004 Web sales (billions): $36.592

Online share of all 2004 retail sales: 4%

Miscellaneous

1999 Web sales (billions): $.778

2004 Web sales (billions): $9.394

Online share of all 2004 retail sales: 14%

Health and Beauty

1999 Web sales (billions): $.509

2004 Web sales (billions): $10.335

Online share of all 2004 retail sales: 5%

Food And Beverage

1999 Web sales (billions): $.513

2004 Web sales (billions): $16.863

Online share of all 2004 retail sales: 3%

Researched Products

Researched Products (total)

1999 Web sales (billions): $11.414

2004 Web sales (billions): $78.782

Online share of all 2004 retail sales: 8%

Computer Hardware

1999 Web sales (billions): $1.964

2004 Web sales (billions): $12.541

Online share of all 2004 retail sales: 40%

Leisure Travel

1999 Web sales (billions): $7.798

2004 Web sales (billions): $32.097

Online share of all 2004 retail sales: 12%

Consumer Electronics

1999 Web sales (billions): $1.205

2004 Web sales (billions): $11.67

Online share of all 2004 retail sales: 10%

Appliances

1999 Web sales (billions): $.179

2004 Web sales (billions): $2.023

Online share of all 2004 retail sales: 9%

Furniture

1999 Web sales (billions): $.268

2004 Web sales (billions): $3.884

Online share of all 2004 retail sales: 5%

Contact Sources

Forrester Research Inc., http://www.forrester.com.

GartnerGroup, (203) 316-1111, http://www.gartner.com.

IDC, (508) 935-4282, http://www.idc.com