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How Low?

It doesn't have to cost a bundle to launch an e-commerce site. We've found several smart options for top-notch online stores.
June 1, 2003
URL: http://www.entrepreneur.com/article/62240

When Leslie Gordon started looking for a way to sell products from the Hudson Valley online, she didn't have a lot of money, time or computer expertise. What she had were high expectations for an e-commerce site that would be classy, powerful and adaptable. "Most important to us was finding a low-cost [solution] without sacrificing quality, sophistication or flexibility," says Gordon, 31.

Gordon found her low cost e-commerce Web site solution at Homestead.com. Menlo Park, California-based Homestead Technologies charges her $150 a month to host Madeinthehudsonvalley.com. She used the Web design tool supplied by Homestead to create the site herself, and also takes advantage of the marketing services the host provides.

Besides saving the $10,000 she estimates it would have cost to have a programmer custom-build her site, Gordon is also happy with the results. "Their functionality mirrored the functionality of, say, an Amazon.com in its look and feel," she says.

Start-ups in search of a low-cost solution for an e-commerce Web site don't have as many options as they did three years ago, says Kneko Burney, director of business infrastructure and services at In-Stat MDR, a research firm. But that's not necessarily bad. Those providers that are left, Burney says, tend to be larger and stronger companies that have well-defined offerings and will probably be around for the long haul.

Selling online is still an excellent idea for many small businesses, and inexpensive options for setting up your own online store are plentiful and effective. To help you decide, we checked out five popular low-cost e-commerce Web site solutions.

Five Options to Get Started

1. bCentral
Microsoft's bCentraloffers a hosting package for $49.95 a month and an e-commerce package for another $24.95 monthly. There's also a $35 setup fee. The e-commerce plan lets you start with templates and use various tools to add logos and build product catalogs. It includes a shopping cart, sales- and order-tracking, automatic e-mail order confirmations, customer traffic reports and PayPal Merchant Services. Telephone support is available for a fee. You can try the service free for a month.

Pros: No per-sale fee; allows you to also list your products on several other popular auction and shopping sites, including eBay, MSN Marketplace and uBid

Cons: Limited shipping options; lacks significant traffic-building services

2. eBay Stores
EBay Storesare priced at three levels, depending mainly on how much promotion the store receives within eBay. The $9.95 monthly Basic store gets only a few simple directory listings and no sales or traffic reports. For $49.95, a Featured store gets priority placement in related product searches and some monthly reports. The $500 Anchor stores are showcased on eBay Stores directory pages, get premium placements in search results, and receive 1 million impressions of their logo throughout eBay.

Pros: Inexpensive for a Basic store; lots of traffic from eBay's 42 million users

Cons: Rudimentary store-building tool; produces basic sites that look like any auction site

3. Homestead Storefront
Homestead's Storefront e-commerce solution is priced from $29.99 to $130 monthly, depending on how many products you list and whether you opt for the Basic or Plus version. Both include hosting and employ Homestead's easy-to-use setup wizard, SiteBuilder software, templates and store manager. You can assign different price points to products by attribute, such as size or color; send order confirmation e-mails; and offer quantity discounts and other extras.

Homestead Storefrontworks with most major online merchant accounts to process credit card payments online; if you don't already have one, Homestead will set up an account for another $22.95 per month. Standard features include basic Web site visitor statistics and a search engine submission service. Additional promotional packages start at $4.99 and go up to $69.99 a month.

Pros: Easy-to-use drag-and-drop SiteBuilder tool; well-regarded customer service

Cons: Still has something of a "free Web site" stigma; standard bundled promotional tools are rudimentary

4. ISP "Web Site in a Box"
Many large, reputable ISPs and hosting services offer affordable and worthwhile "Web site in a box" solutions for e-commerce start-ups. As a rule, these give you more options than other solutions, but are also more complex to manage.

For instance, DellHost, a service now operated by Sprint, sells a $449 Web site starter kit that includes domain name registration, a three-page professionally designed Web site and a year's worth of basic hosting. Such ISP-based e-commerce solutions are good for information-intensive applications.

Pros: Allows for more sophistication and flexibility; 24-hour toll-free telephone support included with most packages

Cons: Bundled e-commerce software that's harder to use than site-builder services; may employ dynamic Web pages not readily indexed by search engines

5. Yahoo! Stores
This is the most recommended solution for low-cost e-commerce. Hosting is $49.95 a month--with a one-month free trial offer-and charges for e-commerce include 10 cents per item listed per month, 0.5 percent of each transaction and 3.5 percent if the referral came from the Yahoo! Network. Domain name registration is included, or you can use your existing domain name for $10 a year. Get daily sales and visitor statistics, apply for a merchant account through Yahoo!, and upload existing product databases to create a catalog with just a few clicks.

Pros: Low-cost e-commerce solution; combines, flexibility, reliability and a full set of features

Cons: Relies heavily on templates, so your store won't necessarily have a distinctive look unless you master HTML; can submit your store for inclusion in Yahoo! Directory, but listing not guaranteed--even if you pay their fee

e-Commerce Concerns

Once you've identified a few possible solutions, it's time to start weighing them against your concerns.

At the other end of the spectrum, you can pay $1,000 a month for a dedicated server, plus tens or hundreds of thousands of dollars to e-commerce site developers to create a one-of-a-kind site.

One thing experts warn against is trying to scrape by with a free hosting solution. Having pop-up ads on your site will only drive customers away, and free hosts generally lack the security and reliability of paid hosts. "I would caution people away from looking for a zero-cost option," says Homestead CEO and co-founder Justin Kitch. "It you're serious about starting a business, you need to invest."

Also consider the look and feel of your Web site. Rudimentary site-building tools like those offered by eBay Stores result in plain, undistinguished online storefronts. "The eBay Stores aren't really like a store," says Bob Kerstein, who has used a variety of providers, including eBay Stores, to sell antique stock certificates online with his e-commerce storefront, Scripophily.com. "It's the same thing as an auction listing." To find out what your store will probably look like, check out some other online vendors who use the same provider.

Low-cost e-commerce solutions offer the beginning e-commerce merchant viable routes to test a business idea without over-committing scarce resources. Then, if things work out, it's possible to expand the business as big as the market will allow.

The Internet isn't as confusing as it was a few years ago, but the decision about where to start your e-commerce business still requires some homework. Fortunately, you can use the Web to do almost all your research, and much of the legwork has already been done for you. Most e-commerce solution sellers let you compare options between various plans by simply clicking on a button at their Web site. CNET.com, an online technology publication, regularly reviews and compares low-cost e-commerce solutions. TopHosts also provides a directory and capsule descriptions of leading e-commerce Web hosts.


Austin, Texas, writer Mark Henricks has covered business and technology for leading publications since 1981.